We are again working from home-based offices and fielding calls from clients about the government help available during this latest covid lockdown.
The government has announced the Wage Subsidy Scheme is in place again – we've included more information on this below. If you have any questions please do get in touch. We wish you and your family members all the best, and understand this is a difficult time for everyone.
With the nationwide increase to Alert Level 4 from Wednesday 18 August , various government support packages have been activated. The criteria for each support package varies and should be reviewed carefully.
The familiar Wage Subsidy has come back, with a few changes since it was last used in February. Key things to note are:
- Eligible employers throughout New Zealand can apply for the Wage Subsidy if they expect a loss of 40 percent of revenue as a result of the Alert Level change.
- The Wage Subsidy has increased to $600 per week per full time employee and $359 per week per part time employee.
- Applications for the Wage Subsidy open on Friday 20 August with the first payments expected three days following.
- The Wage Subsidy will be paid as a two-week lump sum.
The government's press release did not indicate any change to the requirement to make reasonable efforts to pay 80% of the wages and salaries of staff members, but we assume this continues to be the case as before.
We expect a high trust model will be implemented as before, but note businesses who expected a loss of 40 percent of revenue, but did not have this eventuate have faced pressure to make repayment of the subsidy. In addition, we expect that further payments might be available should the heightened alert level remain for longer than two weeks.
Applications open today Friday 20 August, see more details on this link:
MSD WAGE SUBSIDY
Resurgence Support Payment
The Resurgence Support Payment is back for a fourth round. Key things to note are:
- Eligible businesses throughout New Zealand can apply for the Resurgence Support Payment if they incur a loss of 30 percent of revenue as a result of the Alert Level change.
- The Resurgence Support Payment continues to be $1,500 plus $400 per full-time equivalent employee, up to a maximum of 50 full-time employees (so a maximum payment of $21,500).
- Inland Revenue advise that applications will be open on Tuesday 24 August, as this support is only available after a 7 day lockdown level change.
IRD Resurgent grants
Both areas of relief can be applied for by eligible businesses, but as the criteria are slightly different for both, careful review is needed.
Our advice is to keep good records of your calculations of the reduction in income that has occurred due to the lockdown.
For income tax purposes, both payments are exempt income, but the corresponding expenditure is non-deductible. For self-employed people, the wage subsidy will need to be returned as income in your 2022 tax return.
For GST purposes, the Wage Subsidy is exempt, while the Resurgence Support Payment needs to be included in the GST return.
There are also HR considerations that may need to be worked through, especially if a wage decrease is proposed.
Previously, revenue decrease has had to be calculated based on the typical way in which revenue is measured, and we expect this to continue to be the case.
Businesses who have previously had an application declined, or have had to repay a grant may not be eligible.
Please stay safe and contact us via email or mobile if you have queries, Diane phone 021 2929029