Covid-19 Government Financial Aid – Summary

The NZ Government last week announced an initial financial assistance package of $12.1b to assist businesses and other people affected by Covid-19.

The package includes:

  • $5.1b in Wage subsidies
  • $2.8b in Income Support
  • $2.8b in tax changes
  • $500m support for the aviation sector
  • $600m for health services.

Government plans to announce further assistance to businesses.

 

Wage Subsidy

Businesses can seek assistance for wage subsidies if:

  • There is a 30% drop in income between January and June 2020 compared to the same period last year and this fall in income is attributable to Covid – 19. Business can also use forecast data to demonstrate the fall income.
  • Employers must demonstrate that they have actively tried to mitigate the impact and consequences of Covid – 19.
  • Employers must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidized period.

The Wage Subsidy is paid at a flat rate of:

  • $585.80 for employees working 20 hours or more per week.
  • $350.00 for employees working less than 20 hours per week.

The maximum that can be paid to a business is $150,000 and the subsidy can only be claimed once.

 

Leave Payments

Employers can apply for Leave Payments at the same rates as the Wage Subsidy set out above if:

  • Employees need to self-isolate
  • Employees have contracted Covid – 19 and cannot work
  • Employees who are caring for dependents who are required to self-isolate or are sick with Covid – 19.

The Leave payments are available for 8 weeks from 17 March 2020 and Employers can apply more than once. The payments  must be passed in full to the employees.

 

Tax Breaks

Government is introducing legislation to give effect to the following measures that will also assist businesses and will take effect from1 April 2020 (2020/2021 financial year).

  • Asset Depreciation – commercial and industrial buildings will be able to claim depreciation. This deduction will be on-going.
  • Instant Asset Write-Off – for the 2020/2021 financial year this is being increased from $500 to $5000 and after that to $1000.
  • Provisional Tax – the threshold for liability to Provisional Tax is being permanently increased to $5000.
  • Use-of Money-Interest – Inland Revenue will now given discretion to write off use-of-money-interest for taxes owing after 14 February 2020. This discretion will initially apply for a 2 year period.

How to apply for Assistance