Latest Updates on COVID-19
In this section;
From 11:59pm on Tuesday 1 September, all of the country south of Auckland moved to Alert Level 3.
For our office, this means our premises aren’t open to the public, however we are open for contactless drop-offs and collections of papers.
All meetings and contact will continue over phone calls and zoom.
Please contact our team with anything you need.
Morrinsville 07 889 7153 | Matamata 07 888 8002 | Thames 07 868 9945
In light on the yesterday’s government announcement, our premises are closed.
Morrinsville and Matamata offices are closed for at least 3 days and our Thames office is closed for at least 7 days.
Our team are still here to support you and are set up to continue business as normal from home.
For those with appointments over the next few days, we will be in touch with you soon to reschedule or organise a zoom or phone appointment where needed.
Contact can still be made with the team through email and cell phones as normal. Our main phone lines have been diverted and all messages received will be passed onto team members (our Thames line is diverted to Morrinsville).
Please see some updates below on working at Level 4 and business finance support available.
We will be sending regular updates as they come to us but we can reassure you we continue to be here to support you.
On a positive note, we’ve been here before and we know what to do, let’s work together and get back to normal as soon as possible.
Keep safe, take care.
From the team at CooperAitken Accountants
Doing Business at Alert Levels
DOING BUSINESS AT ALERT LEVEL 4
Under level 4 restrictions only some businesses can operate. We are seeing more businesses operating at Level 4 where they have not previously been allowed to.
If you’re unsure if you are able to operate at Level 4, please review this information here.
If you wish to discuss your business and whether you qualify to operate at Level 4, get in touch with our team.
OPERATING AT LEVEL 3
For 11:59pm Tuesday 1 September, all of the counry south of Auckland, moved into Alert Level 3.
If you are unsure if you can operate at Level 3, please follow the links below;
RETURN TO LEVEL 3 & 2
Whilst we do not know when Alert levels will change, we can plan for a drop in alert levels to ensure that we have an operational plan at all alert levels.
A lot of businesses successfully operated at level 3 and level 2 in the past so now is the time to start thinking about how your business will operate at these levels safely.
So what worked well last time and what didn’t? Get a plan in place now so you can move quickly and become operational as soon as possible once alert levels are dropped.
If you want some advice on how to operate safely at lower alert levels or to brainstorm some alternative ways of operating get in touch today.
Business Financial Support
BUSINESS FINANCIAL SUPPORT
Applications for the wage subsidy, resurgence support payment, leave support payment, short-term absence payment and the small business cashflow loan are all open now.
The wage subsidy, leave support payment and short-term absence payment are all employee payments available and you cannot get more than one of these payments for the same employee at the same time.
This differs to the resurgence support payment which is a payment to business owners to help them meet business costs. You can apply for both the RSP and an employee payment.
The small business cashflow loan (SBCL) is a one off repayable loan available to meet business costs also. These support packages are detailed further below.
Wage Subsidy - August 2021 (1st round)
APPLICATIONS FOR WAGE SUBSIDY #1 ARE NOW CLOSED.
The payment will cover a two week period at the rate of:
- $600 a week for each full-time employee retained (20 hours a week or more)
- $359 a week for each part-time employee retained (less than 20 hours a week)
It is important that you first read the declaration before applying for the wage subsidy. Important points included in the declaration are:
- Your business meets the revenue decline test which for a standard trading business means your business has had, or you are predicting will have, a decline in revenue of at least 40% over the period 17 August 2021 to 30 August 2021 that is attributable to the effect the move to Alert Level 4 on 17 August 2021 when compared to a typical 14-day consecutive period of revenue in the six weeks immediately prior to the move to Alert Level 4 on 17 August 2021.
- For seasonal businesses a drop of at least 40% over the same period compared to the same 14 consecutive days in 2020 or 2019
- You will prepare and retain evidence to support this declaration including the drop in revenue
- Use your best endeavours to pay at least 80 per cent of each named employee’s ordinary wages or salary and pay at least the full amount of the subsidy to each named employee
- You will not make any changes to your obligations under any employment agreement, including to rates of pay, hours of work and leave entitlements, without the written agreement of the relevant employees
- You will discuss this application with the named employees and obtain consent from them – employee privacy statement found here.
Wage Subsidy - August 2021 #2 (2nd round)
APPLICATIONS FOR WAGE SUBSIDY #2 ARE NOW CLOSED.
The government has announced a second round of the wage subsidy referred to as Wage Subsidy August 2021 #2. This is for all businesses and self-employed people who have or predict at least a 40% decline in their revenue from 31 August to 13 September who meet all the eligibility criteria (read criteria here).
