On 17 March 2020 the government announced an economic response package to help cushion the impact of COVID-19 and support the economy during the COVID-19 crisis.
The package includes:
- wage subsidy scheme
- leave and self-isolation support
- business cash flow and tax measures
- wider $12.1 billion package.
Wage subsidy scheme
Wage subsidies will be available for all businesses significantly impacted by COVID-19 including:
- employers that are struggling to retain employees
- sole traders
- new and existing businesses.
Wage subsidies will be available for businesses in all sectors and regions that can show a 30% decline in revenue for any month between January and June 2020 compared to the year before (including projected revenue).
The subsidy will be:
- $585.80 per week for a full-time employee (20 hours or more)
- $350.00 per week for a part-time employee (less than 20 hours)
The payment will be made as a one-off lump sum for a period covering 12 weeks. This means employers will receive a payment of $7,029.60 for a full time employee and $4,200 for a part time employee. The maximum amount any one employer can receive is $150,000.
More information on who qualifies for the wage subsidy, definitions for wage subsidy qualifications, and how to apply, can be found from Work and Income. You may also need a New Zealand Business Number (NZBN) to apply (the NZBN for companies can be found on the Companies Office website ).
Leave and self-isolation support
Workers and businesses have responsibilities to prevent the spread of COVID-19. The purpose of the COVID-19 leave and self-isolation scheme is to support workers financially to self-isolate, or while ill with COVID-19, where this is required so that all businesses and workers can do the right thing.
From 17 March 2020, the COVID-19 leave payment will be available to support people financially if they:
- need to self-isolate
- can’t work because they are sick with COVID-19
- can’t work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19.
The payments will be:
- $585.80 per week for a full-time worker (20 hours or more)
- $350 per week for a part-time worker (less than 20 hours)
The COVID-19 leave payment will be available for eight weeks from 17 March 2020. Employers receiving the payment for employees who are required to self-isolate can receive it for 14 days. As people may be required to self-isolate more than once, employers will be able to apply for this on an ‘as needed’ basis. It can be paid for the entire period an employee is sick (or looking after a dependent person who is sick) with COVID-19 but the employer must apply every 14 days. It will be paid to employers who have eligible employees and they must pass the payment onto their employees in full.
You and your employee can agree to use any form of paid leave (eg annual leave) to cover their period of self-isolation. However, employees aren’t required to have used any or all their paid leave entitlements before they can receive this payment.
Business cash flow and tax measures
There are a number of business cash flow and tax measures that have been announced, including:
- Giving Inland Revenue the discretion to remit use-of-money interest (UOMI) for customers significantly adversely affected by COVID-19.
- Increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021.
- Increasing the small asset depreciation threshold from $500 to $1,000 — and to $5,000 for the 2020/21 tax year.
- Allowing depreciation on commercial and industrial buildings from 2020/2021.
- Removing the hours test from the In-Work Tax Credit (IWTC) from 1 July 2020.
Tax payment relief options include:
- Re-estimating provisional tax (the third instalment for 2020 is due 7 May 2020). IRD advise they will arrange early refunds if provisional tax has been overpaid.
- If you’re having difficulty paying outstanding tax, you can set up an instalment arrangement. You can apply in myIR or contact your accountant.
- You can also apply for a write-off due to serious hardship when you know you won’t be able to pay the full amount.
- Extensions to filing dates for some income tax returns may be available. Extensions can’t be granted for GST and PAYE returns, but any penalties for late filing may be remitted. Under limited circumstances penalties for late payments incurred due to the effects of the COVID-19 may also be remitted.
- If you’re currently involved in contract work where schedular payments are to be deducted, such as forestry or bush work of all kinds, fishing boat work for profit-share, you may be entitled to a certificate of exemption.
- Tax purchases using a third party tax intermediary allows tax payments to be spread and/or delayed without incurring late payment penalties.
More information on the business cash flow and tax measures can be found from Inland Revenue or contact your accountant.
Wider $12.1 billion package
There are further parts to the wider $12.1 billion package that you may be interested in, including income support and further investment in the health response.
More information on the wider package can be found from the Treasury.