Coding the August 2021 Wage Subsidy

Last year coding of the Wage Subsidy was slightly different as it covered a larger period (12 weeks) and financial year-end. See our instructions before for how to code the August 2021 wage subsidy received:

1. If you are a Contractor or Self-Employed

Ensure you have the following chart of account code set up in your accounting system

      Name: COVID-19 Wage Subsidy Received

      Type: Revenue

      GST Type: No GST

Coding of Wage Subsidy Received from the Ministry of Social Development

In your accounting system, code the funds that you have received from the government to the code above: COVID-19 Wage Subsidy Received

2. If you received a wage subsidy for a working owner (included with your employees’ subsidy) that does not receive a PAYE salary from the business

Ensure you have the following chart of account code set up in your accounting system

      Name: COVID-19 Wage Subsidy Received

      Type: Revenue

      GST Type: No GST

Coding of Wage Subsidy Received from the Ministry of Social Development

In your accounting system, code the funds that you have received from the government to the code above: COVID-19 Wage Subsidy Received

Please note: no physical payment is required to be paid to the shareholder for the wage subsidy

3. If you use a payroll system that is NOT linked to your accounting system

Ensure you have the following chart of account codes set up in your accounting system

  1. Name: COVID-19 Wage Subsidy Received

      Type: Revenue

      GST Type: No GST

   2. Name: COVID-19 Wage Subsidy Paid

       Type: Expense

       GST Type: No GST

Coding of Wage Subsidy Received from the Ministry of Social Development (MSD)

In your accounting system, code the funds that you have received from the government to the code above: COVID-19 Wage Subsidy Received

Coding of Wage Subsidy Paid to Employees

1. When you reconcile the wages payment & PAYE payment in your accounting system these will both be coded to wages expense code.

2. After you have processed your payroll, you will need to enter a journal in your accounting system for the total amount of the wage subsidy paid to your employees in that pay run

Description: Transfer of wage subsidy paid to employees for the period ending [date of payroll period]

Date: [Date payroll is paid]

                     Code                                       Amount

Debit:  COVID-19 Wage Subsidy Paid          $xx

Credit:  Wages Expense                                $xx

Please note: You can choose to do step two above, or we will ensure this journal is done when we complete your 2022 Financial Accounts.

4. If you are an employer and your payroll system is linked to your accounting system

Ensure you have the following chart of account codes in your accounting system

  1. Name: COVID-19 Wage Subsidy Received

      Type: Revenue

      GST Type: No GST

  2. Name: COVID-19 Wage Subsidy Paid

      Type: Expense

      GST Type: No GST

Coding of Wage Subsidy Received from the Ministry of Social Development (MSD)

In your accounting system, code the funds that you have received from the government to the code above: COVID-19 Wage Subsidy Received

Coding of Wage Subsidy Paid to Employees

1. You will need to make sure the pay types in your payroll system are linked to the correct codes in your accounting system.

       • When you process your payroll and are splitting the wage subsidy amount in your system, map the wage subsidy payment to the new COVID-19 Wage Subsidy Paid code and the employer’s contribution will be coded directly to the wages expense code (as usual)

       • When the payroll payment comes into the bank code this is against the automated journal created from the payroll system.

If you require our support please email our team at covid19@velocite.co.nz