Economic Response Package
An update as at 24 March 2020.
On 23 March the government removed the $150,000 cap that limited the amount each business could receive under the wage subsidy. All businesses are now eligible to apply for a wage subsidy for all of their staff, regardless of the size of the business. Other changes that were announced on 23 March include that:
- new businesses (e.g. that are less than a year old) and high growth firms (e.g. firms that have had significant increase in revenue) are also eligible. They will need to demonstrate the revenue loss assessment against a similar time period, for example a 30% loss of income, attributable to COVID-19, in March 2020 compared to January 2020.
- self-employed people with variable monthly incomes are eligible if they can demonstrate the revenue loss assessment against the previous year’s monthly average (e.g. 30% loss of income attributable to COVID-19 comparing March 2020 to the average monthly income in the period March 2019 to March 2020).
- the scheme now covers registered charities, non-governmental organisations, incorporated societies and post-settlement governance entities.
All of the other eligibility criteria for the wage subsidy still apply.
More information about the wage subsidy can be found here.
Overview of Economic Response Package
On 17 March the Government announced a $12.1 billion package to support jobs and the domestic economy respond to Covid-19. The three parts of the package that are most directly relevant for sport and recreation organisations are:
- Part 1 - $5.1 billion in wage subsidies for affected businesses in all sectors and regions
- Part 2 - $126 million in Covid-19 leave and self-isolation support
- Part 3 - $2.8 billion in business tax changes to free up cashflow, including a provisional tax threshold lift, the reinstatement of building depreciation and writing off interest on the late payment of tax.
More information on the full package can be found here.
Part 1 - Wage subsidies for businesses affected by Covid-19
The government has introduced a wage subsidy to support your business if you are impacted by Covid-19 and face laying off staff or reducing their hours because of Covid-19. Sport and recreation organisations are eligible for these wage subsidies along with businesses from all other sectors.
To qualify for the wage subsidy:
- your business must be registered and operating in New Zealand
- your employees must be legally working in New Zealand
- the business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline must be related to Covid-19
- your business must have taken active steps to mitigate the impact of Covid-19
- you must make your best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.
The Covid-19 wage subsidy will be paid at a flat rate of:
- $585.80 for people working 20 hours or more per week
- $350.00 for people working less than 20 hours per week.
The subsidy will be paid as a lump sum and covers 12 weeks per employee. Businesses can only get this subsidy once.
Threshold of 30% decline in revenue
The wage subsidy scheme requires you to state that your business has seen a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year. If your business has seen (or is expected to see) a drop of 30% or more in revenue as a result of Covid-19 but you cannot demonstrate this on a direct month to month comparison then please contact us at email@example.com.
Business New Zealand is developing a tool to help employers assess the impact Covid-19 has had on their business to determine whether the 30% threshold has been met or not. This is expected to be available on the Business New Zealand website shortly (https://www.businessnz.org.nz/resources).
More information including how to apply for the subsidy can be found here.
Part 2 - Covid-19 leave and self-isolation support
The Government has also introduced a Covid-19 Leave Payment to support people financially if they:
- need to self-isolate (as determined by the Ministry of Health guidelines),
- cannot work because they are sick with Covid-19, or
- cannot work because they are caring for dependents who are required to self-isolate or are sick with Covid-19.
The Covid-19 Leave Payment will be available for 8 weeks from 17 March 2020. Employers will be able to apply for this more than once.
It will be paid to employers who have eligible employees and they must pass the payment onto their employees in full.
More information about the leave payment scheme including how to apply can be found here.
Part 3 - Business tax changes
The Covid-19 Economic Response Package also includes a range of business cash flow and tax measures which sport and recreation organisations may benefit from including:
- increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021
- increasing the small asset depreciation threshold from $500 to $1,000 — and to $5,000 for the 2020/21 tax year
- allowing depreciation on commercial and industrial buildings from 2020/2021
- removing the hours test from the In-Work Tax Credit (IWTC) from 1 July 2020.
More information about the business tax changes can be found here.