John Cantin, our Co-Head of Tax Policy answers your questions on the Government's Support and Stimulus Response Package. Please note as further announcements are made over the coming days, we will update this page accordingly.
Last updated: 21 August 2020
Wage subsidy
We understand that this means that the business must be making their best endeavours to make up to the 80%, but if the business cannot subsequently do this (e.g. if creditors and suppliers require payment or debtors withhold payment) a reduction to the $585 payment may be permitted.
The scheme covers employers, contractors, sole traders, the self-employed, registered charities, incorporated societies, non-governmental organisations and post-settlement governance entities.
The best answer we have is that individual companies qualify but for more complex groups, a consolidated view can be taken. However, a consistent approach should be applied. If the consolidated view is taken of the revenue reduction for example (to ensure that all employees are covered), individual companies should not apply using only their revenue.
An Order in Council has confirmed that the subsidy is exempt from GST.
Inland Revenue has advised:
Government and officials have advised that the scheme is a high trust model. This means there is little front-end checking before payments are made. However, wage subsidy claims are subject to a verification programme and repayment may be required if MSD considers the eligibility criteria are not met. Accordingly, you should be prepared to respond to inquiries. The key areas that you should document are:
Other areas of potential audit will include receiving the consent of employees and compliance with existing employment agreements.
For comprehensive information on your obligations in applying for the wage subsidy, please see here to link to the obligations as set out on the WINZ website.
The Privacy Commissioner has advised that consent is unnecessary to disclose employee information to public sector agencies due to a national emergency being declared. However, MSD has not yet updated its website for this.
Despite consent not being required while there is a national emergency, we recommend sending an email to employees advising them of the application and of the personal information that will be disclosed to MSD (and potentially other agencies) and that they are able to request access to their personal information under the Privacy Act.
Yes, payments to employees remain subject to PAYE, KiwiSaver and other relevant deductions.
The application process is relatively straightforward. It requires:
Leave payments (ceased 4:00pm on 27 March 2020)
The effect of Alert 4 applying from 11:59pm on Wednesday 25 March 2020, is uncertain. The leave subsidy criteria include a requirement to register with the Ministry of Health for those self-isolating and unable to work from home. It is unclear whether employees will be required to register or whether they will be treated as such. However, we understand that claims were being accepted until the announcement that the leave subsidy scheme ceased.
An Order in Council has confirmed that the subsidy is exempt from GST.
Inland Revenue has advised:
General tax questions
Instalment arrangements can be made through MyIR or through agreement with Inland Revenue’s debt recovery team. Further, Inland Revenue may write off core tax if the taxpayer can demonstrate serious hardship.
On 25 March, Inland Revenue’s media release advised they would waive late payment penalties and interest. Inland Revenue has released further guidance outlining the eligibility requirements for remittance of penalties and interest:
If you can pay, you should. Further, if tax will be paid late or not at all, contact Inland Revenue as soon as possible to make arrangements. We can provide assistance with this.
Inland Revenue has confirmed that, using her care and management power, the Commissioner will close any reviews or other compliance activity at 31 March 2024 if the return is filed before 31 May 2020. She has provided three conditions on that, the return cannot be: