employmentIRDTaxwage subsidy

Current Times Update 5

Day 5 has arrived .. the sun is out again. Hope you had a good Saturday and Sunday (the concept of weekends now is lost at this time).

No new updates from the Government in relation to further business support packages – no word on when if at all anything will be announced. Have some words from IRD re tax payments, returns etc which is below.

Firstly though wages ..
Again by now you should have applied for the wages subsidy. Check out our blog posts for the criteria, process and links. From our experience, the subsidy is getting paid out quite quickly.

On Friday the Government made an announcement to remove the leave subsidy (basically those returning from overseas – no longer applicable) and to clarify some aspects of the Wage subsidy which are:

  • Employers receiving the wage subsidy must make every effort to pay employees at least 80% of their wages, and if they cannot do this, they must pass on the full wage subsidy to employees
  • Employers cannot terminate an employee while receiving the wage subsidy
  • Names will be published of all employers receiving the Wage Subsidy
  • All legal obligations apply including paying staff for hours worked if over and above 80% of their wages/salary,
  • Even if your business is not operating currently, you may be still eligible for the Wage Subsidy

The focus has now shifted with the wage subsidy to saving jobs hence the the last resort option to only payout the wage subsidy amount and employees cannot be terminated if the wage subsidy has been received for them.
We have had some questions around part-time employees and the subsidy received ($350 gross) which may be more than 80% (or 100%) of their normal pay .. what happens? There has been conflicting opinions for this but following Friday’s announcement the consensus is that the the part-time employee will get 100% of their normal wage if that amount is under the subsidy amount otherwise it is the subsidy amount. Any excess will go into the “kitty” to top up other affected staff. This is different to full-time employees.
For options on paying full time employees please check out here.

Minimum Wage Increase – please do not forget the minimum wage increase that takes place from 1 April 2020. This has not been put on hold. Check out the new rates here.

Now for the IRD .. below is the official word so far from the IRD –

Tax relief and income assistance is available to people affected by the downturn in business due to the COVID-19 (novel coronavirus). We have a range of ways to help depending on your circumstances. If you have a tax agent, they should also be able to help.

If your business is unable to pay its taxes on time due to the impact of COVID-19, we understand – you don’t need to contact us right now. Get in touch with us when you can, and we’ll write-off any penalties and interest.
However, it will help if you continue to file. This information is used to make correct payments to people and to help the Government respond to what is happening in the economy.

So at this stage there is no official deferral on the payment of tax, GST or PAYE .. therefore 7 April tax payment is expected to be paid. Also, as the statement states, they still expect the required returns to be filed irrespective of payment.
What we will do is wait for another couple of days and then provide you with the options and steps to be taken specifically with the tax payments that are due.

Any questions please email us.

Take care and keep safe.