All you need to know on COVID-19
Latest Updates on COVID-19
Business & Individuals Support
In this section;
Business Financial Support
- Resurgence Wage Subsidy
- Wage Subsidy Scheme Extension
- Leave Support Scheme
- Business Finance Guarantee Scheme
- Business Cashflow and tax measures
- Small Business Cashflow Loan Scheme
- Temporary Loss Carry-Back Scheme
- Apprenticeship Boost Intiative
- Mortgage Repayment Deferral Scheme
- Extended Mortgage Deferral Scheme
- Essentials Costs
- Redundancy Support
- COVID-19 Income Relief Payment
- Protection for renters and tenants
BUSINESS FINANCIAL SUPPORT
- The government have recently announced updates to some of their financial support schemes, with further work in the pipeline.
Current Financial Assistance regarding COVID-19
For full details on COVID-19 Financial Assistance; COVID-19 – Financial Assistance
COVID–19 Resurgence Wage Subsidy
- 2 week payment open from 21 August 2020 to 3 September 2020 for all business who meet the criteria, and aren’t receiving the wage subsidy or wage subsidy extension.
- Criteria is revenue drop of 40% (had or expected) for any consecutive 14 days during the period 12/08/20 – 10/09/20 compared to a similar period last year
- Applications can be made from 1pm 21 August 2020 until 11.59pm on 3rd September 2020
- Nationwide support
For more information on the Resurgence Wage Subsidy; Work and Income – wage subsidy
COVID-19 Wage Subsidy Scheme Extension
Support for employers who are still significantly impacted by COVID-19 after the original wage subsidy ends.
- If you applied for the original Wage Subsidy payment, you can’t apply for the Extension until your 12 week Wage Subsidy payment has finished.
- The payment will cover eight weeks from the date you submit your application. It will be paid at the same weekly rate as the Wage Subsidy.
- Your business must have experienced a minimum 40% decline in actual or predicted revenue over a 30 day period. This period needs to be in the 40 days before you apply, but no earlier than 10 May 2020, and must be compared to the closest period last year. You can use the COVID-19 Revenue Calculator to better understand your revenue.
- You need to repay the subsidy if you stop being eligible or fail to meet any of your obligations.
- Applications are open from 10 June 2020 until 1 September 2020
COVID-19 Leave Support Scheme
The COVID-19 Leave Support Scheme provides a payment to businesses to pay their workers who need to take leave due to COVID-19 public health guidance.
- August 2020 update : The revenue-drop test for the Covid-19 leave support scheme has been removed from August 2020 – businesses with workers who have been told by health officials to self-isolate will receive the equivalent of the wage subsidy.
For more information; Work and Income – leave support scheme
Business Finance Guarantee Scheme
- Small and medium-sized businesses may be eligible for Business Finance Guarantee scheme. The scheme helps businesses access credit to support operating cashflow disrupted by COVID-19.
- Participating banks can provide to eligible businesses:
- new loans
- increased limits to existing loans
- revolving credit facilities.
- The scheme supports banks to take on lending by the Government taking on the default risk of up to 80% of the loan.
- Lending decisions are made by banks. Borrowers must still pay the loan back — with interest — as they would normally.
For more information; Treasury.govt.nz – business finance guarantee scheme
Business cash flow and tax measures
Inland Revenue has information on a range of measures to help businesses as they recover. These include:
- greater flexibility for taxpayers in respect of statutory tax deadlines
- changes to the tax loss continuity rules
- a tax loss carry-back scheme
- measures to support commercial tenants and landlords
- further business consultancy support.
For more information; Inland Revenue – business cashflow and tax measures
Small Business Cashflow Loan Scheme
The government have announced recent changes to all new and existing Small Business Cashflow Loans (SBCL). There is no set date for the changes, however they will take affect by 31 December 2020.
- Currently no interest is charged if the loan is repaid within one year. This will be increased to two years.
- Currently the loan can only be used for core operating costs. This will be broadened so that the loan can be used, for example, on capital expenditure.
- The application time frame has been extended for another 3 years, with applications now being accepted up until 31 December 2023.
All other aspects of the loan remain in place;
- If you employ 50 or fewer staff, you can also apply for the Small Business Cashflow Loan Scheme. The scheme will loan $10,000 to every firm plus an additional $1800 for each full-time employee within your business.
- When applying for the loan, you need to be able to declare that you’re a viable business.
- Your business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month, compared to the same month last year. You can use the Revenue Estimator Tool to better understand your revenue.
