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Spreading of the wage subsidy payment

30 April, 2020

Spreading of the wage subsidy payment

Many self-employed people will receive the wage subsidy in the 2020 tax year, but (in most cases) only 1 or 2 weeks of it relates to the 2020 tax year. There is an issue about whether the wage subsidy received by a self-employed person is taxable in the year it is received or spread over the 12-week period.

Inland Revenue’s position is that these payments qualify as ‘compensation’ for the purposes of section CG 5B and can therefore be returned in the income year which the income being replaced would have been derived. In practical terms this means an amount received prior to 31 March 2020 can be spread if it relates to income that would have been derived after 31 March (the 2021 year).

 

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