COVID-19 Financial Information
Practical information to help you understand COVID-19 from Deloitte New Zealand
Please note: this information has been provided to us by our friends at Deloitte New Zealand who specialise in accounting services and corporate finance. We are sharing this with you as it may be helpful to navigate this tricky time but please direct any financial questions to your own financial adviser.
This information may also change following further updates from the New Zealand Government. As above, please check with your own financial adviser.
With COVID-19 challenging communities and businesses throughout New Zealand, it is worth emphasising the importance of prioritising the care we show for each other. The information we have shared below, regarding the Wage Subsidy Scheme and Covid-19 Leave and Self-Isolation Support, is designed to support you as business leaders as you navigate through uncertainty.
On 17 March the Government announced a NZ$12.1 billion Economic Response Package. This stimulus includes two immediately accessible subsidies for employers, contractors, sole traders or the self-employed – 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 (NZBN), 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 (MSD) 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.
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.
Upcoming Tax Obligations
On 25 March Inland Revenue issued a media release advising if businesses are unable to pay its taxes on time due to the impact of COVID-19, taxpayers do not need to contact Inland Revenue right now. Inland Revenue suggest taxpayers get in touch when they can. However they would still prefer taxpayers continue to file (employment information, GST returns etc) as this information is required to make correct payments to people, and to help the Government continue respond to what is happening in the economy.
Businesses significantly adversely affected by COVID-19 can enter into instalment arrangements with Inland Revenue. You can, or your nominated tax agent can, send a secure email via myIR prior to the due date requesting an extension. The request should suggest the date for when payment can be made. The email should provide context for the request (i.e. set out the type of business, how long it has been operating and how it has been significantly adversely affected by COVID-19).
Please click here to return to our main COVID-19 information page.