Financial Assistance Covid-19

Wage subsidy and leave payment schemes

Let us break it down in simpler terms.

These payments are being made by Work and Income as the Inland Revenue will have very limited staff. This will mean myIR will be the best way to contact them however I would suggest contacting your Chartered Accountant as the first contact.

Wage subsidy.

https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null

Accounting and Key Issues for:

 An Employer.

This is a wage therefore there is no GST.

As an employer you will need to set up a separate code in your accounting system. I suggest

When this money is paid to the employees as part of normal wages a separate code is suggested as this is not deductible. This will help to keep an audit trail to ensure that this money has been used as per the subsidy requirements.

If you have a number of employees, then I would put this money in a separate bank account so that this money is not used for the general business running but used for paying wages only.  

 – Covid-19 Employer Support (GST exempt) and this is not income and not taxable. Your accountant will ensure this is shown in the appropriate area for reports.

An Employee:

This is paid to an employee as part of their wages therefore it is taxable and without GST. (subject to PAYE, Kiwisaver and student loan deductions as per normal.

A decline in revenue (sales of services or products) by 30% or more

Predicted reduction – eg unable to work or can not deliver product to clients and this is due to Covid-19

Leave Payment

This is paid due to the self-isolation rules, cannot work as sick with Covid-19 or cannot work caring for dependents in either of these cases.

Available for 8 weeks from 17 March 2020. Paid to the employer who has eligible employees and the full amount is paid onto them.

Employer/contractor/sole trader/self-employed

$585.80 over 20 hours per week

$350.00 working less than 20 hours per week.

The employer will need to apply every 14 days.

This application can be made online.

If you are a new business, then compare the month to the month prior.

The business needs to have sought advice from their bank, other relevant industries and Chartered Accountant to reduce the financial impact to the business.

Keep records of all e-mails and notes on any discussions with these parties as you may be required to substantiate your position.

The business needs to be fully committed to trying to retain the staff and to have paid them a minimum of 80% of their normal wage.

Remember you are signing a declaration which will be open to an audit or review in the future so please consult with your Chartered Accountant before you apply.

Need help contact CW Chartered Accountants Ltd