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What Financial Support Is Available To Your Business During Delta Lockdown?
24 August, 2021 | Smith and Partners
Lockdowns can cause significant financial stress to businesses and keeping track of the options available to you can be confusing, below we outline the support available to your business – from MBIE, WINZ, IRD and ACC. The information below only provides general summaries sourced from each of these agencies – and directing you where you can find more information. Care should be taken to ensure that you meet all the criteria required before applying for any of these support packages.
Please note that for all schemes that involve sharing information about your employees, you MUST seek their prior written permission before sharing their private information with the Government to be eligible for these schemes.
COVID Wage Subsidy Scheme
The purpose of this scheme is to help businesses afford the costs of paying staff when their revenue has dropped due to COVID-19 Level shift. If you are an employer, contractor, sole trader or self-employed you may be eligible for the COVID-19 wage subsidy.
To qualify, your business must have experienced a 40% decline over the period between 17 August 2021 and 30 August 2021 inclusive (this is the revenue test period), compared to a typical 14-day consecutive period of revenue in the six weeks immediately before the move to Alert Level 4 on 17 August 2021. There are additional specific criteria you should assess on the Work and Income page. You should refer specifically to the required declaration to ensure you fully comply.
This payment does not have to be repaid, unless it turns out your business did not meet the revenue decline threshold.
To learn more and apply – go here https://www.workandincome.govt.nz/covid-19/wage-subsidy/index.html
Leave Support Scheme
This scheme is designed to support businesses to support workers who have been told to self-isolate and who cannot work from home during that time. This payment covers employees and the self-employed.
There is a vast range of criteria that will make an employer entitled to apply for this payment. You can apply if you have an employee who:
- is sick with COVID-19
- is identified as someone who has been in close contact with someone who has COVID-19
- Has been asked to self-isolate for a period by a doctor or health official through the National Contract Tracing process
- Is the parent or caregiver of a dependant who has been identified as any of the above
- Are considered ‘higher risk’ and a doctor has told them to self-isolate while there’s active community transmission.
The business does not have to be experiencing a loss of revenue to apply for this payment, however the employee must not be able to work from home.
Employees who are casual contacts or are merely experiencing symptoms and waiting for results from a COVID-19 test are not eligible for this payment. The WINZ website has further details of who is and isn’t eligible for this subsidy.
You can find out more details and apply here – https://www.workandincome.govt.nz/covid-19/leave-support-scheme/index.html
Short Term Absence Payment
The COVID-19 Short-Term Absence Payment is available for businesses, including self-employed people, to help pay their workers who cannot work from home while they wait for a COVID-19 test result. (those not covered by the Leave Support Scheme)
At level 4 this option would only be available to businesses whose employees are essential workers.
This payment is available to both employers and the self-employed.
You can learn more about this subsidy here – https://www.workandincome.govt.nz/covid-19/short-term-absence-payment/index.html
Resurgence Support Payment
This is an additional support payment available to businesses on top of the wage subsidy scheme. Charities, not for profit organisations, the self-employed may also be eligible.
The purpose of this payment is to assist businesses with other non-staffing related costs.
If you don’t qualify for the wage subsidy, you may still qualify for the resurgence support payment as the threshold for the revenue drop is 30% (instead of the 40% for the Wage Subsidy Scheme)
To qualify a business or organisation must:
- have experienced at least a 30% drop in revenue over a 7-day period, due to the increased COVID-19 alert level.
- Have been in business for at least 6 months
- be considered viable and ongoing
- be physically present in New Zealand
- have a New Zealand Business Number
To learn more about eligibility and how this payment works – https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/eligibility
To apply – https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/apply
This payment does not have to be repaid unless it turns out your business did not meet the revenue decline threshold and can be claimed in addition to the Covid Wage Subsidy.
Small Business Cash Flow Loan Scheme
The purpose of these loans is to provide businesses with additional cash to help ease cashflow issues during lockdown. These loans are interest free if paid back within two years or operate at an interest rate of 3% for a loan term of 5 years.
The amount you can borrow depends on the number of full time and part time employees.
To be eligible – you must show at least a 30% drop in revenue due to COVID-19 – further details can be found here – https://www.ird.govt.nz/covid-19/business-and-organisations/small-business-cash-flow-loan
Business Dept Hibernation
This is a scheme designed to help businesses manage their debts until normal trading can resume. Sole traders are not eligible for this scheme. This scheme applies only to existing debts and not new debts and does not apply to all creditors.
The scheme allows you to set up an arrangement for your existing debts – for example paying your creditors only a percentage of what you owe them on time and delaying the rest. Your business will get up to a month’s protection while you set up the arrangement – meaning most creditors can’t enforce their debts (liquidation proceedings etc). If your creditors agree, you may get a further six months protection.
You still have to repay your debts in full.
It is strongly recommended that you get assistance from a lawyer or accountant to ensure you meet your legal obligations, especially in relation to employment and privacy law.
Learn more about this scheme here – https://www.business.govt.nz/covid-19/business-debt-hibernation/
Provisional Tax
Where circumstances have changed significantly, you may be able to make an estimate or re-estimate of provisional tax. They many also arrange refunds if provisional tax has been overpaid.
The provisional tax threshold was also extended from $2,500 to $5,000.
To learn more – go here
https://www.ird.govt.nz/covid-19/business-and-organisations/provisional-tax
Tax Penalties and Interest
The IRD has recognised that some businesses may struggle to pay their taxes and have stated that they may enter into arrangements with businesses.
To learn more – https://www.ird.govt.nz/covid-19/manage-my-tax/penalties-and-interest
COVID-19 Temporary Loss Carry-Back Scheme
This scheme should be discussed with your accountant and allows businesses who expect to make a loss in the 2020 year or 2021 year to offset profits they made the year before, resulting in tax changes.
You can learn more about this scheme here – https://www.ird.govt.nz/covid-19/business-and-organisations/temporary-loss-carry-back-scheme
GST Issues
To learn more about what to do or understand how IRD is assisting businesses where there are tax implications for cancelled supplies, where there is change of use for an asset or to cancel GST registrations – go here https://www.ird.govt.nz/covid-19/business-and-organisations/specific-gst-issues
Income Tax Issues
Some of the information around income tax still relates to the previous COVID-19 lockdowns. But assistance covered beneficiary distributions, bad debt write-offs, depreciation, insurance pay-outs, subvention payments and trading stock valuations.
To learn more – https://www.ird.govt.nz/covid-19/business-and-organisations/specific-income-tax-issues
Reduced Self-Employed Income
IRD is allowing the self-employed to apply for a tailored tax code where your income has been significantly altered. They are also allowing some self-employed people to apply for certificate of exemption for use with schedular payments.
And here
Assistance with ACC Levies
It you are struggling to pay and ACC levy due to the impact of COVID-19 – businesses are urged to contact the ACC Collections and Recovery Team
If your liable earnings are different due to COVID-19, this may affect your levy amount. You can learn more about dealing with ACC issues here – https://www.acc.co.nz/covid-19/businesses/general-covid-19-information-for-businesses
Further Information
The Government also offers all businesses free access to a 50 minute, on-demand webinar
COVID-19 FOR SMALL TO MEDIUM BUSINESSES AND ORGANISATIONS outlining the initiatives and relief available to small businesses.
To sign up to watch this webinar go to https://event.on24.com/wcc/r/2400699/F97BB6724FC756D5F466925FEF89A3E8