- Applications can be made through myIR. If your business does not have a myIR account, you will need to create one to apply.
Temporary Loss Carry-Back Scheme
- Businesses expecting to make a loss in either the 2020 year or the 2021 year can use that loss to offset profits they made the year before.
For more information; Inland Revenue – temporary loss carry-back Scheme
Apprenticeship Boost Initiative
- Support will be available to employers of first and second year apprentices in a Tertiary Education Commission-approved New Zealand Apprenticeship or Managed Apprenticeship programme.
- The amount that can be claimed will vary depending on when an apprentice started their training programme and when they reach 24 months. Employers can claim:
- $1,000 a month for eligible apprentices in the first 12 months of their training programme
- $500 a month in the second 12 months of their training programme.
- Funding will be available from August 2020 until April 2022.
- Employers are required to top up the funding they receive to ensure their apprentices receive at least the minimum or training wage they are legally entitled to.
For more information; Work and Income – apprenticeship boost intiative
INDIVIDUALS FINANCIAL SUPPORT
Mortgage repayment deferral scheme
New Zealand’s retail banks are offering to defer repayments for all residential mortgages for up to 6 months for customers financially affected by COVID-19.
If you get a mortgage repayment deferral from your bank you will not need to make principal and interest payments on your loan for up to 6 months. This package is in addition to what banks are already doing individually to help affected customers.
Customers should contact bank for details or queries about the scheme
Extended Mortgage Deferral Scheme
RBNZ announced 17 August 2020 an extension of the regulatory guidance for the mortgage deferrals programme
Means banks can continue to offer temporary mortgage deferrals to their customers
The extension takes effect from when the existing guidance expires on 27 September and will apply until 31 March 2021, at which point the usual treatment will resume.
If you’ve lost your job or had your hours reduced you may be able to get a benefit or some other financial help from Work and Income.
Work and Income can help with urgent costs like:
– Accommodation costs, for example rent or mortgage, board, emergency housing, moving house
– Repairs or replacing appliances
– Emergency dental treatment
– Emergency medical treatment
– Water tank refill.
Financial support, eligibility criteria and how to apply at the Work at Income website https://workandincome.govt.nz/eligibility/living-expenses/index.html
As the impact of COVID-19 increases, experiencing job loss could be a reality for many. If you’ve lost your job or you run a business and are faced with laying off your employees, there may be support options available to you. Work and Income offer a range of information and support to employees who are made redundant.
COVID-19 Income Relief Payment
The COVID-19 Income Relief Payment is another option for people who have recently lost their jobs. You may be eligible if you lost your job (including self-employment) from 1 March 2020 to 30 October 2020, due to the impacts of COVID-19. You can get up to 12 weeks of payments to help with living costs and give you time to look for other work.
$490 a week if you lost full-time work
$250 a week if you lost part-time work.
Protection for renters and tenants
If you’re renting and are struggling to pay your rent, you may be eligible for support to help you stay in your rental property.
Click here for more information.
There is currently a freeze on rent increases. This means that landlords can’t increase rent for their rental properties until after 25 September 2020.
Click here for more information
BUSINESS COVID-19 CHECKLIST
We’ve put together a checklist of things to consider for you business during this COVID-19 crisis. The checklist includes some key area’s that may be affected including; financial, sales, purchasing, staff and people and technology.
The checklist raises a number of questions for you to consider, and then assists you with formulating an action plan.
Download a copy of our checklist that can be filled in onscreen or printed;
Contact Tracing for Businesses
All businesses (where customers enter the premises) must be registered and display a NZ COVID Tracer QR code.
The government has introduced Contact Tracing with NZ COVID Tracer App which enables visitors to check in at your premises (by way of a QR code displayed at your entrance). This process contact traces for individuals and does not eliminate the need for visitors/customers to manually sign in at your premises (which is for business records). Visitors to your premises must still manually sign in.
If you need to get this set up for your business, we can complete this for you on your behalf.
Please get in touch with our team 07 889 7153.
GST & Tax Information
GST processing will be business as usual during COVID Alert Levels.
During a change in Alert Levels, we will update you on the process in how you drop in papers, ensuring we follow the government guidelines.
We ask that you please collate your invoices, bank statements, etc as you normally would and drop off if needed.
Where possible we ask that you email any invoices, bank statements and other GST material through to your GST processor.
For clients that use Xero software there is functionality for you to upload your documents to you Xero file. If you are unsure on how to do this, please get in touch and we can guide you through this.
Another way is to take a photo of an invoice and email it through but the processor, will advise if that is required.
