How can the NZ COVID-19 Economic Response Package help my business
The government has announced assistance for all affected by the Coronavirus. We provide a summary of the assistance below.
Wage Subsidy
Purpose of Wage Subsidy
Provide financial support businesses affected by the COVID-19 virus that is facing laying off staff or reducing staffing hours. This subsidy is for wages only which is intended to keep staff employed while employers consider changes needed to ensure future viability of business.
Who can get it?
Employer, contractor, sole trader or self-employed but must meet the following criteria;
Business must be registered and operating in New Zealand.
Your employees must be legally working in New Zealand
Business must have experienced a minimum of 30% decline in actual or predicted revenue over the period of a month when compared with same month last year, and that decline is related to COVID-19
You must have taken active steps to mitigate the impact of COVID-19
Must make the best effort to retain employees and pay them minimally 80% of their normal income for the subsidised period.
How much can you get?
The subsidy is a lump sum payment to cover 12 weeks per employee. It will be paid at a flat rate of;
$585.50 for full time employees (working 20 hours or more per week)
$350.00 for part time employees (working less than 20 hours per week)
Maximum subsidy paid to a business is $150,000 and business can only get this subsidy once.
Leave Subsidy
Leave subsidy is available from 17 March 2020 for 8 weeks for those that;
Need to self-isolate (in line with Ministry of Health Guidelines and having registered with Healthline as needing to self-isolate).
Cannot work due to being sick with COVID-19
Cannot work because caring for dependents who are required to self-isolate or sick with COVID-19.
This payment is paid to eligible employees and employers must pass the payments on in full.
Who can apply for Leave Subsidy?
• Employer
• Contractor
• Sole Trader or Self Employed
The payments cover full time, part-time and casual employees and contractors who are legally working in New Zealand. It is not available to those who can work from home.
How much can you get?
The subsidy is paid at a flat rate of;
$585.50 for full time employees (working 20 hours or more per week)
$350.00 for part time employees (working less than 20 hours per week)
Employers can receive it for 14 days, however, as they can apply for this on an “as needed” basis as some may need to self-isolate more than once. The payment can be paid for the entire period the employee is sick but employers must apply for the subsidy every 14 days. Employees need not have used up their paid leave entitlement before they receive this payment.
Eligible employers and employees
Self employed qualify if they;
Are usually earning the minimum wage when they decide to self-isolate
For the period of self-isolation they are expecting to work
Cannot draw an income for the period of self-isolation
Self employed do not qualify if they;
Are not earning at least the minimum wage
Not legally working in New Zealand
State sector employees are not eligible for this payment.
Tax Changes
A number of changes have been announced that are intended to help businesses improve cash flow and stimulate investments. The changes include;
Re-introduction of depreciation on industrial and commercial buildings from the start of 2020-2021 tax year using the diminishing value rate of 2%.
Instant deduction for low value asset increased from $500 to $5,000 from the start of 2020-2021 income year. The threshold will be reduced to $1,000 from the 2021-2022 income year.
Provisional tax threshold will increase from $2,500 to $5,000 for the 2020-2021 income year. This will ensure fewer businesses will be required to pay provisional tax throughout the year.
Support for Individuals
From 1 July 2020, existing requirement to work at least 20 hours a week (sole parents) or 30 hours a week (couple) for those receiving In Works Tax Credit (ITC) will be removed. This means families receiving the ITC will continue to receive this support even if their work hours are impacted by the COVID-19.