Businesses that applied for the initial Wage Subsidy August 2021 payment and who meet all the eligibility criteria for Wage Subsidy #2, can apply for another wage subsidy payment two weeks after their previous application. So, if someone applied on 23 August, they could apply for Wage Subsidy #2 on 6 September. Early applications can’t be accepted as each payment is for two weeks.
Applications for the Wage Subsidy August 2021 #2 open at 9:00am on Friday 3 September.
If you are unsure whether your decline in revenue will meet the eligibility criteria, please contact team to help you calculate this.
Wage Subsidy #3 (3rd round)
Due to Auckland remaining in Alert Level 4 while the remainder of the country moves into Level 2, a third Wage Subsidy Scheme has been announced from the government for eligible businesses.
You can apply from Friday 17 September 2021.
LEAVE SUPPORT SCHEME
The leave support scheme is for employees who must self-isolate and cannot work from home. This payment provides a two-week lump sum payment.
The Leave Support Scheme is paid as a 2-week lump sum per eligible employee and is paid at a flat rate of:
- $600 a week for full-time workers who were working 20 hours or more a week
- $359 a week for part-time workers who were working less than 20 hours a week.
SHORT-TERM ABSENCE PAYMENT
The short term absence payment provides a one-off payment for workers who must miss work due to a COVID-19 test and cannot work from home.
This is a one-off payment of $359 for each eligible worker. You can only apply for it once, for each eligible worker, in any 30-day period.
RESURGENCE SUPPORT PAYMENT (RSP)
Resurgence Support Payment #1
APPLICATIONS FOR RSP #1 ARE NOW CLOSED.
On Tuesday 17 August, the Minister of Finance announced that the Resurgence Support Payment (RSP) would be made available to businesses and organisations affected by the 17 August Alert level 4 increase. Unlike the wage subsidy scheme, the RSP does not have to be applied directly to employees but businesses can use the funds to cover other business costs.
To be eligible, a business or organisation must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to the increased COVID-19 Alert level. This decrease in revenue or capital-raising ability is compared with a typical 7-day revenue period in the 6 weeks prior to the increase from Alert level 1.
The payment you will receive will be the lesser of:
- $1,500 plus $400 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs
- four times (4x) the actual revenue decline experienced by the applicant.
Other eligibility can apply for full criteria can be found here; Inland Revenue – RSP eligibility
Resurgence Support Payment #2
APPLICATIONS FOR RSP #2 ARE OPEN.
The government have announced a second payment of the Resurgence Support Payment (RSP) is to be made available to those business still feeling the impact of the recent alert level increase.
The RSP is a lump sum payment to help businesses to meet their fixed costs.
Businesses will need to show a 30% or more drop in revenue in a 7-day period from 8 September until immediately before all of NZ returns to Alert Level 1 compared to a typical 7-day period in the 6 weeks before 17 August.
The payment will stay as $1,500 plus $400 per full-time equivalent (FTE) employee up to a maximum of 50 FTEs, or four times the actual revenue decline experienced by the applicant, whichever is less.
Applications will open for the second payment at 8am Friday, 17 September.
Applications for RSP payments will remain open until 1 month after the whole of New Zealand returns to Alert Level 1.
How do you apply?
Businesses have to apply through their MyIR account at IRD and if you don’t already have a myIR account, you can create one.
You will need the following information to apply:
1.New Zealand Business Number (NZBN).
The NZBN is a globally unique identifier for each New Zealand business. When you have one it helps to speed up your interactions across Government.
If you’re a registered company you’ll already have one. You can find it on the NZBN website in the search bar.
If you’re self-employed, a sole trader, a partnership or a trust, and you don’t already have an NZBN – apply for yours on the NZBN website here or get in touch and we can help you apply
Please note applying for a NZBN can take a few days so we recommend doing it now.
2. Employee details
If you’ve filed an employment information (EI) in the last 30 days leading up to the application, your employees’ name and IRD number will already be on the application. Otherwise, you’ll need to enter each employee’s name, IRD number, and whether they are a full or part time employee.
3. Bank account
If the bank account number you want the RSP paid into is different to the one IRD already holds, you need to provide the new number with your application. This must be a New Zealand bank account.
4. Revenue details
You’ll need to provide revenue details for the 7-day elevated alert level period and the 7-day comparison period. Please get in touch if you need our help calculating this. At this stage we are not sure whether you will be required to submit this information with the application or whether you will need to hold this information for a later date.
