Commonly Asked Questions Regarding Wage Subsidy

These are some of the commonly asked questions we have encountered regarding the COVID-19 Wage Subsidy. We will post more as we get them. Question: Is the wage subsidy taxable? Do we need to deduct tax before paying the subsidy? Answer: The wage subsidy received by the employer is not assessable income nor is it subject to GST. The employer however will need to deduct PAYE, Student Loans, Kiwisaver etc from the subsidy before paying the subsidy out as wages. The employee only gets the net amount. A full time employee (working 20 hours or more a week) will receive $585.50 less tax per week while part time employee (working less than 20 hours a week) will receive $350 less tax per week. Sole Traders and Contractors receive the subsidy direct from the government so they will need to return the wage subsidy as income when they file their tax return at the end of the financial year.