SPECIAL ALERT - Covid Financial Support
Covid-19 Wages Subsidy
Most of us will remember the wage subsidy introduced early last year during the first lockdown - the rules for the current situation have changed slightly.
Businesses need to expect a 40% revenue decline for the two-week period from 17 August – 30 August due to the move into Level 4.
Revenue is to be compared against a typical fortnight in the six-week period before 17 August. For seasonal businesses, comparison can be made against a similar period in 2020 or 2019.
The rates have increased slightly - $600 per week per employee working 20 hours or more (regarded as full-time equivalent employees FTE’s) or $359 for those working fewer than 20 hours.
The initial wage subsidy payment is for two weeks. Applications opened on 20 August and remain open for two weeks.
Covid-19 Resurgence Support Payment
This new support didn’t exist in March last year.
Those who qualify for the wage subsidy are likely to also qualify for the resurgence support payment.
The key difference is a 30% decline in revenue – but this is an actual decline. Businesses will need to report the revenue for the lockdown week and the revenue for a comparable week in the last six weeks.
Again, seasonal businesses can use a comparable figure from prior years.
The amount available is the lower of $1500 + $400 per FTE, or four times the reduction in revenue. The FTE calculation allows 0.6 for an employee working fewer than 20 hours per week, the result is rounded up to a whole number. For example, a business with one FTE and three part-timers would be entitled to $2700, being $1500 plus 2.8 FTE’s rounded up to three.
This payment is to support businesses’ other operating costs and is inclusive of GST, for GST registered businesses.
Businesses need a NZ business number to apply for the support payment. Companies have this automatically;
sole traders and partnerships will need to apply for one at www.nzbn.govt.nz
Covid-19 Leave Support Scheme
Available to employers and self employed, this targets workers needing to self isolate who can’t work from home. The rates have been increased to the wage subsidy level, but is for two weeks only. Businesses need not have suffered a revenue decline under the scheme which takes effect from 21 August.
The criteria is quite strict and the employer will need a conversation with the employee to ensure they can complete the appropriate declarations.
Covid-19 Short-Term Absence Payment (STAP)
To cover those workers and self-employed at home awaiting Covid-19 test results and can’t work from home, a one-off payment of $359 for each eligible worker is available.
Covid-19 Small Business Cashflow Loan Scheme
For those businesses that haven’t already applied or have applied but fully repaid it, Small Business Cash Flow Loans are still available. The business must have experienced at least a 30% Covid-related drop in revenue in any 14 day period in the last six months, compared with same 14 day period a year ago (or two years ago, if the prior year was COVID affected). The loan is a base amount of $10,000 plus $1800 for each FTE at 3% interest from the date of advance - if not fully repaid within two years. No repayments are due for the first two years.
If you have any queries, there is a lot of COVID information on the government website www.business.govt.nz or ask your friendly business adviser.
Take care and stay safe.