8 Weeks Wage Subsidy Extension (14/05/20)

On May 14, 2020, the New Zealand government issued more policies to help New Zealander to get through the difficulties caused by COVID-19. The government expects to spend 50 billion on the new crown pneumonia economic recovery plan to retain nearly 140,000 jobs in New Zealand.

One of the most attractive policies is the new subsidy – 8 weeks wage subsidy extension which will nearly cost 3.2 billion.

The Wage Subsidy Extension is to support you to pay 8 weeks of wages for your employees from the date you submitted your application.

You should pay your employee in accordance with their employment agreement.

If you can’t pay their usual wages, you should try your hardest to pay them at least 80% of their usual wages. If that isn’t possible, you should pay them at least the subsidy rate (ie, full-time or part-time).

a). Usual wages are less than wage subsidy Extension

If your employee’s usual wages are less than the Wage Subsidy Extension, you must pay them their usual wages.

b). GST

You don’t have to pay GST on the Wage Subsidy Extension.

c). Income Tax

For most businesses, the Wage Subsidy Extension is classified as “excluded income” for income tax purposes. This means that as a business you don’t pay income tax on the Wage Subsidy Extension you receive from MSD. You don’t get an income tax deduction for the wages you pay using the Wage Subsidy Extension. You still need to make the usual PAYE/PAYG deductions when you pass it onto your employee.

1. You must be an eligible employer
2. Your business must be in New Zealand
3. Your employees must be legally working in New Zealand
4. You must have a 40% decline in revenue

• • Your business must have experienced a minimum 40% decline in revenue for a continuous 30 day period. The 30 day period must be:
    • in the 40 days before you apply (but no earlier than 10 May 2020)
    • compared to the closest period last year.
  • The decline must also be related to COVID-19.

5. You must mitigate the financial impact
6. You must retain the employees you’re applying for

The subsidy will be paid at a flat rate of:

• $585.80 for people working 20 hours or more per week (full-time rate)
• $350.00 for people working less than 20 hours per week (part-time rate).

The subsidy is paid as a lump sum and covers 8 weeks per employee from the date you submit your application