Since the outbreak of COVID-19 in New Zealand, the Government has announced various support packages including the wage subsidy, a tax loss carry-back scheme, and small business financing schemes.
The support packages for businesses have included an estimated $9 billion – $12 billion in wage subsidies, $2.8 billion in business tax changes to reduce cash flow pressure, a $100 million redeployment package to keep more New Zealanders in work, a $3.1 billion tax loss carry-back scheme, a $6.25 billion Business Finance Guarantee scheme for small and medium-sized businesses. Additional measures include the Small Business Cashflow Loan Scheme which provides interest free loans for small businesses for a year, greater flexibility for affected businesses to meet their tax obligations, and $25 million in business consultancy support. On 14 May 2020, the Minister of Finance announced a wide range of funding support to various industry sectors. The details on the support measures have not been made public as yet.
On 14th July the Government announced an additional $40 million of funding to be allocated nationally through the Regional Business Partner programme. This additional fund is set to provide our nations SME community with the support required to navigate and survive the effects of COVID-19 on their businesses.
COVID-19 has created an unparalleled environment and the Government support package sets out to cushion the blow for both businesses and workers. This package is evolving to meet the challenging needs of our economy, with further changes and support expected to come.
COVID-19 Business Advisory Fund
For businesses who have been negatively impacted by COVID-19 and who are wanting to access advice, training or other support to help navigate these impacts, the Government created the COVID-19 Business Advisory Fund. For the Manawatu-Whanganui region, this fund is administered through CEDA, whose team of Business Growth Advisors are on hand to help businesses understand and access the help, support and training that is available.
With the Government’s announcement of an additional $40 million in support being made available across New Zealand from 14th July, businesses are encouraged to get in touch with CEDA to find out how they can access this support or if they are eligible.
What can the funding be used for?
The COVID-19 Business Advisory Fund covers a range of support to help mitigate or lessen the impacts of COVID-19 on businesses, and include:
- HR & Employee Relations
- Legal, Financial and Cashflow Management
- Health and Wellness
- Business Continuity Planning
- Marketing Strategy
- Digital Enablement Strategy
This funding is available to connect businesses with professional specialist providers that deliver services in the above areas. Contact the CEDA team today to find out more, on email@example.com or phone 0800 CEDA SUPPORT to connect with one of our Business Growth Advisors.
COVID-19 Income Relief Payment
Announced on 25 May 2020, the Government introduced a new Income Relief Payment, alongside a wider work programme on possible future employment insurance. This additional support is part of the Governments approach to rebuilding our economy in a way that supports workers and businesses together. This additional support will help to ease pressure on people and families under stress from COVID-19 job losses.
The payment will be available for 12 weeks for anyone who has lost their job due to the impact of COVID-19 since 1 March 2020. It will pay $490 a week to those who lost full-time work and $250 for part-time, and it has been confirmed that the payment will not be taxed.
Receipt of the payment comes with expectations from the Government, and responsibilities. While details are still being worked through, initial outlines indicate that people who receive this payment will be required to:
- Be available for, and actively seeking, suitable work opportunities while they receive the payment
- Take appropriate steps towards gaining new employment; and
- Identify and take opportunities for employment, re-deployment and training.
Students who have lost part-time work as a result of COVID-19 may also be eligible for the part-time rate.
The criteria is still being developed, and will be updated on the Work and Income website as it comes to hand. For now, we understand it will be available to those who:
- have lost their job from 1 March to 30 October because of COVID-19, and
- had been working at least 15 hours a week for 12 weeks before they lost their job
- don’t have a partner earning more than $2,000 a week before tax
- meet other eligibility criteria.
For more information and updates, keep an eye on Work and Income New Zealand’s website here.
The Government has announced an extension on the Wage Subsidy.
The wage subsidy extension helps businesses affected by COVID-19, and supports businesses and their staff to maintain an employment connection, The subsidy:
- Supports employers adversely affected by COVID-19, so that they can continue to pay their employees
- Supports workers to ensure they continue to receive income.
Businesses can apply to cover the wages of employees over an 8 week period. A business can’t apply for the same employee twice. Businesses can apply for the Wage Subsidy Extension for an employee, even if the business has not applied for the Wage Subsidy for the employee before.
If the business has applied for the Wage Subsidy or Leave Support Scheme for an employee, a business needs to wait until those payments are finished before it can apply for the Wage Subsidy Extension. A business can’t receive more than one COVID-19 payment for the same employee at the same time.
