Updated on 27 March 2020.
On 27 March the government made some further changes to its Economic Response Package. From 27 March onwards:
the Covid-19 leave and self-isolation support scheme has been removed as all New Zealanders (other than those in essential services) are now expected to be eligible for the wage subsidy scheme if they cannot work normally from home. The government is working on arrangements for those in essential work who require sick leave due to Covid-19.
businesses accessing the scheme must still undertake best endeavours to pay employees 80% of their pre-COVID income. Where that is not possible – in particular, where a business has no activity whatsoever due to the shutdown and workers are not working any hours – they must pass on at least the whole value of the wage subsidy to each affected worker.
businesses must undertake to keep employees in employment for the period of the subsidy.
The Treasury now estimates that the financial cost of the scheme will be between $8 billion and $12 billion depending on uptake by businesses.
More information can be found here.
Update on 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 a 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 (on 27 March this part of the scheme was folded into the wage subsidy scheme given the Level 4 status of the country)
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
On 27 March the government announced the removal of the Covid-19 leave and self-isolation support scheme as all New Zealanders (other than those in essential services) are now expected to be eligible for the wage subsidy scheme if they cannot work normally from home.
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.