The COVID-19 Wage Subsidy August 2021 is being paid in two-week periods. Since the alert level change on 17 August 2021, several rounds of the scheme have been announced.
Each round is a new application, and businesses must make sure they meet all the eligibility criteria for each application. You can apply for more than one round of the wage subsidies, two weeks after your previous application, if you meet eligibility criteria.
Applications for the Wage Subsidy August 2021 #2 open Friday 3 September 2021.
With the initial two-week COVID-19 wage subsidy closing on 2 September 2021, the Government has approved a second round of subsidy payments to help support employers and self-employed people throughout New Zealand affected by the level 3 and 4 lockdowns.
Unlike the scheme that operated in March 2020, the Wage Subsidy August 2021 scheme requires businesses to reapply for each fortnightly payment.
Businesses can apply for support if they experience or expect to have at least a 40% decline in their revenue between 31 August and 13 September, when compared to a typical 14-day consecutive period of revenue in the six weeks immediately prior to the move to alert level 4 on 17 August 2021.
The wage subsidy will cover a two-week period at the rate of $600 a week for each full-time employee retained and $359 a week for each part-time employee retained.
Businesses that applied for the initial two-week wage subsidy payment can apply for the second two-week payment two weeks after the previous application date. For example, if you applied on 23 August 2021, you could apply for a second subsidy payment on 6 September.
Work and Income won’t be accepting early applications as each payment is for two weeks.
Eligible businesses that didn’t apply for the initial wage subsidy can apply for the second round from 3 September.
As well as the wage subsidy, you may be able to get the Resurgence Support Payment (RSP) to help with fixed costs like rent. Applications for the RSP for businesses affected by the 17 August alert level change are currently open and will remain open for one month after a nationwide return to alert level 1. Our recent article on what COVID financial support is available for businesses affected by the latest lockdown provides more information on the current support measures for businesses and workers.
The wage subsidy and tax
For most businesses, the Wage Subsidy is classified as “excluded income” for income tax purposes, therefore you don’t pay income tax on the payment. You also don’t get an income tax deduction for the wages you pay using the subsidy. You will still need to make the usual PAYE deductions when you pass it onto your employee.
Self-employed people will need to pay income tax on the wage subsidy received, as the payment replaces a loss of earnings.
Employees will need to pay tax on their wage subsidy payment as it’s paid to them as part of their normal wages.
We’re here for you
We continue to support our clients through this challenging period with key business and tax advice to answer your business-related questions and guide you through the COVID-19 financial support measures. For the latest COVID-19 updates, visit our Resource Page.
Should you need any additional support, please contact your local William Buck advisor – we’re here to help.