The wage subsidy extension is available to all businesses adversely affected by COVID-19 including:
- sole traders
- registered charities
- incorporated societies
- post-settlement governance entities
- pre-revenue research and development start-up companies that are seed or venture capital backed.
The subsidy is not available to state sector organisations.
Eligibility: The Wage subsidy extension provides an 8-week payment per named employee. Businesses must have experienced a minimum 40% decline in actual or predicted revenue over a 30-day period within 40 days prior to applying for the extension, versus the nearest comparable period last year. There are different calculations for organisations where this calculation is not possible, such as new businesses or pre-revenue firms.
The Wage subsidy extension is now available. Visit Work and Income for more information.
Tax Relief and Cash Flow
Te Taake me te moni putea
Provisional tax estimates: You may be able to make an estimate or re-estimate of provisional tax, if your circumstances have changed due to COVID-19, with early refunds available where provisional tax has been overpaid.
Is the wage subsidy taxable to the employee? Yes – As it is included as part of their normal wages it is subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc
Tax loss carry-back scheme: This scheme allows businesses to carry-back tax losses for one year. The scheme temporarily allows businesses to carry losses back from the 2019/20 or 2020/21 tax years to offset against profits of the prior year. In practical terms, if a business paid tax on profits in the year to 31 March 2019 and has a loss for the year to 31 March 2020, the business can use the loss to generate a tax refund from the prior year.
Cash Flow: It’s important to get in touch with your bank as soon as possible if you’re experiencing cash flow issues, or anticipate issues coming due to the COVID-19 situation.
Business Finance Guarantee Scheme: On the 25 March Government announced the Business Finance Guarantee Scheme, for small to medium sized businesses. The Government guarantees 80% of the loans. This will include a limit of $500,000 per loan and will apply to firms with a turnover of between $250,000 and $80 million per annum. The loans will be for a maximum of three years and expected to be provided by the banks at competitive, transparent rates. On 1 May, the Government announced that further changes are being made to the Business Finance Guarantee Scheme, including the requirement for a General Security Agreement. Get in touch with your bank today to find out more.
Small Business Cashflow Loan Scheme (SBCS): On 1 May, the Government announced the Small Business Cashflow Loan Scheme. This scheme provides assistance of up to $100,000 to firms employing 50 or fewer full–time equivalent employees. The scheme will provide $10,000 to each qualifying firm and, in addition, $1800 per equivalent full–time employee. Loans will be interest free if they are paid back within a year. The interest rate will be 3% for a maximum term of five years., and repayments are not required for the first two years. The eligibility criteria are the same as for the Wage Subsidy Scheme; specifically businesses will have to declare that they are a viable business, they will use the money for core business operating costs and enter into a legally binding loan contract. This scheme is designed to give businesses access to cashflow to meet fixed costs on concessionary terms. This scheme sits alongside the Business Finance Guarantee Scheme.
Businesses and organisations can now apply for the SBCS loan through myIR. To do this, in the ‘I want to’ section of myIR, select ‘Apply for a Small Business loan’. Businesses without a myIR account will need to create one to apply for the SBCS loan. Applications opened from 12 May 2020 to 12 June 2020 inclusive. Further information and guidelines on contacting IRD for any assistance can be found here.
What measures are in place to support staff leave: There is $126 million in funding nationally for COVID-19 leave and self-isolation support for people who are unable to work because they’re sick, self-isolating, or caring for dependents. Since being announced, this has been rolled into the Wage Subsidy Scheme. There is also a leave scheme for essential workers who take leave from work to comply with public health guidance, to ensure they will continue to receive income.
For more information on the COVID-19 Leave Support Scheme, visit Employment.govt.nz here.
What if I need to make some of my employees redundant? The Ministry of Social Development has a guide for employers on COVID-19 related redundancies.
Is there assistance for employees made redundant? Yes, the MSD Benefit no longer has a stand down period in place. This means that those eligible to receive a benefit won’t have to wait if they’re unemployed due to COVID-19. They can apply online here. Processing times are normally 2-5 days, but due to increased demand are currently taking about 7-10 days.
Support with essential costs: For those that have lost their job, can’t work, or have experienced a reduction in income, they may be eligible for other financial help from Work and Income (MSD). This could include food costs, accommodation supplements, power/gas/water costs, medical costs and even bedding. Get in touch today to find out more.
