To help cushion the impact of the coronavirus, COVID-19, on employers and employees, the government has announced a large economic response package.
Assistance available to businesses and workers includes wage subsidies, leave support, and tax relief.
The situation and the government’s response is changing rapidly, so please keep checking the Ministry of Business Innovation and Employment’s latest COVID-19: Information for businesses.
Information updated: 25 March 2020.
Wage subsidies are available for businesses in all sectors and regions that are registered and operating in New Zealand.
Businesses need to show they've had a 30% or more reduction in revenue (actual or predicted) for any month between January and June 2020 compared to the previous year.
If your business is less than 12 months old or you have had a significant increase in revenue over the past year, you will need to show a 30% decline in revenue compared to a similar time period (e.g. a 30% loss of income when comparing January 2020 to March 2020).
The decline in revenue must be attributable to COVID-19 and the business must have taken active steps to mitigate the impact (this could include activating your business continuity plan and seeking advice and support from your bank, a relevant industry association etc.).
You must also make your best efforts to retain employees and pay them a minimum of 80% of their current pay rates for the subsidised period.
You can receive the allowance for each person for up to 12 weeks. There is no cap on the number of staff you can apply to support (there was previously a maximum of $150,000 per business).
If your business is eligible, you will be paid:
- $585.80 per week for a person working 20 hours or more per week.
- $350 per week for a person working less than 20 hours per week.
This means employers will receive a payment of $7,029.60 for a full-time employee and $4,200 for a part-time employee (employees must be working in NZ legally).
Employers apply for and receive the subsidy, rather than the employee, and then pass the payment on to their team member(s) in full.
The subsidy is paid as a lump sum and is for wages only, to help keep staff employed.
Businesses can only get the subsidy once. The wage subsidy scheme is scheduled to finish on 9 June 2020.
Contractors, sole traders, self-employed people, registered charities, non-governmental organisations, and incorporated societies are also eligible for the subsidy.
Leave and self-isolation support
Leave payments are available for people unable to work who are in self-isolation, are sick with COVID-19, or caring for others with COVID-19.
Employers can apply for leave payments more than once, on an ‘as needed’ basis, up to a maximum of 8 weeks.
You must apply every 14 days.
Leave payment is paid at a flat rate of:
- $585.80 to a person working 20 hours or more per week.
- $350.00 to a person working less than 20 hours per week.
Employers and employees can agree to use any form of paid leave (e.g. annual leave) to cover a period of self-isolation, but employees aren’t required to have used any or all their paid leave entitlements before they are eligible for leave support assistance.
The leave payment scheme will be in place for an initial 8-week period. The government will then reassess, based on the health situation at the time.
Eligibility for leave payments
All full-time, part-time, and casual employees, and contractors who are legally working in NZ and who:
- cannot work because they have been diagnosed with COVID-19, or
- cannot work because they are caring for dependents who are required to self-isolate or have COVID-19, or
- need to self isolate in line with Ministry of Health Guidelines and have registered as needing to self-isolate with Healthline, cannot work from home and their self-isolation is not because they left NZ since travel restrictions were imposed (on 16 March 2020) and have returned.
People who can work from home during the period of self-isolation and can be paid normally are not eligible.
Self-employed people are eligible for leave payments.
Applying for wage subsidies or leave payments
Employers apply for the assistance and pass on the payment to their employee(s).
Consult with your team members before applying. As with any significant employment change, consultation is required and legal obligations have not be loosened as part of this package.
You will also have to get consent from each employee to provide their details (name, date of birth, IRD number etc.) as part of the application.
The process is managed by the Ministry of Social Development (MSD) and is a “high trust” model, which means barriers to entry are reasonably low. You need to declare you meet the criteria for payment as part of your application.
Remember, any attempt to mislead MSD to get the assistance is considered fraud. All payments will be subject to audits and reviews.
MSD is aiming to make payments 5 working days after it gets all the necessary information, depending on the volume of applications.
Tax relief measures for businesses whose circumstances have changed due to COVID-19 include:
- Potential interest write-offs on late payments (for payments due on or after 14 February 2020).
- Installment arrangements or possible write-offs if you face difficulties paying outstanding tax.
- An increase to the provisional tax threshold: from $2,500 to $5,000 from 2020/21.
- Re-estimation of provisional tax obligations and early refunds of provisional tax overpayments.
- Extensions to filing dates for some income tax returns (not GST or PAYE returns).
- An increase to the small asset depreciation threshold: from $500 to $1,000, and to $5,000 for the 2020/21 tax year.
- Depreciation on commercial and industrial buildings from 2020/21.
In Work Tax Credit changes
From 1 July 2020, working families with children who have some employment income each week and are not receiving a benefit won’t have to meet the hours test to receive the In Work Tax Credit.
Families are normally required to work at least 20 hours a week (sole parents) or 30 hours a week (couples) to be eligible.
The In Work Tax Credit is an income-tested cash payment of $72.50pw ($3,770 per year).