MESSAGE TO CLIENTS 24 MARCH 2020
Bailey Ingham is Open for Business, though our doors are closed from 5pm today
The ongoing impact of the COVID-19 virus is having a huge effect on New Zealand society and the economy. At Bailey Ingham we are doing everything we can to prioritise the wellbeing of our staff, clients and communities to help contain the spread of COVID-19. Following the Prime Minister's announcement on Monday, our staff are working remotely for the time being, from Wednesday 25 March.
We have invested in our remote working capability over recent years and therefore it will be business as usual for our three offices as we continue to focus on providing an excellent level of service for our clients. Essential services such as payroll processing and PAYE and GST filing will continue as normal and we have a committed team of staff to assist all clients with advice and assistance.
We will continue to complete your GST returns and other work, but maybe in a slightly different manner. As you will not be able to drop records into the office, staff may request the content of these (details of some transactions) by email or phone.
We know that many of our clients are working through similar challenges to ours and that these are uncertain times for everyone. It is apparent, because of the large-scale influence that the virus is having on finances for almost all businesses in New Zealand, that the government announcements of financial support will only partly offset the problems in this area, and there will be job losses and businesses in financial difficulty. We will continue to provide assistance and are working closely with many businesses to assist with cashflow forecasts and business subsidy applications.
Information regarding the COVID-19 Economic Support Package is attached.
We wish you and your family the very best as New Zealand comes to terms with the ‘lock-down’ situation. We are here to help, please call or email if you require assistance at any time.
INFORMATION SHEET FOR BAILEY INGHAM CLIENTS
Re: COVID- 19 – Economic Support Packages for Businesses
The Government have announced a package to support businesses that are affected by the Coronavirus outbreak. The main two packages for businesses (as at 24 March 2020) are as follows:
- Wage Subsidy
The COVID-19 wage subsidy will be paid at a flat rate of $585.80 a week for employees working 20 hours or more per week, or $350 a week for employees working less than 20 hours per week. The subsidy is paid as a lump sum and covers 12 weeks per employee. The subsidy is for wages only and is to help keep your staff employed and to ensure the future viability of your business. Businesses can only get this subsidy once. If you stop paying employees after you have already received a subsidy for the next 12 weeks, then you will have to pay some of that subsidy back.
This subsidy has been put in place for all businesses that are affected by COVID-19 and face laying off staff or reducing hours because of a drop in income. The main qualification is that your business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year (there are some exceptions to this such as new businesses or businesses that have grown substantially over the past year). This drop in income must be directly related to COVID-19. In order to achieve the subsidy your business must make the best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.
2. Leave Payment
The second payment available to businesses is the leave payment. From 17 March the COVID-19 leave payment has been available to support businesses and employees if they:
- Need to self-isolate as determined by the Ministry of Health guidelines
- Cannot work because they are sick with COVID-19
- Cannot work because they are caring for dependents who are required to self-isolate or are sick with COVID-19
The COVID-19 leave payment will be available for 8 weeks. Employers will be able to apply for this more than once. It will be paid to employers who have eligible employees and they must pass the payment onto their employees in full. The COVID-19 leave payment covers full-time, part-time, casual employees and contractors. The COVID-19 leave payment will be paid at a flat rate of $585.80 to a person working 20 hours or more per week, or $350 to a person working less than 20 hours per week. Employers receiving the payment for those required to self- isolate can receive it for 14 days. As people may be required to self-isolate more than once then employers will be able to apply for this on an as needed basis.
Businesses and their employees can agree to use any form of paid leave (e.g. annual leave) to cover their period of self-isolation. However, employees are not required to have used all of their annual leave entitlements before they can receive this payment. The employee must have been legally working for their employer at the time of self-isolation and they must have been expected to work for the period of self-isolation. Self-employed people who are not earning at least the minimum wage are not entitled to the leave payment.
Applying for the Wage Subsidy and Leave Payment Subsidy
Applications should be done online at the website workandincome.govt.nz. Here is the link to the information page:
And here is the link to the Application form (employer): https://services.workandincome.govt.nz/ess/employer_applications/new
And here is the link to the Application form (no employees):
The application is made online and you will need to supply the business IRD number, business name and address, as well as names and IRD numbers of your employees. Contact details for your business and your employees must be given. Work and income will check if you do indeed qualify for one of the subsidies and they will contact you by phone should they require further information regarding the application. Please note that you will require a New Zealand business number which is a 13-digit number. Companies will already have a 13-digit number (search the companies office website for this) https://companies-register.companiesoffice.govt.nz/ However, many sole traders, partnerships and Trusts will need to apply for a New Zealand business number. The link for this is here: https://www.nzbn.govt.nz/get-an-nzbn/get-your-nzbn/
The actual application form for the subsidies is relatively straight forward. It appears that no financial information is immediately required, however, WINZ will be contacting businesses, so it is important that you do have financial information or projections available to show that your income has been reduced by 30% to get the Wage Subsidy Payment. With the country going into lockdown mode, some businesses where employees are not able to work should apply for the Leave Payment first, and then the Wage Subsidy payment later on. Each business will be different.
3. Tax Relief
In addition to the cash subsidy payments available, the government is also supporting businesses through areas of tax relief including a relaxation of the rules regarding use of money charges for late IRD payments. We always recommend, however, if you can’t make a payment to the Inland Revenue Department, that you contact them and make an arrangement to pay (prior to the due date).
Continue to file all returns such as PAYE and GST even if you can’t immediately make payment to IRD. There are other tax changes including an increase in the provisional tax threshold to $5000 (was $2500) and assets used for business can be written off fully in the year purchased during the 2021 financial year.
Please contact one of our friendly team should you require any confirmation regarding the above. As always, we are here to help you through this difficult time. If you have any queries or require more specific advice, please contact:
Directors and Associates
Bailey Ingham Ltd