Paying your staff and taxes

How to pay a COVID-19 Wage Subsidy August 2021 to your employees, and manage GST and tax around this. The full eligibility details and obligations are set out in the declaration, which you must read and agree to when you apply for Wage Subsidy August 2021.

Paying your staff

A Wage Subsidy August 2021 is to support you to pay two weeks of wages for your employees.

You must, from the date of your application, retain the named employees for the period you receive the subsidy.

You must use the subsidy to support paying the ordinary wages and salary of the named employees, in accordance with their employment agreements and statutory obligations, for the period you receive the subsidy.

You remain responsible for paying the ordinary wages and salary of the named employees.

For the period you receive the subsidy, you must:

  • use your best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary, and
  • pay at least the full amount of the subsidy to each named employee,

but

  • where the ordinary wages or salary of a named employee as at 16 August 2021 is lawfully below the amount of the subsidy, pay the employee that amount.

Any difference should be used for the wages of other affected staff – the wage subsidy is designed to keep your employees connected to you.

Casual employees: You can get the COVID-19 Wage Subsidy August 2021 for your casual employees for their usual hours, and you must continue to employ them for the subsidy period.

You will not make any changes to your obligations under any employment agreement, including to rates of pay, hours of work and leave entitlements, without the written agreement of the relevant employee.

Visit the Employment NZ website for information about employment law.

  • GST and tax

    Business

    Information about GST, PAYE and income tax if you're a business.

    GST: You don't have to pay GST on the wage subsidy.

    PAYE: You need to make the usual employer deductions, eg, PAYE, Student Loan, KiwiSaver, Child Support. This is because you pay the wage subsidy payment to your employee as part of their normal wages.

    When calculating PAYE deductions, do not gross up the COVID-19 Wage Subsidy August 2021 component. PAYE is deducted from the subsidy (ie $600 less PAYE, etc).

    Income tax: For most businesses, a Wage Subsidy August 2021 is classified as "excluded income" for income tax purposes. This means that as a business you don't pay income tax on a Wage Subsidy August 2021 you receive from us. You don't get an income tax deduction for the wages you pay using a Wage Subsidy August 2021. You still need to make the usual PAYE deductions when you pay your employees.

    Self-employed

    If you're self-employed, you need to pay income tax on a Wage Subsidy August 2021 you receive, as it's a contribution to your wages or salary.

    For further information on tax queries, visit the Inland Revenue website:

  • Obligations

    All COVID-19 Wage Subsidy 2021 obligations are in the declaration you agreed to when you applied.

    Read the declaration for the current Wage Subsidy

    The information on this page is a summary of the eligibility criteria and obligations set out in the declaration for a COVID-19 Wage Subsidy 2021.

    Find out about your obligations when you get a COVID-19 Wage Subsidy 2021.

    It does not replace the terms of the declaration and if there are any differences between this page and the declaration, the declaration prevails.