The government announced a new COVID-19 Short-Term Absence Payment (STAP) on 8 February 2021.
The purpose of the payment is to support both employers and those who are self-employed who need to miss work if they are self-isolating waiting on a COVID-19 test result and cannot work from home.
The STAP is a one-off payment of $350.00. No GST applies to this payment.
The amount passed onto the employee is excluded income so will not be included either as income or claimed as a deduction on their income tax return.
The employee will pay tax on the income they receive as normal by PAYE.
Any excess amount that is not passed onto an employee is taxable and should be recorded as such and included in the employer’s income tax return.
The STAP is paid on top of an employee’s normal salary or wage for the pay period it’s received in. PAYE and other deductions such as student loans or KiwiSaver will be made from the gross amount.
Self-employed workers need to declare the STAP as income on their IR3 return.
More information about the STAP is available on Inland Revenue’s site. You can access that by clicking on the link here.
How do you Apply for the Payment?
As with the wage subsidies paid by the government in 2020, the STAP is being administered by Work & Income. You can find more information about applying for the payment here.