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Client Newsletter RE Covid Subsidy - Friday 20 August 2021

Recent events including community cases of Covid 19 in Auckland and the move to Alert Level 4 throughout New Zealand will be causing uncertainty and financial difficulties to many New Zealand businesses.

For this reason, the Government have reintroduced the Wage Subsidy and the Resurgence Support Payment (RSP) to assist businesses that have had a certain reduction in their revenue to meet ongoing wage and other business costs.

Applications for the Wage Subsidy opened at 9am this morning while the Resurgence Support Payment is available from next Tuesday. Payments are expected to be received by businesses within three working days of applying.

Businesses must be able to prove that they have had a decline in revenue and must agree to the conditions of receiving the payments. From what we have seen so far, the Wage Subsidy can be applied for based on anticipated revenue decline (of 40%, and because of the return of Level 4), while with the Resurgence Support Payment, it appears that this should be applied for after the business has confirmed a drop of 30% of income and is to meet other business costs. 

It is not entirely clear from what we have seen so far whether Wage Subsidy payments received need to be included when calculating the loss of revenue for applications for the RSP, but it is clear that businesses can apply for both support schemes.  We will keep you up to date once applications for the Resurgence Support Payment open on Tuesday and more detail is announced.

More details are below, please click on the links for more detailed information and to apply for the support.

employees through the response to COVID-19

Wage Subsidy Scheme

Applications for the Wage Subsidy Scheme will open nationally from 9am on Friday 20 August 2021, with applications initially open for two weeks. You’ll be able to apply on the Work and Income website.

The Wage Subsidy will be available to eligible businesses, organisations and the self-employed impacted by the move to Alert Level 4 on 17 August 2021.

To reflect higher wage costs since the scheme was first used in March 2020 the payments have been increased to:

  • $600 per week per full-time employee (working 20 hours or more per week)
  • $359 per week per part-time employee (working less than 20 hours per week)

For your business to meet the revenue decline test the following must apply:

  • your business is being or will be affected by the move to Alert Level 4 on 17 August 2021; and
  • your business has had, or you are predicting will have, a decline in revenue that is attributable to the effect the move to Alert Level 4 on 17 August 2021 has had on your business and that is:
    • of at least 40% over the period 17 August 2021 to 30 August 2021 (inclusive) (revenue test period), when compared to a typical 14-day consecutive period of revenue in the six weeks immediately prior to the move to Alert Level 4 on 17 August 2021 (default comparator period); or
    • if you are an employer that has highly seasonal revenue, of at least 40% over the revenue test period when compared to the same 14 consecutive days in 2020 or 2019 (seasonal comparator period), provided you can demonstrate that the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature; and
    • in relation to both the calculation of revenue for the test period and the calculation of the revenue for the relevant comparator period, exclusive of any payments made to you from this subsidy, other COVID-19 Wage Subsidy schemes, the COVID-19 Short-term Absence Payment scheme, COVID-19 Leave Support schemes, COVID-19 Essential Workers Leave Support scheme, COVID-19 Resurgence Support Payment scheme or the COVID-19 Small Business Cashflow scheme.

Information on the Wage Subsidy Scheme — Work and Income

https://www.workandincome.govt.nz/covid-19/wage-subsidy/how-to-apply.html

Resurgence Support Payment

Resurgence Support Payment applications will open nationally from 8am on Tuesday 24 August 2021. Applications will remain open for one month after a nationwide return to Alert Level 1.

Businesses and organisations will be eligible if they experience a 30% drop in revenue over a seven-day period after an alert level increase and meet other eligibility criteria. This drop is compared to a typical seven-day period in the six weeks before the increase in alert level. Seasonal businesses should show a 30% revenue drop compared with a similar week the previous year.

The decline in revenue must be a result of the specific alert level change, not just COVID-19 in general. You must have been in business for at least six months to be eligible. Charities, not-for-profit organisations, the self-employed and pre-revenue businesses, such as start-ups may also be eligible.

This payment is not a loan, so does not need to be repaid. The payment must be used to help cover business expenses such as wages and fixed costs.

There have been some recent changes to the eligibility criteria for commonly owned groups. A commonly owned group generally consists of businesses that have the same owners. Some individual businesses or organisations within a commonly owned group may now be eligible for RSP. You can find examples of commonly owned groups and more eligibility criteria for the RSP on the Inland Revenue website.

You can also calculate how much you may be entitled to and how to apply on Inland Revenue's website.

Eligibility for the Resurgence Support Payment– Inland Revenue https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/eligibility

Apply for the Resurgence Support Payment – Inland Revenue https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/apply

If you don’t meet the criteria for RSP but do have cash flow problems, Inland Revenue can help. Visit their Manage my tax page for more information.

Manage my tax – Inland Revenue

https://www.ird.govt.nz/covid-19/manage-my-tax

The NZ Government Covid Support page also has useful information for businesses:

NZ Government Covid 19 – Support for businesses

https://covid19.govt.nz/business-and-money/financial-support/financial-support-for-businesses/

Leave Support Scheme & Short-Term Absence Payments

These payments are available at all Alert Levels to employers to pay workers who are following public health guidance and are staying home (and cannot work from home) to self-isolate or are waiting for a COVID-19 test result. Note that you can’t get a Wage Subsidy for an employee for the period they're covered (and paid by) by a Leave Support Scheme or Short-Term Absence Payment.

Many businesses and self-employed people have applied for the various types of assistance last year so have a decent understanding of how to apply and how the criteria works for paying staff. With luck, the rest of New Zealand (Auckland and possibly Coromandel excluded) may be able to move out of Level 4 reasonably quickly if no cases emerge in the community (outside Auckland) in the next few days. However, as we saw last year, for many industries, particularly tourism, hospitality and retail, there is a huge cost to profit and productivity at Alert Levels 2 and 3, so businesses may be facing difficulties for some time.

At Bailey Ingham we are here to help our clients through this difficult and uncertain time. Please call or email your usual staff contact or one of our directors or associates should you need assistance at any time.

Stay safe and take care.

 

Regards,

 

Bailey Ingham Directors and Staff

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