How to Code Your COVID-19 Wage Subsidy and Payroll

 Current at 1 April 2020

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Once you have received your wage subsidy there are a few interesting challenges around how to code the wage subsidy, and how to code the resulting payments to employees (and business owners) correctly in your accounting system, these arise for several reasons: 

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   1.  The total subsidy is for 12 weeks but relates to the financial year ending 31 March 2020 and 31 March 2021 (if you are a March balance date business), does it need to be allocated to each income year for accounting purposes? 

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   2.  The subsidy relates to employees and business owners, employees are on the payroll whereas business owners may not be. Business owners could be shareholder employees or self-employed. Does this result in different accounting coding? 

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   3. From a tax perspective the wage and leave subsidy are not subject to Income Tax or GST, how do I code this to ensure I do not pay GST or Income Tax in error? 

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   4.  When the business passes the payment on as wages, the business does not get a deduction for income tax purposes. How do I ensure I get this right? 

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  5.  If an employee leaves, how do I then account for the repayment back to the Government?

 

We have split the various scenarios into different sections, click on the link to the relevant section for your situation:

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   1.  If you are an employer and your payroll system is linked to your accounting system (eg Xero & Flexitime) download this Guide 

 

If you also have a working owner that received a wage subsidy but does not receive a PAYE salary, you will also need to complete the steps in this Guide 

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   2.  If you are an employer and your payroll system is NOT linked to your accounting system (eg MYOB payroll) download this Guide 

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If you also have a working owner that received a wage subsidy but does not receive a PAYE salary, you will also need to complete the steps in this Guide

 

   3.  If you have no employees and do not pay yourself a PAYE salary download this Guide 

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If you have any questions, need immediate assistance please email us at covid19@velocite.co.nz