Government Economic Package - Full details
The Government
announced an Economic Response Package. This stimulus includes a subsidy for employers, contractors, sole traders or the
self-employed ie the Wage Subsidy and Leave Payment Scheme.
· The Wage Subsidy is a one-off lump
sum payment to support businesses in keeping people employed for the next 12
weeks.
·
The Leave Payment Scheme provides
support for employees that are required to self-isolate in accordance
with Ministry of Health guidance.
The purpose of the
Wage Subsidy is to support employers who have experienced a minimum 30% decline
in actual or predicted revenue to keep employees on the payroll during this
difficult period. The Wage Subsidy is calculated with reference to employees
and spans a 12 week period. The subsidy is calculated as $585.80 per employee
working more than 20 hours per week and $350.00 per employee working less than
20 hours per week. The subsidy will be paid as a lump sum covering a 12 week
period.
The purpose of the
Leave Payment Scheme is to provide payments (via employers) to employees who
are required to self-isolate – these payments are required to be passed on in
full to the relevant employees (less employment taxes and other deductions).
The leave payments are $585.80 to a person working 20 hours or more per week
and $350.00 to a person working less than 20 hours per week.
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, use this link to
apply.
If you are self-employed / a contractor, use
this link to apply.
Preparing
an application
In order to apply
you will need to confirm your eligibility and collect the required information.
Please ensure you
have proof that you are registered and operating in New Zealand, and that your
employees are legally working in New Zealand.
To complete the
application form you will need to collect:
- Your business bank account, IRD number, New
Zealand Business Number, and business contact details.
- With employee consent, relevant employees’
names, dates of birth, IRD numbers and employment types (i.e. more or less
than 20 hours of work per week).
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,
and here for the leave payment.
Wage
Subsidy eligibility
Businesses applying
for the Wage Subsidy will need to consider whether they can demonstrate revenue
decline, proof of “active steps” and best endeavours to retain employees.
Revenue
information
You will need to
confirm a minimum revenue decline of 30% for any month between January and June
2020, compared to the same month in 2019.
- Proof can be an actual decline or forecast
decline, but needs to be due to COVID-19.
- For those in business less than a year,
comparison can be made to a previous month “that gives the best estimation
of the revenue decline related to COVID-19”.
Proof
of “active steps”
You will need to be
able to prove that you are taking active steps to mitigate the financial impact
of COVID-19 on your business. Active steps might include activating a business
continuity plan; or seeking advice and support from bank or financial advisors,
the Chamber of Commerce, a relevant industry association, or a Regional
Business Partner programme.
Best
endeavours to retain employees
You will need to be
committed to making “best efforts” to retain employees and pay them a minimum
of 80% of their normal income for the subsidised period.
Leave
Payment Scheme eligibility
Businesses applying
for the Leave Payment will need to declare that employees’ require
self-isolation and that they will promptly pass the payment on in full (less
taxes) to the employees named in the application.
Employee
self-isolation status
In all cases,
employees must be legally working in New Zealand, must be unable to work from
home and must have been expected to work for the employer during the given
period.
Employees will also
need to fall into one of three groups:
- Cannot work because the person has been
diagnosed with COVID-19; or
- Cannot work because they are caring for
dependents who are required to self-isolate or who are sick with COVID-19;
or
- Required to self-isolate in line with Ministry
of Health Guidelines; have registered as needing to self-isolate with
Healthline; cannot work from home; and self-isolation is not because the
employee left New Zealand since the travel restrictions on 16 March 2020
and have since returned.
Employers and
employees are not required to use normal leave balances before applying for the
subsidy.
For the
‘self-employed’, you will need to be able to demonstrate that:
- You are legally working in New Zealand;
- Usually earning the minimum wage when you
decide to self-isolate;
- You were expecting to work for the period of self-isolation;
and
- You cannot draw an income for the period of
self-isolation.
We’re here to help
The recent outbreak is having a serious impact on NZ
communities and businesses. We encourage you all to take reasonable precautions and
follow the advice of the Ministry of Health.
COVID-19
is causing a great deal of uncertainty that requires thoughtful, people-first
responses. Business owners will need to directly address employees’ psychological
stress alongside the organisational needs.
We are ready to help if you need support in
applying for a subsidy, collecting information for an application or confirming
your eligibility.
- We
are able to assist in budgeting, forecasting and reviewing accounts to
confirm changes in revenue expectations / outcomes.
- We
are able to document conversations to show the ‘active steps’ you are
taking to respond to the financial impacts of COVID-19 on your business.
- We
are ready to discuss your choices for employee retention and wider
business continuity plans, including strategies to maintain cash flows.
- We
can support governance group decision-making through the next few weeks
and months.
- We
can support working-from-home finance staff or teams to stay on top of
compliance obligations.
Disclaimer:
This information has been carefully prepared, but it has been written in
general terms only.
The publication should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.
The publication should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.