Government Financial Support for your Business during Lockdown
20 August 2021
The government has provided various avenues of financial support for small businesses affected by covid and lockdowns.
Wage Subsidy Scheme (WSS)
The government has again made available a wage subsidy for eligible businesses.
Applications for the WSS open on Friday 20th August 2021, and will initially be open for a period of 2 weeks. Applications can be made on the work and Income website.
To receive the COVID-19 Wage Subsidy you must:
• operate a business in New Zealand that employs, and pay the employees named in your application, and
• meet the revenue decline test:
- your business has had, or you are predicting will have, a decline in revenue that is attributable to the effect the move to
Alert Level 4 on 17 August 2021 has had on your business and that is:
o of at least 40% over the period 17 August 2021 to 30 August 2021 (inclusive), 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
(default comparator period); or
o if you are an employer that has highly seasonal revenue, of at least 40% over the revenue test period when compared to the same 14 consecutive days in 2020 or 2019, provided you can demonstrate that the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature; and
o in relation to both the calculation of revenue for the test period and the calculation of the revenue for the relevant comparator period, exclusive of any payments made to you from this subsidy, other COVID-19 Wage Subsidy schemes, the COVID-19 Short-term Absence Payment scheme, COVID-19 Leave Support schemes, COVID-19 Essential Workers Leave Support scheme, COVID-19 Resurgence Support Payment scheme or the COVID-19 Small Business Cashflow scheme.
• meet the other eligibility criteria set out in the declaration (taken active steps to mitigate the financial effect of covid, retain the employees you have applied for etc).
The declaration lists all the eligibility criteria in full, and you need to agree that you meet these when you apply
The good news for business is the subsidy is slightly increased from previous occasions -$600 per week for fulltime employees (previously $585) and $359 for part time employees (previously $350)
Resurgence Support Payment (RSP)
Businesses and organisations will be eligible for the RSP if they experience a 30% drop in revenue over a seven day period after an alert level increase and meet other eligibility criteria. This drop is compared to a typical seven-day period in the six weeks before the increase in alert level. Seasonal businesses should show a 30% revenue drop compared with a similar week the previous year.
The decline in revenue must be a result of the specific alert level change, not just COVID-19 in general. You must have been in business for at least six months to be eligible. Charities, not-for-profit organisations, the self-employed and pre-revenue businesses, such as start-ups may also be eligible.
The amount of the payment your business or organisation may be eligible for is depended on the number of full-time equivalent employees (FTEs) you have, and your level of revenue. (maximum payment is $21,500)
Eligible businesses and organisations can apply to receive 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 drop experienced by the applicant.
This payment is not a loan, so does not need to be repaid. The payment must be used to help cover business expenses such as wages and fixed costs.
There have been some recent changes to the eligibility criteria for commonly owned groups. Some individual businesses or organisations within a commonly owned group may now be eligible for RSP.
Applications for the RSP are made via the Inland Revenue website and will open from 8am Tuesday 24 August 2021. Applications will remain open for one month after a nationwide return to alert level 1.
Short Term Absence Payment
A COVID-19 Short-Term Absence Payment is available at all Alert Levels to employers to pay workers who follow public health guidance and are staying home while waiting for a COVID-19 test result. It is also available to eligible self-employed workers. To be eligible, workers need to be unable to work from home and need to miss work while waiting for the test results.
There is a one-off payment of $350 for each eligible worker. From 24 August 2021, this payment is increasing to $359 for each eligible worker. Employers or the self-employed can apply for any worker once in any 30-day period.
This subsidy can be applied for on the Work and Income website.
Leave Support Scheme
The COVID-19 Leave Support Scheme provides a payment to businesses to pay their workers who meet certain health criteria, eg they have COVID-19. This is also available if you are self-employed.
If you, or your staff have been told by a health official to self-isolate and cannot work from home, you can apply for the COVID-19 Leave Support Scheme.
This support will be paid as a lump sum covering two weeks (you can reapply if required) of $585.50 per week for full-time workers and $350 per week for part-time workers. From 24 August 2021, the payment will increase to $600 per week for full-time workers and $359 per week for part-time workers.
Businesses are no longer required to show an actual or predicted revenue drop or that their ability to support an employee was negatively impacted by COVID-19, to be eligible to access the payment.
This subsidy can be applied for on the Work and Income website
Small Business Cash Flow Loan Scheme (SBCLS)
Government will provide loans to small businesses, including sole traders and the self-employed, impacted by COVID-19 to support their cash flow needs.
If you have previously applied for a SBCLS and have fully repaid it, you can apply again.
Applications are open until 31 December 2023. You can apply through myIR.
The small business cash flow loan scheme will provide assistance of up to a maximum of $100,000 to businesses employing 50 or fewer full-time employees. This includes sole traders and self-employed businesses.
Details of the loans include:
• $10,000 to be provided to eligible businesses
• an additional $1800 per equivalent full-time employee
• interest free if the loan is paid back within two years
• an interest rate of 3% for a maximum term of five years
• repayments not required for the first two years
• you must show at least a 30% drop in revenue due to Covid-19, measured over a 14-day period in the past six months compared with the same 14-day period a year ago. If your revenue from the same period a year ago was also affected by COVID-19, compare the same 14-day period two years ago.
Tax, GST and ACC Support
There are various options available that may be able to be applied to assist you, if unable to immediately pay tax, ACC or GST. Every situation is different, so please contact us to see if we can assist in developing a personalised solution.
Talk to us or send us a message below to discuss how we can assist you with any of the above support options.
Talk to us
Stay in touch. Please do not hesitate to contact your client advisor.