30th March, 2020

Updates to wage subsidy scheme in time for broad-scale lockdown

Following the release of several stimulus measures for employers and individuals, the Ardern Government has moved to amend its wages subsidy scheme to combine with leave subsidy payments.

UPDATE (6/4/20): We have since compiled an updated list of all New Zealand stimulus measures so far.

The New Zealand Government has once again amended its wages subsidy scheme, and has combined the program with its leave subsidy payments.

Previously, the Federal Government offered a sick leave subsidy, and a separate wages scheme. These have now been brought together into one payment.

The trigger for this change was the announcement of Alert Level 4 restrictions.

Additionally, the Government made it very clear that it doesn’t want to see any businesses skimming off the top of any wage subsidy before passing on to employees.

“This scheme is a high trust system in order to ensure that money reaches workers and businesses as soon as possible.

“We urge employers to use the money provided by the scheme for the purpose it was intended, to support the wages of their employees,” Minister of Finance Grant Robertson said late last week.

Applications for the subsidy are made on the Work and Income website.

How does the new wage subsidy scheme work?

The modified wage subsidy scheme is designed for companies to maintain an employment connection and ensure an income for affected employees, even if they aren’t working.

These categories of employees are eligible:

  • Self-employed
  • Contractors
  • Sole traders
  • Registered charities
  • Incorporated societies
  • Post-settlement governance entities

How much are the subsidies?

The payment rates are unchanged from the previous scheme.

These are:

  • $585.80 (gross) per week for full-time employees, where full-time is 20 hours or more per week
  • $350 (gross) per week for part-time employees, where part-time is less than 20 hours per week

The subsidy is a one-time lump sum payment, to cover 12 weeks.

How can I prove that I’m eligible?

Any business must show they have a 30 percent drop in revenue attributable to COVID-19.

Difference between the wage rate and the subsidy rate

The New Zealand Government has made clear that businesses should pay at least 80 percent of usual wages. But if that isn’t possible, they should pass on the entire wage subsidy.

How to process wage subsidies in MYOB products

If you’re an MYOB payroll user, then you should have everything you need to process the Government’s wage subsidy from your software.

Click one of the below to find a guide on how to process wage subsidies in the corresponding MYOB package:

MYOB Essentials

ACE Payroll

NZ Payroll

Other important information

If you plan on applying for the New Zealand subsidy, this is what you should know:

  • Make sure your IRD details are fully updated
  • If you’re an “essential” business, which means you’re allowed to stay open during Level 4 lockdown, you can still access the subsidy
  • If you already applied for the original wage subsidy, you need to use that first under the original agreement
  • The cap of $150,000 per business has been removed
  • If your employee resigns, you need to notify Work and Income immediately

For additional information, the IRD website offers details on tax relief, while the Government has also set up a dedicated page covering financial support measures.