Wage subsidy and Leave Payment available to support employers affected by COVID-19
How to process in MYOB
Below is a summary of the Wage subsidy and Leave Payment available to support employers affected by COVID-19. For full details see this page on the Work & Income website.
How to implement these subsidies to your MYOB payroll
Decide what can your business afford to do?
Pay 100% of the employees’ normal wage
Pay 80% of the employees’ normal wage to work a 4 day week
Redundancy (no subsidy available if you do this)
The wage subsidy is a grant for the employer. It comes as a lump sum (no GST) and will get coded in MYOB to 8-xxxx Other Income.
The leave subsidy is another grant for the employer. It comes as a lump sum (no GST) and will get coded in MYOB to 8-xxxx Other Income. The whole amount MUST be paid to the employee. The subsidy means you must endeavour to keep your employees on your payroll.
You must pay them a minimum 80% of what they get paid now.
Examples of how to Process
The Tax Treatment (this is confusing!)
It is not subject to GST.
The wage subsidy paid to the employer is not taxable. It is excluded income under Section CX 47 Income Tax Act
It is not deductible when paid by the employer as part of wages to employees.
It is taxable for the employee. It is included as part of their normal wages and subject to PAYE, Student Loan, Kiwisaver deductions.
If you receive more for Covid 19 than what you pay out to employees for Covid 19 you will need to pay this BACK to the government.
We recommend a separate General Ledger code to track the money in and out for Covid 19.
Next Steps to Take:
Meet with your employees. Any change to their contracts must be in writing.
Apply for the grant here (we can help with this)
Contact us should you need help with payroll.
Kind regards, Debbie
Call: 027 498 9551