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Government Support

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 schemeand small business financing schemes. On 11 May 2020, the Government announced that the country will move out of Alert Level 3 and into Alert Level 2, beginning at 11.59pm on Wednesday 13 May 2020.

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 cashflow pressure, a $100 million redeployment package to keep more New Zealanders in worka $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.  

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 Income Relief Payment 

Announced on 25 May 2020, the Government are introducing 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 March 1. 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.  

Online applications open on the 8th June 2020 and should be made via the MyMSD portal online – whether you are an existing client or a new one. 

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. 

Wage Subsidies 

The Government has announced an extension on the Wage Subsidy extension. The Wage Subsidy Extension payment will be for an additional 8-week period, available from Wednesday 10 June 2020 until 1 September 2020. Eligible businesses will need to reapply through Work and Income once their current 12-week subsidy has come to an end. 

The weekly rates will be the same as under the current Wage Subsidy and will provide an additional 8-week payment per named employee and will be paid to businesses as a lump sum. The Wage Subsidy Extension must be used to pay employees’ wages and receiving it does not change existing employment law obligations. 

The Wage Subsidy Extension will be open to the same types of employers currently eligible for the wage subsidy, including contractors, the self-employed and sole traders. There is some change to the criteria for the Wage Subsidy Extension, for example, a business must have experienced a minimum 50% decline in actual or predicted revenue. Where this is not possible for some organisations to show, there are different calculations available such as for new businesses or pre-revenue firms. 

Below are some key points on the Wage Subsidy Extension. More information about this payment and how to apply will be available before 10 June. 

  • You must have had, or expect to have, a revenue loss of at least 50% for the 30 days before you apply, compared to the closest period last year. 
  • It will cover 8 weeks per employee from the date you submit your application. 
  • It will be paid to you as a lump sum at the same weekly rate as the Wage Subsidy. 
  • You’ll need to agree to certain obligations, such as to: 
    • pass the subsidy on to your employees 
    • retain your employees for the duration of the subsidy 
    • do your best to pay your employees at least 80% of their normal pay 
    • take active steps to mitigate the impact of COVID-19 on your business. 

Further FAQ’s will be published on the wage subsidy as soon further information is available.  

For information on the wage subsidy on the Ministry for Social Development website here. 

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 Payments: Businesses that are having trouble paying their tax can set up installment arrangements, or apply to have the debt written off due to serious hardship 

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. 

ACC Levy: ACC are working with businesses who have been impacted by COVID-19 and struggling to pay their levies, and those that have had to close their business.  

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 fulltime equivalent employees. The scheme will provide $10,000 to each qualifying firm and, in addition, $1800 per equivalent fulltime 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 Schemespecifically 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 contractThis scheme is designed to give businesses access to cashflow to meet fixed costs on concessionary termsThis scheme sits alongside the Business Finance Guarantee Scheme

Businesses and organisations can now apply for the SBCS loan through myIRTo 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 are open from 12 May 2020 to 12 June 2020 inclusiveFurther information and guidelines on contacting IRD for any assistance can be found here. 

Leave 

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.

Redundancies 

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.  

Mortgage Holidays

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 2

On 11 May 2020, the Government announced that the country will move out of Alert Level 3 and into Alert Level 2, beginning at 11.59pm on Wednesday 13 May 2020. Cabinet will further review Alert Level 2 restrictions on Monday 25 May 2020. 

The announcement on the move to Alert Level 2 as it affects businesses includes the following: 

    • Most businesses can open if they can do it safely.  
    • Tertiary education facilities, schools and early learning centres will be open. 
    • Retail, malls, cafes, restaurants, cinemas and other public spaces including playgrounds and gyms, can reopen. All will be required to have physical distancing and strict hygiene measures in place. 
    • Shoppers can go in-store at local businesses. 
    • On Thursday 21 May, bars will be able to open with all strict requirements for hospitality businesses applying, including that groups must be seated, there must be space between tables, and there must not be multiple waiters and waitresses serving a single table (single server). 
    • Services can also be provided on customers’ premises, for example, cleaning and home help. 
    • For some businesses, close personal contact is required to deliver a service. This including hairdressers and home help. These businesses can operate if they have public health measures in place such as robust contact registers in place, good hygiene practices and minimised contact to the extent possible. 
    • Public gatherings initially for up to 10 people at a time are allowed. This includes weddings, funerals, tangihanga, religious ceremonies, and gatherings in private homes 
    • More than 10 people may be present in public or at a venue, as long as they are in separate groups and are not intermingling with each other.  
    • There will be tight controls in place at the country’s borders. 
    • Travel is allowed between regions, but travel must be done safely.  
    • Complying with general Alert Level 2 settings 
    • Meeting appropriate public health requirements for their workplace (e.g. having contact tracing systems and physical distancing) 
    • Fulfilling all other health and safety obligations.  

Additional conditions on public gatherings can be found here, on the Government website.

Businesses must operate safely, based on these guidelines here. This means: 

  • Complying with general Alert Level 2 settings 
  • Meeting appropriate public health requirements for their workplace (e.g. having contact tracing systems and physical distancing) 
  • Fulfilling all other health and safety obligations.  

All businesses are encouraged to use alternative ways of working if possible. Business premises can open for staff and customers provided they meet public health requirements. Services can also be provided on customers’ premises (e.g. in homes). If a workplace cannot meet these measures it cannot open its physical premises. Further detail can be found here. 

Specific guidance for key sectors is being developed by Government and will be available here soon. 

Visit covid-19.govt.nz

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 tpk.tetaihauauru@tpk.govt.nz.

Business Webinars

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.

Find out more >>

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.   
Get in touch

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