The return of the Wage Subsidy and other government COVID-19 Support
The Wage Subsidy is back! In this article, we provide details of the third round of the Wage Subsidy and details of other support businesses affected by COVID-19 can apply for.
- Wage Subsidy – Businesses who experience a 40% decline in revenue over a consecutive 14 day period between 28 February 2021 and 21 March 2021 compared with a typical 14 day period during 4 January 2021 and 14 February 2021 are eligible to receive another round of the Wage Subsidy. Businesses can apply from 4 March 2021. See here for further details.
- Resurgence Support Payments – This payment is available if the country increases from Alert Level 1 for more than seven days and businesses experience a 30% revenue loss during that period as a result. This provides viable businesses with the lesser of:
- $1,500 per business and $400 per full time employee (max 50 employees); or
- 4 times the actual revenue drop experienced by the business.
Sole Traders can get $1,900. Unlike the Wage Subsidy, businesses can use this payment for all business expenses (not just wages). Eligibility is not affected by receiving any other COVID-19 support payment. The last day for applications due to the current change in Alert Levels is one month after a nationwide return to Alert Level 1. See here for further information.
- Short Term Absence Payment – Businesses and self-employed workers can get a one-off payment of $350 for each employee who cannot work from home and is unable to go to work due to COVID-19 (e.g. are awaiting test results). Businesses can only apply for each worker once every 30 days. The Leave Support Scheme is available if an employee returns a positive COVID-19 test result (see below). See more here.
- Leave Support Scheme – This is a payment for businesses with employees who have to self-isolate due to COVID -19. Businesses will get a 2-week lump sum per eligible employee (up to a maximum of $535.80 for each full time worker and $350 per part time worker i.e. less than 20 hours per week). Further details can be found here.
- Business Finance Guarantee Loan Scheme – To make it easier for banks to lend to COVID-19 affected businesses, the government will guarantee up to 80% of loans provided to businesses by banks via this Scheme. The bank will have its own lending criteria and security requirements. The loan can only be used for certain purposes. More information can be found here.
- Small Business Cash Flow Scheme – This scheme provides eligible businesses with a one-off loan of up $10,000 plus $1800 per full time employee for a term of 5 years. The loan is only available to businesses with 50 employees or less and is interest free if paid back within 2 years. After that, the interest rate is 3% per annum. No repayments are required for the first 2 years. The business must have at the least a 30% decline in revenue over a 14 day period, as compared with the same period in the previous year. Applications can be submitted up to and including 31 December 2023. See more here.
- Loss Carry Backs – This allows businesses that make a loss in 2020 or 2021 to use that loss to offset profits they made the year before (i.e. they can carry the loss back one year). See here for more information.
- Provisional Tax Threshold – The provisional tax threshold has increased from $2,500 to $5,000 meaning that businesses with provisional tax of less than $5,000 to be paid will not have to pay their tax until 7 February the following year. See more here.
- R&D tax credit available earlier - The government has brought forward the application date for refunds of the R&D tax credit by one year to provide businesses with access to the R&D credit sooner. This has been done to try and prevent any scaling back of R&D activities by businesses. See here for more information.
- Commercial Lease Dispute Services – This is a service available to landlords and tenants who have a dispute about the payment of rent and outgoings where the lessee has experienced a material loss of revenue during a lockdown period (i.e. during Alert level 3 or 4). At least one of the parties to the dispute must be:
- NZ based (i.e. is operating in NZ, does not have an overseas head office and is not part of an overseas based multi-national); and
- have 20 or fewer full-time staff (per site for tenants and in total for landlords).
The subsidy is only available for dispute resolution commenced during 25 September 2020 to 31 March 2021. Arbitration is subsidised up to $6,000 incl GST and mediation up to $4,000 incl GST. Only the Government approved providers can be used. More information can be found here.
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