Lastly, any clients that would like our office to assist in the preparation of your GST or any other office administration matters please get in touch as we are more than happy to help out during this time.
Inland Revenue have requested that filing of returns continues as normal, even if you are unable to pay. The current view is that it is better to have an accurate GST or Payroll return filed, even if unable to pay, than a default assessment being issued which is inaccurate.
Inland Revenue have advised the following:
- If you business is unable to pay it’s taxes on time due to the impact of COVID-19, we understand, you don’t need to contact us right now.
- Get in touch with us when you can, and we’ll write-off any penalties and interest.
- It would help if you continue to file however, as the information is used to make correct payments to people, and to help the Government continue to respond to what is happening in the economy.
- IR will have the discretion to write-off use of money interest (UOMI) on payments due on or after 14 February 2020 if a taxpayer’s ability to make a tax payment on time has been significantly adversely affected by the COVID-19 outbreak. UOMI could be remitted for a maximum of two years past the date of enactment. Further guidance on this will be provided but eligibility appears to be;
o The business or individual has been significantly affected by COVID-19.
o Their income or revenue has reduced by at least 30% compared to the same month 12 months earlier (if your February 2020 income is 30% lower than your income from February 2019, for example).
o They have explored other options to support them financially, such as talking with their bank about additional finance or re-negotiated other loans/overdrafts.
More information here…
There has also been some specific guidance around “tax relief” provided by IR. Again this is a summary and further detail is available on the IR website but in short they have provided the following guidance;
- You may be able to make an estimate or re-estimate of provisional tax, if your circumstances have changed due to the COVID-19. We can arrange early refunds if provisional tax has been overpaid.
- If you’re having difficulty paying outstanding tax, we can help you set up an instalment arrangement. You can apply in myIR. You can also apply for a write-off due to serious hardship when you know you won’t be able to pay the full amount. The completion of an IR590 will still be required and we that in itself isn’t always and easy process.
- If you’re currently involved in contract work where schedular payments are to be deducted, such as forestry or bush work of all kinds, fishing boat work for profit-share, you may be entitled to a certificate of exemption.
- Working for Families Tax Credits entitlements are based on your yearly family income. If your family income changes, your entitlement may change. If your yearly family income decreases you may be entitled to increased payments, or you may be able to increase the frequency of your payments.
- You may be entitled to a tailored tax code if you’re receiving a salary or wage and have a loss to carry forward. A certificate will be issued to you with a reduced tax rate.
More information here…
There have been tax changes to announced that will apply from the 2020/2021 income tax year these changes are;
- 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 effective from 17/03/2020
- 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 here…
Tax Changes for 2021 income tax year
There have been further tax changes announced for 2021 income tax year for those affected by COVID-19. These changes include;
- A temporary and permanent loss carry back scheme
- Changes to the loss carry forward rules for companies
- Flexibility on due dates for returns
The actual design of how this will work is currently being implemented and we will update further once the rules and application is further understood.
Wage Subsidy Scheme
17 August 2020 – GOVERNMENT UPDATE:
COVID-19 Resurgence Wage Subsidy
A 2-week subsidy payment will be available nationally for employers, including self-employed people, who are financially impacted by the resurgence of COVID-19 and changes to COVID Alert Levels.
Businesses could be eligible for an eight week extension to the 12-week wage subsidy. Revenue loss thresold has now been decreased from 50% to 40%.
The Government has put together a COVID-19 Wage Subsidy for businesses in all regions where they expect to have revenue reduced by more than 30% due to COVID-19.
We recommend all employers, businesses, self-employed people who will be affected to submit a subsidy application form now. We have included links to Work and Income for information plus links to both forms which are used for the application process.
If you need help with this, please feel free to contact your accountant at CooperAitken for advice.
Sole traders and partnerships will use a different form to companies and employers. Note if you operate as a sole trader or partnership who has employees, you will need to complete both forms, one for your employees and the other for yourself.
The leave payment scheme has been removed and incorporated into the wage subsidy scheme.
The Declaration made at time of wage subsidy application has been amended and is more prescriptive. Anyone applying for the wage subsidy prior to 3pm on 27 March is bound by the previous declaration.
Active steps must be taken to mitigate the impact of COVID on business activities before making the application, which includes discussions with the bank, draw on internal cash reserves and making insurance claims where possible.
The expectations of employers’ commitment to paying and retaining employees has been tightened up.
- 80% of normal average pay needs to be paid to employee, but if not possible, the employer must at least pass on the subsidy.
