Covid-19 Government Support Package

What it means for you…

Wage subsidies

The COVID-19 government support package offers a wage subsidy available for businesses that can demonstrate a decline in monthly revenue of 30% compared to last year and covers the period from January to June 2020.

This is available if you are an employer, contractor, sole trader or self-employed. Online applications can be made via the Ministry of Social Development (MSD) website.

The payments will be $585.80 per week for a full-time employee (20 hrs or more) or $350.00 per week for a part-time employee (less than 20 hrs). The payment will be made as a one-off lump sum for a period covering 12 weeks. The maximum amount any one employer can receive is $150,000.

To qualify, employers will be required to declare that they intend to employ affected employees at a minimum of 80% of their usual pay for the subsidy period and take active steps to mitigate the impact of COVID-19.

Leave and self-isolation support

Should you, or any of your employees be required to self-isolation or contract COVID-19, or need to take time off to care for someone with COVID-19 then you will be eligible to receive support payments.

The payments will be $585.80 per week for full time and $350 per week for part-time workers and does not affect any paid leave entitlements. The payments may be backdated to 17 March 2020.

Again, employers will be required to apply online for the payment from MSD. Multiple applications can be made for this support payment.

Tax changes

A number of tax changes have been announced that are intended to help businesses improve cash flow and stimulate business investment as follows:

  • Reintroducing depreciation on industrial and commercial buildings (including motels and hotels) from the start of the 2020-21 tax year. The diminishing value rate will be 2% (a separate straight-line rate will be announced later).
  • Low-value assets can be deducted immediately and are not required to be deducted over time under the depreciation rules.
    This is currently limited to assets valued at less than $500, but the low-value asset limit will be temporarily increased to $5,000 from the start of the 2020-21 income year.
    The threshold will eventually be reduced to $1,000 from the 2021-22 income year.
  • The provisional tax threshold for the 2020-21 income year will rise to $5,000, up from $2,500.
  • For the next two years, use of money interest (UOMI) on late payment of tax will be waived for businesses affected by the COVID-19 outbreak.
    The relief will apply to interest on all tax payments (including provisional, PAYE, and GST) due on or after 14 February 2020.
    Affected taxpayers will be required to demonstrate that their inability to pay tax arose as a result of COVID-19. Details about how this will operate in practice will be released in a subsequent announcement.

Support for individuals

The Government has also announced increases to a number of social entitlements, including a permanent increase of $25 a week for all main benefits (effective from 1 April 2020) and an increase to the recently introduced Winter Energy Payment. Recipients will not be required to apply for the additional entitlements as the increases will be applied universally to those already entitled to receive the relevant payments.

Changes to the In Work Tax Credit (ITC) will apply from 1 July 2020, which will remove the existing requirement to be working at least 20 hours a week (for sole parents) or 30 hours a week (for couples) to be eligible to receive the credit. This means those families currently receiving the ITC will continue to receive this support even if their work hours are impacted by COVID-19.

We acknowledge that this is a difficult time for many individuals and businesses.

If you would like to discuss how these measures can support you and your business, please contact us.