May Book 2020 May 2020 - Page 26

EDITORIAL Covid -19 Suppor QUESTION: I have lost a lot of my income due to events not going ahead. Is there any assistance I can apply for? ANSWER: If you have experienced a loss of income of 30% or more then you will be able to apply for the Covid-19 Wage Subsidy. This means: • your business has experienced a minimum 30% decline in actual or predicted revenue over the period of a month, when compared with the same month last year, and • that decline is related to COVID-19. QUESTION: How much is the subsidy? ANSWER: The subsidy is a lump sum payment. It covers 12 weeks and pays $585.80 per week for full-time workers and $350.00 per week for part-time workers per employee. QUESTION: Are there any other conditions for applying for the subsidy? ANSWER: To apply you must be a New Zealand registered company and be working in New Zealand. In addition, you must pay the subsidy received on to employees. QUESTION: I have received the subsidy – does the payment include GST? ANSWER: No the subsidy does not include GST. If the company is GST registered then when you are coding the income, it should be recorded as EXEMPT income, meaning that it is not included in your GST return. In addition, the income is NON-ASSESSABLE, meaning that you do not pay income tax on the Subsidy received. 26 • NZ MUSIC COMMISSION MAY BOOK 2020 You will need to add a new code ‘Non-Assessable Income - Covid-19 Wage Subsidy’. If you have an accountant you may want to check with them which code number to use. QUESTION: Do I still make PAYE deductions when I am paying the subsidy on to staff? ANSWER: Yes, you should still make all the normal deductions that you make when you normally pay staff such as PAYE, Student Loan, Kiwisaver etc. QUESTION: When I am paying on the wage subsidy to employees, is this still 100% tax deductible to the business? ANSWER: No, the amount of the wage subsidy received and then paid on to staff is not deductible for tax purposes. So in summary, when the subsidy is received it is not taxable income and then when it is paid on to staff it is not a tax deductible expense. It is intended that there is no tax consequences of receiving the wage subsidy for the company. The subsidy is taxable income to your employees once it has been paid. Your accountant will make all tax adjustments whilst preparing your end of year tax return to ensure that the correct tax treatment has been applied. QUESTION: What if my company is receiving the wage subsidy for myself but I haven’t paid it to my personal bank account? ANSWER: This will become taxable income in your personal income tax return at the end of the year. Your accountant will record it as income in your tax return for you. The subsidy will still be non- assessable income and a non-deductible expense in the Company.