Emergency Package Release (Part 2)
Key Points
- The $150k Wage Subsidy cap has been removed, increasing cash flow assistance.
- Leave Payment has been implemented to supplement the Wage Subsidy.
- Application process has been implemented by Work and Income NZ.
More Details
This article’s focus is to provide information to those businesses/people who are seeking relief from the COVID-19 virus relevant as at 25 March 2020. With the NZ Government raising the alert status to level 3 to be increased to level 4 on midnight Wednesday 25 March 2020.
Summarising from the Ministry of Health, alert level 4 is:
- Only essential businesses will remain open;
- Everyone must stay at home except essential workers (including essential health and disability support workers);
- In community spaces, physical distancing and good hygiene rules should be followed;
- Travel is only allowed in emergency situations; and
- Non-urgent health services may be cancelled so that healthcare workers can help where they are needed.
As a result of these severe and unprecedented measures, there has been a sharp contraction in the economy and job market has resulted in further subsidies and grants available to the people.
Kia Kaha – Stay Strong
Essential businesses
In short, essential businesses are: food, shelter, healthcare, energy and finance. As we move to Level 4, takeaway services must move to close their operations.
Non-essential businesses must now close. All bars, restaurants, cafes, gyms, cinemas, pools, museums, libraries, playgrounds and any other place where the public congregate must close their face to face function.
For the full list, see here: https://covid19.govt.nz/government-actions/covid-19-alert-system/
Wage Subsidies
Since our previous article, some changes have been made to the wage subsidy regime. Work and Income New Zealand (“WINZ“) has removed the $150k maximum subsidy cap and have included a leave payment subsidy for those affected by the COVID-19. 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, self-employed and partnerships.
Revenue Decline
Which businesses are eligible?
Businesses are eligible to apply for wage subsidies if they can show a 30 percent decline in revenue for any month between January and June 2020 compared to the year before, including projected revenue loss during the period of the scheme.
What must businesses do?
Employers must declare that, on their best endeavours, they will continue to employee the affected employees at a minimum of 80% of employee income for the duration of the subsidy period. In other words, paying their employees 4 out of 5 working days. Employers must also take active steps to mitigate the impact of COVID-19 (such as engaging with their bank/financial advisor) and sign a declaration form to that effect.
How much can be claimed?
Depending on the type of employees, you will receive a lump sum payment for a period covering 12 weeks:
- Full time employees (FTE) (20 hrs or more) = $585.80/week – total of $7,029.60 per FTE; and
- Part time employees (PTE) (less than 20 hrs) = $350.00/week – total of $4,200.00 per PTE.
Leave Payment
Employees are not required to use any or all their paid leave entitlements before they receive the leave payment. However, employers and employees can agree to use any form of paid leave to cover their period of self-isolation.
Which businesses are eligible?
Businesses are eligible to apply for leave payments for those employers who hire full-time, part-time and casual employees, and contractors who:
- Need to self isolate in line with Ministry of Health Guidelines and cannot work from home. (Self-isolation is not due returning from international travel since 16 March 2020) ;
- 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 who have been diagnosed with COVID-19.
What must businesses do?
Employers must declare that, on their best endeavours, they will continue to employee the affected employees at a minimum of 80% of employee income for the duration of the subsidy period. In other words, paying their employees 4 out of 5 working days.
Employers must also take active steps to mitigate the impact of COVID-19 (such as engaging with their bank/financial advisor) and sign a declaration form to that effect.
How much can be claimed?
Depending on the type of employees, you will receive a lump sum payment for a period covering 14 days (2 weeks):
- Full time employees (FTE) (20 hrs or more) = $585.80/week – total of $1,171.60 per FTE; and
- Part time employees (PTE) (less than 20 hrs) = $350.00/week – total of $4,200.00 per PTE.
- Determine which employees you will need to apply for Leave Payment and/or Wage Subsidy;
- Go to: COVID-19 Wage Subsidy and Leave Payment Application Form. You will need your:
- Business IRD number;
- Business name (IR Customer Name);
- Business address;
- Your contact details (contact name, email, mobile);
- Business bank account; and
- Employee details (First name, Last Name, Date of Birth, IRD Number and Employment Type).
- WINZ will check if you qualify. Contact will be made by phone if further information regarding your application is required;
- After assessment:
- If approved, you will be notified by email and text of approval and payment
- If declined, you will be notified.
WINZ intends to complete payment within 5 working days. However understandably it will take longer due to overwhelming number of application.
This is an informative piece and should not be relied upon as legal or tax advice as it may not apply to your personal circumstance. It is not intended to provide a complete overview but rather the key points we believe are important for our clients.
If you would like to know more, contact us for a consultation.
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