The Wage Subsidy Scheme supports businesses and their employees, even if the employee is unable to actually work any hours. Employers, contractors, sole traders, self-employed people, registered charities, incorporated societies and nongovernmental organisations can apply provided they meet the eligibility criteria.
The original 12 week scheme ran until 9th June. For employers including sole traders who are still significantly impacted after this date it will be possible to apply for a further eight weeks for the period 10 June 2020 to 1 September 2020 (Wage Subsidy Extension Payment). You cannot apply for the extension until you have reached the end of your original 12 week subsidy (which began from the time of your application declaration).
The subsidy rates are $585.80 gross per week for full-time employees working 20 or more hours per week, and $350.00 gross per week for part-time employees who work less than 20 hours per week. This is paid out in a lump sum and covers a further eight week period starting at the date the subsidy was applied for. If you have employed new people whom you haven’t applied for the original wage subsidy for you can apply for them under the extension.
To qualify for the eight week Wage Subsidy Extension you must have suffered a 40% (rather than 30%) decline in revenue over a 30- day continuous period, compared with a comparable period in 2019.
This calculation can be a little complex so if uncertain about the comparative periods, please contact your Leech & Partners client manager.
A business receiving the Wage Subsidy must endeavour to pay employees at least 80% of their normal wages. If that is not possible, they need to be paid at least the full value of the subsidy (or 100% of their normal wages if this is less than the subsidy received for them).
The wage subsidy is a gross payment, and the relevant employee deductions should be paid from this amount (not on top of it). The employer Kiwisaver contribution and ESCT items are paid on top of the subsidy amount.
We recommend that you continue to pay your staff using the same pay period as you normally would, and not paying a single lump sum payment. A lump sum payment can have unintended tax repercussions for employees and of course will not help the business cashflow.
To apply for the wage subsidy extension, please follow the link below:
https://www.workandincome.govt.nz/covid-19/wage-subsidy-extension/how-to-apply.html
