Self-employed persons and other individuals, upon application, may have been eligible for a Wage Subsidy Scheme payment paid by the Ministry of Social Development (MSD) if they had been affected by COVID-19.
Leave support payments for self-isolation as a result of COVID-19 were also available to self-employed persons/other individuals who satisfied the eligibility criteria and were prevented from working.
'Other individuals' are people who received a subsidy payment without tax deducted at source, for example: partners, trustees, non-PAYE shareholder-employees, Look-through company owners, students, and home-based childcare providers.
There are specific tax issues for the self-employed and other individuals to consider.
Accounting for tax on the wage subsidy and leave subsidy payments
The COVID-19 wage subsidy and leave payments from MSD received by self-employed persons/other individuals are considered a compensation payment under section CG 5B and must be included as income in your IR3/IR3NR return:
- in the 2020 year in the "Other income" box
- In the 2021 year onwards in the “Government Subsidies” box.
For 2022 income tax returns, receiving a wage or leave subsidy is no longer a requirement for filing an IR3. The wage and leave subsidy payments related to Covid-19 will be included on individual income tax assessments in the government subsidies box. You will still need to file an IR3 if you have other income that requires an IR3 return to be filed. If required to file an IR3, the wage and leave subsidies will pre-populate to the government subsidies box of the IR3 return.
You can find examples of various scenarios applying to self-employed persons and other individuals in Accounting for the wage subsidy - IR1251.
2021 Income Tax Returns
Accounting for the wage subsidy - Example scenarios for individuals IR1251 Sep 2021 (PDF 171KB) Download form2022 Income Tax Returns onwards
Accounting for Covid-19 subsidies - Example scenarios for individuals 2022 Income tax returns onwards IR1251 Apr 2022 (PDF 233KB) Download guideSpreading of the subsidy payments
Where customers received the initial wage or leave subsidy payment which was for 12 weeks before 31 March 2020, as only 1 or 2 weeks would have related to the 2020 tax year it can be spread over the 2020 and 2021 income tax returns.
Similarly, if customers received the March 2021 (two weeks) wage subsidy payment prior to 31 March 2021, depending on the date received it may be able to be spread over the 2021 and 2022 income tax returns.
Jenny applied for the initial wage subsidy and received payment ($7,029.60) on 24 March 2020. Of the 12-week payment received, only one week relates to the 31 March 2020 tax year. Jenny is required to return 1/12th of the payment ($585.80) in the 31 March 2020 income tax return. The remaining 11 weeks ($6,443.80) is required to be returned in the 31 March 2021 income tax return.
Adrian applied for the March 2021 wage subsidy. He received payment ($1,171.60) on 13 March. As the payment was for two weeks and this all falls into the 2021 tax year, he is required to include this full payment in his 31 March 2021 tax return. Nothing can be allocated to the 2022 tax year.
John received a full-time wage subsidy payment of $7,029 on 3 April 2020. After review by MSD, it was determined he was only entitled to the part-time subsidy ($4,200). John was required to repay MSD $2,829. John repaid this amount on 1 February 2021. John will declare $4,200 ($7,029 - $2,829) in the Government Subsidies key point in his IR3.