The Government has released its initial $12.1 billion relief package in an attempt to mitigate the worst economic impacts of COVID-19.
The key aspects of the scheme are set out below.
Twelve-week wage subsidy scheme
From 17 March (and for the next 12 weeks), wage subsidies will be available for all employers that are significantly impacted by COVID-19 and are struggling to retain employees as a result. The scheme will be open to sole traders and the self-employed as well as firms. The subsidy is:
The payment is made as a lump sum for a period covering 12 weeks. The maximum amount any one employer can receive is NZ$150,000.
Employers must have suffered, or be projected to suffer, at least a 30% decline in revenue compared to last year for any month between January 2020 and June 2020. Applications can also be made on the basis of forecast revenue loss within the period of the scheme.
Key undertakings required from the employer are:
Applications for the subsidy can be made through the Work and Income website. The Ministry of Social Development (MSD) will aim to make first payments no later than five working days from when applications are received. Please follow the link below to access the Employer and/or Self Employed/Contractor applications.
Eight-week scheme for workers, contractors and self-employed taking COVID-19 leave
The COVID-19 leave payment scheme runs for the next eight weeks, providing financial support to businesses that have workers unable to work because they are in self-isolation, are sick with COVID-19, or caring for others with COVID-19. The scheme applies to employees, contractors and the self-employed.
The payments are:
The payment does not affect any paid leave entitlements that are owed and is available even if an employee is on paid leave for part of the period. It is not available to those who can work from home during the period of self-isolation and who can be paid normally by their employer.
Employers apply for the leave on behalf of any employee who is self-isolating or sick. Payments can be backdated to 17 March 2020. MSD pays employers, who will then be required to pass it on to affected employees. MSD will pay on a fortnightly basis once it receives an application.
Other key parameters of the scheme are:
Income support measures for beneficiaries and superannuitants
Two permanent changes have been made to welfare payments:
In addition, the Winter Energy Payment paid to superannuitants and beneficiaries will double in 2020. This temporary measure begins on 1 May 2020 and will be NZ$40.91 per week (single people) and NZ$63.64 per week (couples or people with dependents).
Tax Components of the package
The relief package has also been used as an opportunity to tweak tax settings in a manner consistent with the Tax Working Group's proposals from last year, as well as implementing measures that businesses have been seeking for some time. Key tax components of the package are:
Inland Revenue have announced they will remit use of money interest for payments due on or after 14 February 2020 where payment was not made on time due to COVID-19. This could apply for up to two years.
The full impact of these proposals will not be seen for several months; however, it is hoped this will encourage investment by the commercial sector and also ensure microbusinesses do not face cashflow constraints.
What you should do now:
We can help you with cashflow forecasting, reviewing your position and communicating with your key stakeholders.
Below is a link to more information on the wage subsidy and leave payments.
Please don't hesitate to call us if you need us. In the meantime stay safe and well.
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