Blog

Covid19 is having a significant impact on turnover for many businesses with flow on effects to industries and workforce. As time goes on, in the next few months, there will be a further decrease in spending
across every industry which means that you have to look at your own businesses and have strategies in place to mitigate the impact of the change in environment due to Covid19. The drastic reduction in turnover means that your purchases & other costs will have to be reviewed, and there may also be the need to manage wages and salaries. The Government has put out support package that will assist businesses, including self employed and contractors. The 2 main areas of support for businesses are:

– Wage subsidy for staff in isolation
– Wage subsidy for businesses with turnover reduced by more than 30%

Staff in Isolation ( Covid -19 Leave Payment)
The amount of the payment is $585.80 per week for full time employees (20hours or more pw) or $350.00 per week for part time employees (less than 20 hrs pw).

Will be available for 8 weeks from 17 March 2020 and can be applied for more than once for the 14 days isolation period. Employers and employees are not required to use normal leave balances before
applying for the subsidy (after 17 March onwards) The employer must pass this payment onto the affected employee when received.

To qualify:
1. Employee must be registered with Heathline as being in self-isolation under the public health guidance ( or caring for a dependents who are sick or required to self -isolate ).
2. Unable to work from home.
3. Employee that has not left NZ to travel overseas from 16 March 2020.

Turnover Reduced due to COVID19
If your business turnover has reduced by 30%, then you can apply for wage subsidy for each of your employees. This support is to help you avoid laying-off staff as a result of the reduced turnover due to Covid19.
The application made will need to show the reduction in turnover of at least 30% from January 2020 to July 2020 on a month to month basis compared to the actual turnover made a year ago. Or, It can be based on your forecast for the coming months.

To qualify:
1. Business must be registered & operating in NZ
2. Employees legally working in NZ
3. Business has experienced 30% decline in actual revenue compared with the same month last year, and the decline is directly related to COVID19.
4. Must make best efforts to retain employees & pay them a minimum of 80% of their income for the period of the subsidy.
5. Companies will have to be able to prove that they took steps to mitigate the Covid-19 financial impact on their business. Eg approaching banks or financial advisors, relevant industry associations
The amount of the entitlement payment is $585.80 per week for full time employees (20hours or more pw)
or $350.00 per week for part time employees (less than 20 hrs pw).
The amount will be paid as a lump sum once your application is processed. The maximum amount you can receive is $150,000. Applications can be made from 17 March for the next 12 weeks.

Other Tax Changes
1. The provisional tax threshold will be lifted from April 1 from NZ$2,500 to NZ$5,000 which will be effective in the 2021 financial year.
2. The value for low value assets has been increased to $5,000 for the 2021 financial year which means assets worth less than $5,000 can be written off immediately. For the 2022 and subsequent years, the threshold will be $1,000.
3. The IRD will also be given powers to waive interest on late payments of tax for those who have had their ability to pay tax on time affected by the Covid19 outbreak.
4. Depreciation on commercial properties at 2% per annum on a diminishing value basis. This is a permanent change and applies for the 2021 financial year.

We recommend that you talk with your bank if you are likely to be behind with your mortgage/lending payments. Banks are likely to be supportive in these circumstances. And, talk to IRD early to make arrangements if you think you’ll be behind on tax payments.

If you need help from us to make applications for subsidies or preparing forecasts please feel free to call us on ………………..

————————————————————————————–

How to apply for the Wage Subsidy and Leave Payment Scheme
If you are eligible for either of the schemes, we strongly encourage you to consider
applying today.
If you are an employer, https://services.workandincome.govt.nz/ess/employer_applications/new
to apply.
If you are self-employed / a contractor, https://services.workandincome.govt.nz/ess/trader_applications/new to apply.
You will also need to make a declaration to the Ministry of Social Development that affirms the legitimacy of your application. You can read the full text of the declaration here for the wage subsidy https://www.workandincome.govt.nz/online-services/covid-19/wage-subsidy-declaration.html, and here for the leave payment https://www.workandincome.govt.nz/online-services/covid-19/leave-payment-
declaration.html

All Posts