FAQ – COVID-19 in the workplace
We are fielding a lot of questions from clients during this time regarding wage and leave subsidies.
There are a number of questions for which there is no definite answer yet – marked as pending – as soon as we have further information we will update this & our Facebook page”.
Below are some of our frequently asked questions and answers –
What is the tax treatment of any wage and leave subsidies we receive?
Any payments received as part of the COVID-19 response package are not GST-able and are excluded income to the employer. Subsidy payments made to employees are taxable to employees, but not deductible for income tax to employers. For the self-employed the payment will be taxable.
We have employees working more than 20 hours per week, but they earn less than $585.80. Do they now receive the $585.80 during this time?
My employee wants to use annual leave over this time and receive 100% of their pay, but we have applied for the wage subsidy, how does this work?
If the employee wants to take annual leave to continue receiving their normal wage, they can use holidays that have been accrued. At the discretion of the employer, holidays in advance may also be taken if both parties agree. It is still unclear how the wage subsidy and annual leave will work together, and we will update this once it becomes clear.
Unless employees are sick, they cannot use sick leave unless they are sick.
When we enter Alert Level 4, our revenue will dry up. We want to retain our workers for when we are able to return to work, but we can’t afford to pay 80% over this time even with the wage subsidy. Can we agree to pay a lesser amount?
At this point in time, the wording says you must make your best endeavours to pay 80%. There is no definition regarding what this means e.g. should you be asking for a bank loan to top up to 80%. Employers must document their best endeavours.
What is 80% of normal income – does it include overtime?
Yes overtime, commissions and shift allowances are included as part of the calculation of normal income.
What are essential services?
If an over 70 employee self-isolated BEFORE alert 4 was entered, are they eligible for the wage or leave subsidy?
Can you use the excess of one employees wage subsidy (who receives less than $585.80) to subsidise one who earns more than this?
When applying for the wage subsidy, we are required to enter each employee one by one. Will there be a bulk upload option?
Yes, MSD are working on this.
We are an essential service and a staff member has a high risk family member at home. Are they covered by the leave payment?
Once everyone is out of our place of business, am I able to return to clean or complete payroll?
No, unless you are an essential service you need to remain at home.
WHAT YOU NEED TO KNOW
You must ask your employees for their permission to apply for wage and leave subsidies and have this in writing.
Any reduction in normal pay MUST be agreed to in writing by employees.
When applying for wage and leave subsidies you will be asked at a later date to show drop in income and other records used in the application.
Kiwisaver contribution holidays are now called Saving Suspensions. To apply for a Savings Suspension you can either apply online if you are registered for MyIR and going through to your Kiwisaver, or complete a Savings Suspension request form searching for KS6 on the Inland Revenue website www.ird.govt.nz
Given the rapidly changing situation, please check our website or our facebook page for updated information. We will be sending out newsletters with regular updates, but please contact any of our team with any queries you may have.