On the eve of our ‘lockdown’ period, many of you are wondering about the way the wage subsidy will work when you must endeavor to 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
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, PAYE and GST although it would be best to pay it.Employees are your priority
- There is a Government-backed loan available up to $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 firstname.lastname@example.org if you need any help
Here is a short video explaining how the above would work:
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