RSM New Zealand

COVID-19 - Breakdown of Government Relief Package

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On Tuesday we released an overview of the Government's Covid-19 Tax proposals. They have initiated two forms of support for employers to provide immediate relief to those affected by COVID-19; a Wage Subsidy and a Leave Payment.

The following has been released by Work and Income:

Wage Subsidy
The Government has put together a COVID-19 Wage Subsidy for employers in all regions. It’s to support your business if you're impacted by COVID-19 and face laying off staff or reducing their hours because of COVID-19.

Who can get it?
If you're an employer, contractor, sole trader or self-employed, you may qualify to get the COVID-19 wage subsidy.

To qualify:

  • Your business must be registered and operating in New Zealand
  • Your employees must be legally working in New Zealand
  • The business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19
  • Your business must have taken active steps to mitigate the impact of COVID-19
  • You must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period

How much you can get?

  • The COVID-19 Wage Subsidy will be paid at a flat rate of: $585.80 for people working 20 hours or more per week or $350.00 for people working less than 20 hours per week;
  • The subsidy is paid as a lump sum and covers 12 weeks per employee;
  • This subsidy is for wages only. It's to help you keep your staff employed while you consider changes that may be needed while the disruption continues, and to ensure the future viability of your business. 

The maximum subsidy that can be paid to a business was previously $150,000. The Government has removed the cap on wage subsidies that can be paid to employers affected by COVID-19. This applies to all New Zealand employers, contractors, sole traders, self-employed people, registered charities and incorporated societies. You are now able to apply for a wage subsidy for all your staff.

If you have already applied for and been granted the wage subsidy for your employees and MSD has capped the amount paid, you don’t need to do anything further. 

If you have applied for the wage subsidy for your staff, and claimed only enough to meet the cap, once you have used this subsidy, you can reapply.

From 17 March 2020 the COVID-19 Leave Payment will be available to support people financially if they need to; 

  • Need to self-isolate in line with Ministry of Health Guidelines and have registered as needing to self-isolate with Healthline and cannot work from home;
  • Cannot work because they are sick with COVID-19;
  • Cannot work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19; 
  • Employers can apply for this more than once; 
  • The leave payment  will be paid to employers who have eligible employees and they must pass the payment onto their employees in full.

The COVID-19 Leave Payment will be available for eight weeks from 17 March 2020.

To qualify:
If you are an employer, contractor, sole trade or self-employed, you may qualify to get the COVID-19 Leave Payment. COVID-19 Leave Payment covers full-time, part-time and casual employees, and contractors who are legally working in New Zealand, and who:

  • Need to self-isolate in line with Ministry of Health Guidelines and have registered as needing to self-isolate with Healthline and cannot work from home;
  • And their self-isolation is not due to the employee leaving New Zealand from the 16th of March 2020 and having since returned;
  • Or cannot work because the person has been diagnosed with COVID-19;
  • Or cannot work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19.

How much you can get?

The COVID-19 leave payment will be paid at a flat rate of: $585.80 to a person working 20 hours or more per week or $350.00 to a person working less than 20 hours per week.

Each payment an employer recieves is valid for 14 days where that employee must self isolate. As people may be required to self-isolate more than once, employers will be able to apply for this on an ‘as needed’ basis. The leave payment can be paid for the entire period an employee is sick (or looking after a dependent person who is sick) with COVID-19 but the employer must apply every 14 days.

Further information and definitions of the qualification criteria can be found on the Work and Income Government website.

Application Process

To complete the application form you will need the following information:

  • IRD Number
  • New Zealand Business Number (NZBN)
  • Business contact details

You will also be required to discuss the application with the employees you wish to include on your application and ensure you receive consent to supply their details on the application.

Employee information required is:

  • Name, Date of Birth and contact details
  • IRD number
  • Employment status (i.e. more or less than 20 hours of work per week)

In order to apply you will also need to make a declaration of your eligibility to the subsidy or payment.

For the Wage Subsidy this includes a confirmation that your business has experienced or is forecast to experience a 30% or more decline in revenue between Jan 2020 and 9 June 2020 that is a direct result of COVID-19. At this stage this application is being administered under a high trust model and employers will not be asked for verification before the subsidy is approved.

However we strongly recommend you prepare some form of report or forecast that can verify your eligibility and continue to monitor this. Upon application you will also declare that you agree to notify any changes in circumstances and repay any amounts you are not entitled to.

The Ministry of Social Development will have the ability to check applications and verify the information at a later date. Any applications filed under false  or misleading information can be subject to a fraud investigation.

Application forms can be found:

  • Employer - here
  • Self employed - here

If you're not sure how to calculate your revenue, have further questions or need assistance applying, then please contact us as we have a team waiting to assist you.

OTHER IMMEDIATE IMPACTS FOR BUSINESSES

Tax payment planning
With upcoming terminal tax due 7th April and provisional tax due 7th May, you may be experiencing financial hardship or cash flow worries caused by the Covid-19 outbreak. The Government has allowed the Commissioner of Inland Revenue to cancel use of money interest on underpayment of tax caused by the outbreak of the virus.

Once legislation is passed, it is likely you’ll need to let Inland Revenue know you have been significantly affected by the COVID-19 outbreak and that you’re unable to make your payments by their due date.

Other options available could be setting up a payment installment plan with Inland Revenue or using a tax pooling agent such as TMNZ to mitigate or reduce the cost of not meeting your tax deadlines.

If you have any concerns about this, contact us. We can go through which option best suits you and your business.

Symptoms of COVID-19 include a cough, fever and breathing difficulties.

  • You can call Healthline’s COVID-19 advice line on 0800 358 5453
  • For all official updates from the Government on COVID-19, check www.covid19.govt.nz 

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