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Budget 2024: The Government has announced FamilyBoost, a proposed new childcare payment to help eligible families with the rising costs of Early Childhood Education (ECE). Find out more: Beehive.govt.nz

We're getting web messages asking us to remove taxable COVID-19 subsidies from the 'Government Subsidies’ field of shareholder-employees' 2022 income summaries and in some cases, to move the payments to the company's income profile. This update explains how to treat the following payments.

  • Wage Subsidy Scheme (WSS)
  • Leave Support Scheme (LSS)
  • Short-term Absence Payment (STAP)

Shareholder-employees who take regular salary or wages

If the shareholder-employee takes a regular salary or wage from the company in the relevant subsidy periods, the company has to do the following:

  • use the WSS, LSS or STAP to pay the regular salary or wages
  • deduct tax at source
  • include the relevant information on the Employment Information forms.

Some shareholder-employees who take regular salary or wages have applied for a COVID-19 subsidy on a self-employed application rather than an employer application, and this may cause the subsidy to appear in their 2022 income summary.

If your client applied as a shareholder-employee and received salary or wages but Government subsidies also appear in their income summary, it may need amending - send us a web message with the subject line 'Income summary – wage subsidy correction'.

Shareholder-employees who do not take a regular salary or wage

Where the shareholder-employee does not take regular salary or wages, the COVID-19 subsidy must be paid to them as a shareholder salary at year-end and declared in the Government subsidies field. This should appear in their income summary and pre-populate to their automatic Individual income tax assessment or Individual income tax return - IR3 for the 2022 year. This is required even if the company is in a loss position or if the shareholder salary allocation would put the company into a loss position (due to the requirements of the WSS, LSS and STAP, and declarations made at the time of application).

These amounts will not be removed from the income summary, as they are required to be reported in the Government subsidies field of their assessment or return. Please do not send us requests to remove this from their income profile or add to a company income profile.

Completing the IR3 or IR3NR

If the shareholder salary amount covered by the taxable COVID-19 payments has not pre-populated to the Government subsidies field, you can add in the income. If the shareholder salary is more than the subsidies received, leave the COVID-19 subsidy in the Government subsidies field and report the balance in the 'Shareholder-employee Salary' field on the return. Refer to the shareholder salary example in our 'Accounting for the wage subsudy - Example scenarios for individuals - IR1251' guide.

Last updated: 13 May 2022
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