Six Month Mortgage Holiday Available: The additional support package announced on 25th March outlines a 6-month mortgage holiday for all those that fit the criteria. Eligibility is being worked through and will be available by your bank in the coming days. Check your banks website for details.
Further F&Q’s for employers can be found here on the Ministry of Social Development site.
Relaxing Visa Conditions
Visa Conditions relaxed for temporary migrants and international students: The Government has agreed to relax visa conditions for a short period to allow temporary migrants and international students to further assist with our essential sectors during the COVID-19 response.
Effective from 16 April 2020, this announcement will help businesses better respond to changed circumstances and enable continuity of essential services while New Zealand remains at Alert Level 3 or 4, while also enabling temporary migrants and international students to move into the aged care workforce.
Temporary migrants already employed in essential services will be able to vary their hours and be redeployed to do other roles within their current workplaces, while international students who are already employed in an essential services role will be able to work longer hours while New Zealand remains at Alert Level 3 or 4 and for six weeks following. Students who are employed in an essential services role and wish to work more than 20 hours must still meet their study requirements and should discuss their plans with their education provider.
Any amendment to an employee’s conditions of work must be compliant with normal New Zealand employment law and the individual or collective employment agreement relevant to the employee.
Further details can be found here.
Alert Levels and what this means for businesses:
Alert Level 1
At Alert Level 1, everyone can return without restriction to work, school, sports and domestic travel, and you can get together with as many people as you want.
Controls at the borders remain for those entering New Zealand, including health screening and testing for all arrivals, and mandatory 14 day managed quarantine or isolation.
Venues or premises that have visitors and customers no longer need to record or hold records of people’s movement on their premises. However, businesses should help customers to keep track of where they have been by displaying the NZ COVID Tracer QR code poster.
Businesses can create a QR code poster with Business Connect through this link.
If businesses are unable to generate the official QR code posters through Business Connect, the QR code template can be filled in and sent to the Ministry of Health. The QR code template, the contact details at the Ministry of Health and the next steps required can be found here.
Despite having moved to Alert Level 1, the Prime Minister has spoken about the need for New Zealand not to become complacent in dealing with the virus. The events industry was singled out as being one sector which needed to take particular care to ensure some of the measures put in place during the Alert levels are still maintained, as part of standard operating process and best practice. The New Zealand events sector has developed a voluntary code which can be found here.
Support for Māori communities and businesses
Tautoko me nga Iwi Maori me te Pakihi Maori
The government has developed a plan to support Māori communities and businesses in the face of COVID-19, with a whole of government approach to providing health, social and economic support tailored to meet the specific needs of Māori. This will include:
- Refocusing of Te Puni Kokiri Regional Hubs to support whānau, hapu and iwi
- A whānau Māori Community and Mārae package reprioritising $10 million from the Māori Development vote to support community outreach
- Māori Health and Whānau Ora response with $30 million targeted directly to Māori Health services and an extra $15 million to Whānau Ora commissioning agencies
- Supporting Māori Businesses and engaging with Māori with $1 million of funding to enable a needs assessment for Māori businesses, and $470,000 to Te Arawhiti to engage and work with iwi on their COVID-19 pandemic response plans.
To find out more about the support available, please contact firstname.lastname@example.org.
CEDA will be delivering a series of free webinars for businesses affected by the COVID-19 pandemic. These webinars will be delivered in partnership with our service providers, and funded by New Zealand Trade and Enterprise.
CEDA’s team are here to support you and help answer any questions you may have.
We recognise that the level of information is significant, and rapidly changing each day. Get in touch so we can help guide you through the different supports available to you and connect you with the resources you need.
Our dedicated team of Business Growth Advisors can connect you to the right information and resources to assist you in navigating this unprecedented time for your business. Ways we can help include:
- Connecting you to professional service providers to assist you with the issues that you are facing e.g. cash flow management, business continuity management,
- Provide you with relevant and up to date information on how and where to access Government support including navigating the Wage Subsidy Scheme, and the recently announced Business Finance Guarantee Scheme.
- Assist Māori businesses on Government support available.
- Provide you with an experienced Business Mentor to provide additional guidance over the next 12 months. Business Mentors come with specific skills and are matched depending on your needs.
- Facilitate funding for Research and Development including project grants.