NZ Government and COVID-19 businesses support – what can you receive?

5 min read

As with many governments around the world, New Zealand will be rolling out a range of support packages and assistance aimed at reducing economic impacts on your business due to COVID-19.

“This package is one of the largest in the world on a per capita basis,” Grant Robertson, NZ Finance Minister.

The measures are significant, and all New Zealand businesses are urged to make full use of what is available to them.

Let’s review the primary business support measures being rolled out.

Wage subsidies

The new measures (an expansion to existing wage subsidies) are designed to combat job loss and support those unable to work from home. Unfortunately, the government is still anticipating further job loss.

“We hope to save some jobs through this package, but we will not be able to save all jobs,” – Treasurer Robertson

Yet there’s still a lot of assistance being granted. The primary details of the package include:

The payment

  • $585.80 per week for full-time employees, where full-time is 20 hours or more per week.
  • $350 per week for part-time employees, where part-time is less than 20 hours per week.
  • If you have variable hours, create an average over the last 12 months and apply for the relevant payment which matches the average amount of hours worked.

Please note – the wage subsidy will be paid as a single lump to your employees and consists of 12 weeks’ worth of payments.

Criteria – do you qualify?

  • You must have suffered 30% business revenue losses since this time last year (over the period of a month).
  • Your business is registered and operating in New Zealand.
  • Your employees are legally working in New Zealand, including employees who have a NZ work visa or have a condition on their visa which allows them to legally undertake work in NZ.
  • Your business has taken active steps to mitigate the impact of COVID-19.
  • You must retain the employees named in your application for the period of the subsidy.

Businesses types included:

  • all business entities
  • self-employed
  • contractors
  • sole traders
  • registered charities
  • incorporated societies
  • post-settlement governance entities

What about income tax?

Most businesses will not have to pay income tax on the new wage subsidy as it will be classified as ‘excluded income’.

For sole traders and the self-employed, however, you will have to pay income tax as it will replace lost earnings.

Apply for wage subsidies as a business: https://services.workandincome.govt.nz/ess/employer_applications/new

Full details here.

Tax relief

There’ll also be a range of tax relief measures available to New Zealand businesses. Leniency and flexibility are being championed by the IRD.

As the IRD has stated:

“If your business is unable to pay its taxes on time due to the impact of COVID-19, we understand – you don’t need to contact us right now. Get in touch with us when you can, and we’ll write-off any penalties and interest. However, it will help if you continue to file.”

There are also some more specific tax benefits now available:

  • KiwiSaver – you may be able to either reduce or entirely suspend your payments.
  • Tailored tax codes – there’s tax relief available for those on wages or a salary with a loss to carry forward.
  • Depreciation – commercial and industrial buildings can now be depreciated for tax from year 2020/21.
  • Leave subsidies – there are now leave subsidies available from the Ministry of Social Development for sole traders, contractors and businesses who need to self-isolate.

More information on tax relief here: https://www.ird.govt.nz/covid-19/tax-relief

Business finance support

The government, retail banks and the Reserve Bank have announced a landmark financial support package for businesses like yours and also home owners affected negatively by the economic impacts of COVID-19.

The ‘Business Finance Guarantee Scheme’ will entail:

  • Targeted new loans and loan extensions will be offered to eligible businesses.
  • Businesses with annual revenue between $250,000 and $80 million can apply to their banks for loans up to $500,000, for up to three years.
  • The government will wear 80% of the risk while approved banks will shoulder 20%.
  • ‘Mortgage holidays’ may be available to you if you are under financial stress.

Check with your bank for details.

Find further information here: https://www.business.govt.nz/covid-19/business-finance-support-and-mortgage-holidays/

Resources:

New Zealand Government: https://www.beehive.govt.nz/