Once you have the above information you log into or register for myIR and once you’ve logged in, select “Apply for Resurgence Support” in “I want to…'” and follow the instructions on screen to complete your application.
Full details on how to apply can be found here; Inland Revenue – How to apply
More information on the RSP can be found here; Inland Revenue – RSP Information
If you need assistance applying or have any questions relating to the RSP please don’t hesitate to get in touch.
SMALL BUSINESS CASHFLOW SCHEME (SBCS)
the government will provide loans to small businesses, including sole traders and self-employed, impacted by COVID-19 to support cashflow needs.
- Applications are open until 31 December 2023.
- The SBCS will provide assistance up to $100,000 to business employees 50 or fewer full-time employees (including sole traders and self-employed)
- Businesses are eligible for a $10,000 loan
- An additional $1,800 is available per equivalent full-time employee
- The loan is interest free if paid back within two years
- You must show at least a 30% drip in revenue due to COVID-19
For more information on the SBCS; Inland Revenue – Small Business Cashlfow Scheme (SBCS)SS
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.
In addition to this, the government announced that mandatory record keeping ie. scanning or manually signing in will now become compulsory at all alert levels for some businesses.
The government has indicated busy places or events will have to comply and have listed that hairdressers, restaurants and beauticians are among those businesses that will fall into this category.
Relevant businesses and events will be responsible for having systems and processes in place to ensure, as far as is reasonably practicable, that customers or visitors make a record at all alert levels.
This rule will come into effect seven days after any change in alert levels so businesses have time to get it.
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
This section explains how each of the Covid-19 Financial Support payments should be returned and treated for tax purposes for both employers and self-employed persons.
- Income Tax – the receipt of the subsidy is treated as excluded income (to the extent that the subsidy is passed on to the employee) and therefore not liable for income. Consequently, the employer will not be entitled to an income tax deduction for wages paid out of the wage subsidy.
The amount of wages paid in excess of the wage subsidy (amounts funded by the employer) are deductible as normal.
- GST – there are no GST implications (the payment is exempt from GST)
ACC – the wage subsidy is not liable for ACC
Please note if you are a self-employed person and receive a PAYE wage then you need to treat payments the same as an ‘Employer’.
Self-Employed Person (including shareholder-employees)
The following is the tax treatment for payments when self-employed persons are not paid a PAYE wage.
- Income Tax – The wage subsidy qualifies under section CG 5B of the Income Tax Act 2007 as ‘compensation’ to replace lost income and is therefore taxable income to a self-employed person.
- GST – there are no GST implications (the payment is exempt from GST)
- ACC – the wage subsidy is not liable for ACC for self-employed person
PAYE Wage Earner
The wage subsidies received are not counted as taxable income for businesses but employees pay PAYE on the subsidy they receive, essentially the end user is liable for the tax. As normal practice the employers will deduct and pay your PAYE tax to the IRD on your behalf on the wage subsidy.
RESURGENCE SUPPORT PAYMENT
This is a payment to businesses to help them meet business costs. The tax treatment differs to the employee related payments above.
The same tax treatment applies to all businesses, whether operating in a company, partnership, trust or as a sole trader;
- Income Tax – this support payment is not subject to income tax. Consequently, tax deductions cannot be claimed for expenses to the extent they are funded by the resurgence support payment.
- GST – Any recipient of the payment that is registered for GST is required to include the GST portion of the payment received in their next GST return. If you are not GST registered then you do not need to return the GST portion. If you received a $1,900 payment then the GST to pay in your next return would be $248. Consequently, the business will then also be able to claim back GST when the money is spent
ACC – the RSP payment will not attract ACC
The following are our standard account codes for all payments you may receive.
- 168 (no GST) : Employees Wage Subsidy/Leave Support Payment and Short-term Absence Payment
- 167 (GST) : Resurgence Support Payment
If you need assistance setting up these account codes please get in touch.
We know it may be challenging for many of you to complete and file your returns during this time. Our staff are willing and able to help you ensure your returns are filed at the IRD on time so please reach out if you need help.
If COVID-19 has impacted a business’s ability to pay tax on time, a request can be submitted for remission of penalties and interest and there is the option of setting up a payment arrangement with the IRD to pay off any tax owing over time.
Get in touch with our team today to discuss your options.
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.
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
COVID-19 Resurgence Wage Subsidy – LATEST
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;
COVID-19 ADVISORY FUNDS
HAS YOUR BUSINESS BEEN IMPACTED BY COVID?
We can help.
We can offer you FUNDED business services to help you and your business through COVID-19 and get you started planning for tomorrow.