- Employers must keep employee employed for the length of the subsidy.
- Nothing overrides the employment agreement.
- Employer cannot force an employee to use leave to receive the subsidy. If leave is to be used for payments in addition to the subsidy, this approval must be held in writing from the employee.
- Names of all employers who have received the subsidy will be published publicly.
- If subsidy is greater than normal wages, the total amount of subsidy must be paid to the employee. For example If a part-time employee earns less than $350 the full $350 must be passed on to them.
- Work and Income will verify information with IRD.
- If originally applied for subsidy before 3pm on 27/3/20 the original criteria will be used.
- If some employees names were left off the first application, a second application may now be made.
- If an employee resigns after the employer receives the wage subsidy, the employer must notify Work and Income
Please note – When you apply for the subsidy, you don’t receive a confirmation of what you have applied for. We are advising our clients to take a screen shot or record the details (or pass onto one of our team so we can record for you) so this information is easily accessible in the future if needed.
Wage subsidies and leave payments as announced as part of the governments COVID-19 package are treated as exempt for GST purposes. This is in contrast to generally GST registered businesses receiving Government grants and subsidy payments are required to return GST on payments received.
For Income Tax purposes, the wage subsidy is exempt income, therefore not taxable when paid to the employer. However for self-employed taxpayers, it will be taxable.
The wage subsidy paid by the employer to the employee is to be treated as a non-deductible expense. However, the wage subsidy is taxable to the employee and included as part of their normal wages subject to the usual PAYE, Student Loan, Kiwisaver deductions etc.
For any further queries around employer/employee responsibilities, please contact your Director for guidance. As this is unchartered territory with many differing views we need to guide you through your specific situation. This may include directing you to external sources such as John Brosnan HR Advisor (email@example.com) or specialised legal advice.
Disclaimer – for legal advice you may wish to contact your lawyer. However, these are the rules as we currently understand the situation:
1. Annual leave
Q Can I insist my employees take annual leave during the shutdown period?
A No. You must consult with your employees, and they may choose to take annual leave. If you apply for the subsidy for them, you can pay 80% as normal pay and the 20% balance can be paid as annual leave if they choose, or this portion may not be paid.
2. Leave without Pay
Q I have an employee who is happy to take leave without pay during the shutdown. Do we still apply for the subsidy for them?
A No, if you apply for a subsidy you are making a declaration that you will endeavour to retain the employee on at least 80% of their regular income during the period of subsidy
3. Earnings under the subsidy
Q An employee works more than 20 hours per week and earns less than $585. If I apply for a subsidy, I will receive $585.80. Do I have to pass on the difference to the employee, or retain the difference in the business?
A Yes, the difference must be passed on to the employee or other employees.
4. Self Employed
Q I am self-employed and do not have any employees. Can I claim a wage subsidy?
A Yes, use the form titled “Self-Employed (no employees) application”
5. Shareholder Employees
Q I have a company with employees. Can I also claim a wage subsidy for myself as a shareholder employee?
A Yes. If you take drawings from the company which you use as a living allowance, you simply include your name in the list of other employees when making the application.
6. Normal Pay
Q My employees are not on fixed hours each week. How much do I need to pay them when they are off work if I have applied for a subsidy?
A You can calculate their average pay as used for holiday pay calculations, and then pay 80% of this. This is not 80% of contracted pay. Clients needing help with calculation, please contact our payroll team 07 889 7153. Please remember, any changes to the employment agreement must be done with the employees approval.
7. Financial Difficulty
Q My business is in financial difficulty and I don’t know how I can keep paying the employees. Do I have to pay them?
A You cannot make them redundant during the 12 week period of the subsidy if you have already claimed this.
8. Buying/selling homes
Q I am buying/selling a house this week. What shall I do?
9. Lease Payments
Q Do I need to continue making my lease payments? Can I ask for a reduction in lease fees?
A Review your lease agreement in the first instance. You can read a helpful blog here, and get in touch to discuss your situation.
Q Can self-employed pensioners apply for wage subsidy?
A Pension is available to all, not means tested.
Important COVID Links
If you are seeking more information, please see below some helpful links;
- Government Economic Response Package
- Unite against COVID-19
- World Health Organisation (WHO)
- World events as they happen – WHO
- NZ entry restrictions – Customs
- Self-isolation advice – NZ Ministry of Health
- Alert Level 1 – Government Guidelines
- Alert Level 2 – Government Guidelines
- Alert Level 3 – Government Guidelines
COVID-19 ADVISORY FUNDS
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