With New Zealand’s confirmed COVID-19 cases jumping to 102, the Government announced yesterday that the country will move to Alert Level 4, or lockdown in 48 hours for a period of 4 weeks. With all non-essential businesses now required to close or work remotely in an effort to stop the spread of COVID-19, the impact on business and the economy will be significant.
We provided details of the Government’s initial economic stimulus package last week here https://www.nexia.co.nz/blog/nz-governments-economic-recovery-response-covid19/. Finance Minister Grant Robertson has today announced an extension of this package by an expected additional $4 billion in an effort to provide significant further support for the economy, workers and businesses as the country moves into lockdown.
The extended measures include:
- Removal of the $150,000 cap per employer for the wage subsidy. The original proposals only extended to 21.3 full time employees – this will enable employers to apply for the lump sum payment ($7,026 per full time employee and $4,200 per part time employee).
- New businesses and high growth businesses are now eligible for the subsidy, they simply need to be able to demonstrate a revenue loss assessment against a similar time period, rather than a year ago.
- Self employed people with variable monthly incomes can apply if they can demonstrate a 30% loss against the previous year’s monthly average.
- Confirming that the scheme is available to registered charities, non-governmental organisations, incorporated societies and post settlement governance entities.
In addition, while details are yet to be ironed out, the Government has announced that:
- Urgent work is being done on additional income support measures for all workers above and beyond the wage subsidy scheme.
- The Government, Reserve Bank and retail banks have agreed in principle to significant temporary support for mortgage holders and a business finance guarantee scheme – more details to be released in the next few days.
- The Government has agreed to freeze all rent increases and no cause terminations have been extended to ensure tenants have security during this period.
We have also confirmed with Inland Revenue that the wage subsidies and leave payments received under these measures will be:
- Exempt from GST
- Non taxable to employers (but also non deductible when paid to employees)
- Taxable to employees in the usual manner as the payments are replacing their wages.
We understand that many, if not all businesses will be affected by these unprecedented and challenging times. We encourage you to get in contact with us to discuss the options available for your business - we are committed to working with you and assisting in any way we can.