The initial wage subsidy application final deadline is 9 June 2020, and many NZ businesses received the subsidy in late March or April 2020.
To be eligible for the initial subsidy the business needed at least a 30% reduction in revenue over a period of a month, or 30 days, when compared to the same month or 30 days the previous year (between January 2020 and 9 June 2020), AND that decline be related to COVID-19.
The government launched the wage subsidy quickly, just prior to lock down, so that businesses could retain and pay staff and the wage subsidy application was able to be made in the expectation of a 30% revenue reduction. However, it was explained that eligibility would be audited and if it turned out that the business was not eligible then the subsidy would need to be refunded.
How to check if you need to repay the subsidy?
Revenue is defined as total income before expenses that a business has earned from its normal business activities. Revenue does not include the receipt of the wage subsidy itself.
To check if your business was eligible for the subsidy compare each individual month January 2020 – May 2020 to the same month the previous year. If revenue was 30% down on the previous year in any of those months, and that drop was COVID-19 related, then you were eligible for the subsidy and won’t need to repay.
If your business was not eligible and did receive the subsidy, then you need to be able to repay the subsidy.
Wage Subsidy Eight Week Extension
The government has now announced an eight-week extension to the wage subsidy, and applications can be made from 10 June 2020 (with final application deadline 2 September).
The eligibility criteria is tighter, and businesses that have suffered a 50% reduction in turnover in the 30 days prior to application as compared to 2019 will be entitled to the wage subsidy for a further eight-week period. High growth and new firms will also be eligible to apply.
The scheme covers eight weeks per employee from the date the application is submitted. It will be paid as a lump sum at the same weekly rate as the initial Wage Subsidy.
Applicants must agree to meet certain obligations, including to:
- pass the subsidy on to employees
- retain employees for the duration of the subsidy
- do their best to pay their employees at least 80% of their normal pay
- take active steps to mitigate the impact of COVID-19 on their business
Contact Q2 if you are unsure about eligibility
If you are unsure about eligibility for the initial subsidy, or the extended subsidy, please contact us. We’re here to help.