COVID-19 Resurgence Wage Subsidy
On 18 August the Government released details of the COVID-19 Resurgence Wage Subsidy payment. Applications for the payment open 21 August 2020.
The payment amounts to $585.80 per full-time employee (those who work 20 hours or more) and $350 for each part time employee (those who work less than 20 hours per week). It is paid as a lump sum for two weeks per employee.
Key features of the scheme:
• You must have had or expect to have a revenue drop of at least 40% for a 14-day period, between 12 August to 10 September 2020, compared to a similar period past year.
• The decline must also be related to COVID-19.
Comparing to the closest period last year
Businesses must compare their revenue to the closest period last year. The revenue in the affected period must be at least 40% less than it was in the period it was compared against.
Businesses operating for less than a year or which have high growth
New businesses which have been operating less than a year, or high growth businesses (e.g. that have had a significant increase in revenue), can apply for the Resurgence Wage Subsidy.
To determine whether these businesses meet the 40% decline in revenue assessment, they must compare their revenue against a 14-day period that gives the best estimation of the revenue decline related to COVID-19.
You must retain the employees named in your application for the period of the Resurgence Wage Subsidy.
Employers are required to agree that, for the duration of the Resurgence Wage Subsidy, they will retain the employees the subsidy was paid for. If you are receiving the Resurgence Wage Subsidy, you must:
• Try your hardest to pay staff at least 80% of their usual wages;
• If that isn't possible, pay at least the rate of the Resurgence Wage Subsidy; and
• If the employee's usual wages are lower than the rate of the Resurgence Wage Subsidy, continue paying that amount for the duration of the subsidy.
Note: Employers can't receive the Resurgence Wage Subsidy if they are already getting other Covid-19 payments like the Wage Subsidy, Wage Subsidy Extension or the Leave Support Scheme for an employee.
Small Business Cashflow Scheme (SBCS) deadline extended
The Government has announced a further extension for the Small Business Cashflow (loan) Scheme (SBC). Applications opened on 12 May 2020 and can now be submitted up to and including 31 December 2020.
All other conditions remain the same.
Details about all other COVID-19 relief initiatives, including eligibility criteria and applying for the SBC loan, can be found at ird.govt.nz/covid-19.
• To be eligible for the SCBS loan a business or organisation must have 50 or fewer full-time-equivalent employees and be eligible for the Wage Subsidy Scheme. They must also have a sound plan to be viable and ongoing and hold information on file to verify this.
• Applications will be open from 12 May 2020 up to and including 12 June 2020. Most will receive funds within five working days.
• IRD will administer the payments and repayments of this scheme. Businesses should speak with their financial advisors before taking this loan.
• The loan has a five-year term and must be repaid by 31 July 2025.
• The annual interest rate will be 3% beginning from the date of the loan being provided. Interest will not be charged if the loan is fully paid back within one year. Repayments are not compulsory in the first 24 months.
• In most cases, businesses will be entitled to a loan amount of $10,000 plus $1,800 per full-time-equivalent employee, to a maximum of $100,000.
Details about eligibility criteria and applying for the loan can be found at ird.govt.nz/covid-19.
Wage Subsidy Extension
On 14 May 2020 the Government announced a targeted extension to the COVID-19 Wage Subsidy Scheme, which will see a further $3.9 billion of funding provided to help employers through these difficult times.
The extension provides an additional 8 weeks of payments to employers and self-employed persons who meet the eligibility criteria.
The employer must demonstrate a revenue loss of at least 40% for a continuous 30-day period. This period needs to occur in the 40 days immediately prior to making the application (but not before 10 May 2020), when compared to the closest comparable period last year.
Applications opened on 10 June 2020 and will remain open until 1 September 2020.
Some important points to remember:
- You cannot apply for the wage subsidy extension until your original 12-week wage subsidy period has finished.
- The wage subsidy extension will be paid at a rate of:
$585.80 per week for people working 20 hours or more (full-time rate)
$350.00 per week for people working less than 20 hours (part-time rate)
- The wage subsidy extension will be paid as a lump sum for 8 weeks per employee from the date you submit your application. That is $4,686.40 per full time employee, and $2,800 per part-time employee
- When you apply for the wage subsidy extension, you will be required to declare that you agree to meet certain obligations in respect of the payment.
Similar to the first wage subsidy, these obligations will include:
- That you pass the subsidy on to your employees
- The you retain your employees for the duration you are receiving the subsidy for them
- That you make best endeavours to pay your employees at least 80% of their normal pay
- That you take active steps to mitigate the impact of COVID-19 on your business.
The Government has clarified the obligations of employers under the Wage Subsidy scheme. These obligations are set out in the Work & Income COVID-19 website.
The Wage Subsidy scheme does not override existing obligations under employment law or employment agreements. For information about employment law visit the Employment New Zealand website.
Employers must retain employees for whom they are receiving a Wage Subsidy for the period of the subsidy and cannot compel employees to use their leave entitlements for the subsidy period.
Note that the Wage Subsidy is exempt from GST.
For information about employer obligations under the Wage Subsidy scheme, including consent to the sharing of information and the consequences of not complying with an official declaration, go to this page on the Work & Income website.
Income Relief Payment
If you lose your job (including self-employment) from 1 March 2020 to 30 October 2020 due to COVID-19, you may be eligible for the COVID-19 Income Relief Payment. It’s available from 8 June 2020.
You can get up to 12 weeks of payments to help with living costs after a sudden job loss and give you time to find other work. You can apply online for the Income Relief Payment from 8 June 2020. If you need support before this date, Work and Income may be able to help you with a benefit or other payments in the meantime.
Details about applying for the payment are available at workandincome.govt.nz.
If you are an employer, the application form for a Wage Subsidy is on the Work & Income website.
You will need:
• your business IRD number
• your New Zealand Business Number (NZBN). If you don’t know your Business Number, go to the NZBN website
• your business name
• your business address
• your contact details
• names of your employees (full-time and part-time, identified as such)
• your employees’ dates of birth
• your employees’ IRD numbers
If you are a large employer (e.g., one with 100 employees), go to this page to make your application.
If you are self-employed the application form for a Wage Subsidy is on the Work & Income website.
You will need:
• your IRD number
• your business name
• your business address
A useful list of Wage Subsidy FAQs are on Work & Income’s COVID-19 site.
Proposed tax changes for businesses
For businesses, the government is intending to allow write-backs of losses this year against last year’s tax paid, meaning applicants may receive a refund of prior tax paid. Find out more on the IRD website.