How you apply and use the wages subsidy during the lockdown period
On the eve of our ‘lockdown’ period, many of you are wondering about the way the wage subsidy will work when you must keep your employees with a minimum of 80% of normal pay.
The fact is that some employees cannot work from home, but you must pay them 80% of their usual pay – the whole idea of the government subsidy is to keep people earning – to pay their normal expenses.
As an employer, you must find the top-up amount for the wages subsidy to keep that 80% figure (100% or 90% would be better) but 80% is the amount.
Things to remember – the top-up amount is claimable for tax, the wage subsidy is non-taxable, no need to pay tax on it – it is not claimable. The amount is a gross amount and PAYE and all deductions have to be made.
Wage subsidies are: Full time $585 Part time $350
Apply for it, receive it and pay 80% of wages to your employees for 12 weeks – this time period is recommended as the actual time is uncertain.
To work out the amount of ‘top-up’ funds you will need over the 12-week period, click on the calculator link here:
Accounting for wages using the subsidy payments
- Our advice is to pay your employees as usual through your payroll software
- We will apportion this later and code it correctly
- Put the amounts that you receive into your suspense account
If we are not doing your accounts – ask your accountant to journal the total amount of subsidy out of your wages and salary account or come back to us with a query.
How to fund the ‘top-up’ payments
(Suggestions not advice)
Pay if you have the money in hand.
You could elect not to pay your provisional tax although it would be best to pay it.
Employees are your priority so GST payments could be postponed.
There is a Government-backed loan available up the %500,000 if your turnover is over $250,000
A 6-month mortgage holiday is available.
More assistance and advice will be available shortly – we will keep you up to date on the website https://resources.wiseadvice.co.nz/cov19
Email us with your queries and take care.