BUILDING A POSITIVE BUSINESS COMMUNITY

Wage & Leave Subsidy: Tax Treatment

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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.

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