FAQs: Covid-19 Wage Subsidy

Do you have a question about the Covid-19 Wage Subsidy? Find the answer here.

Updated: Wednesday 27th September 2021

Auckland is at Alert Level 3. These settings will be reviewed on Monday 4 October.

The rest of New Zealand is at Alert Level 2. These settings will be reviewed on Monday 4 October.

The Covid-19 Wage Subsidy and Covid-19 Resurgence Support Payment are back.

What is the Wage Subsidy Scheme?

This is one of the Covid-19 response mechanisms to help businesses respond to Covid-19. It is a lump sum, tax-free payment for employers to keep paying staff and protect jobs. 

How much is the wage subsidy payment?

There are two separate rates for full time and part time employees. This may change based on inflation over time. Current rates can be found on the Work and Income website.

Covid-19 Wage Subsidy August/September 2021

The Covid-19 Wage Subsidy will be paid at a flat rate of:

  • $600.00 for full-time employees
  • $359.00 for part-time employees.

What period do the wage subsidy payments cover?

The length of the time covered by the Wage Subsidy Scheme will reflect the current Covid-19 situation. The original Wage Subsidy Scheme lasted 12 weeks, although subsequent periods have been considerably shorter.

Refer to the Work and Income website for information relevant to the current situation.

Covid-19 Wage Subsidy August/September 2021

On 17th August 2021 the government announced the Wage Subsidy Scheme will cover an initial 2 week period. Lump sum payments will be made covering the full 2 week period.

Applications for a third round of Wage Subsidy are open from Friday 17th September 2021.

Am I eligible for the Wage Subsidy Scheme?

Traditionally, businesses have needed to have experienced or expect to experience a 40% decrease in revenue during the specified period. You can check if you're eligible on the Work and Income website. 

How do I apply the wage subsidy payment to my payroll?

If you’re a recipient of the Covid-19 Wage Subsidy Payment, you continue to process your pays as normal. Use the Standard Pay type, which you regularly use.

Tracking your use of the subsidy is best done in your accounting software.

Do I transfer the entire lump sum payment to Thankyou Payroll?

You don't need to transfer the wage subsidy lump sum to Thankyou Payroll. Only transfer the Total Deposit highlighted when processing a pay.

I am paying my employees 100% of their wages. Do I need to change anything in Thankyou Payroll?

If you are paying your employees 100% of their wages, add their normal hours into their timesheet.

I will be paying my employees 80% of their wages. Do I need to change anything in Thankyou Payroll?

Yes, you'll need to adjust their hours to reflect 80% of their hours worked. Do not adjust the pay rate - adjust the hours worked. You should distribute the reduced hours evenly across the days worked.

For more information and to see an example of this, check out this article.

I cannot afford to pay my employees 80% of their wages. What should I do?

If you are receiving the Covid-19 wage subsidy, you must try your hardest to pay your employees at least 80% of their usual wages while you’re receiving the subsidy for them. If that isn't possible, you need to pay at least the subsidy rate. 

We'd recommend seeking legal advice if you have any further questions about this.

Will I be taxed on my wage subsidy payment?

The subsidy is a tax-free for the business. Employees will still have PAYE deducted from their gross wages by Thankyou Payroll.

Can I use the wage subsidy payment to cover my employer Kiwisaver contributions?

The wage subsidy payment can only be used to cover your employee's wages, not Kiwisaver contributions.

Got a question? Email us at help@thankyoupayroll.co.nz or call us on 0800 895 146 for further assistance.