Blog

Number Up

Wage & Leave Subsidy: Tax Treatment

Please note that the wage subsidy or leave payment scheme is not administered by IRD but by Ministry of Social Development.

Tax Treatment of the Wage Subsidy
  • It is not subject to GST. An order in Council is currently being drafted to treat it as exempt (Section 5(6E)(B) (iii GST Act).
  • The wage subsidy paid to the employer is not taxable. It is excluded income under Section CX 47 Income Tax Act.
  • It is not deductible when paid by the employer as part of wages to the employees.
  • It is taxable for the employees. It is included as part of their normal wages and subject to PAYE, Student Loan, Kiwisaver deductions etc.
Tax Treatment of the Leave Payment Scheme
  • The leave payment is not subject to GST. An order in Council is being drafted to treat it as exempt (Section 5(6E)(B) (iii GST Act).
  • The leave payment for self isolation paid to employees or self employed persons is subject to tax as it is paid to replace taxable income.

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email
Scroll to Top