6th April, 2020

Government stimulus measures announced so far, more on the way

The New Zealand Finance Minister has revealed small to medium businesses can expect more financial support from the Government in the months ahead.

Following on from recent changes to extend and bolster wage subsidy support, Finance Minister Grant Robinson said businesses should expect “a serious hit”.

“…second only to [wages] is rent and other costs around utilities, so we’re working on the sector to shape a package to deal with that and that includes further looks at the tax system as well.”

The Government has already announced tens of billions of dollars in support for small businesses and sole traders.

We’ve compiled all of the resources available for New Zealand businesses in one place. Here’s everything you need to know.

Measure 1: Wage Subsidy Scheme

What is the Wage Subsidy Scheme?

The scheme pays employers to keep employees on the books, even if businesses are closed.

The wage subsidy scheme is designed for companies to maintain an employment connection and ensure an income for affected employees, even if they aren’t working.

These categories of employees are eligible:

  • Self-employed
  • Contractors
  • Sole traders
  • Registered charities
  • Incorporated societies
  • Post-settlement governance entities

How much are the subsidies?

The payment rates are:

  • $585.80 (gross) per week for full-time employees, where full-time is 20 hours or more per week
  • $350 (gross) per week for part-time employees, where part-time is less than 20 hours per week

The subsidy is a one-time lump sum payment, to cover 12 weeks’ of downtime.

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How can I prove that I’m eligible?

Any business must show they have a 30 percent drop in revenue attributable to COVID-19.

Difference between the wage rate and the subsidy rate

The New Zealand Government has made clear that businesses should pay at least 80 percent of usual wages. But if that isn’t possible, they should pass on the entire wage subsidy.

How to process wage subsidies in MYOB products

If you’re an MYOB payroll user, then you should have everything you need to process the Government’s wage subsidy from your software.

Click one of the below to find a guide on how to process wage subsidies in the corresponding MYOB package:

Measure 2: Business Continuity Package

Apart from wage subsidies, the NZ Government has implemented some major changes to business tax arrangements.

After April 1, the threshold for provisional tax will lift from $2,500 to $5000 with an aim for reducing business cash-flow pressures.

The Government will also reduce or waive interest on some late tax payments.

Measure 3: Sole Trader Support

Sole traders are eligible for a wage subsidy of 12 weeks at $585.50, if they can prove they have experienced a 30 percent decline in predicted revenue and took active steps to mitigate the impact of COVID-19 on the business.

Additionally, the Government has announced these efforts for sole traders:

  • If you cannot work because you have been diagnosed with Covid-19 or because you are caring for dependents with the virus or you need to self-isolate (in line with MOH Guidelines) you are likely eligible for the leave payment scheme. This offers sole traders a bulk payment $585.80 for a period of 8 weeks. If you are in the Level 4 lockdown then that does not qualify you for the leave payment
  • The Key Business Tax Changes Apply to sole traders as well as all businesses
  • For sole traders who also have a part-time job, your employer can apply for the part-time subsidy and you can also make a self-employed application

Measure 4: Other support

The Government has also announced these measures:

  • The reinstatement of depreciation deductions for commercial and industrial buildings at a two percent diminishing value applying from the 2020-21 tax year.
  • Prime Minister Jacinda Ardern also announced a large package specifically to assist the tourism industry, with $10 million to be spent on international marketing with the stated aim of diversifying the international visitor market.
  • A $600 million package for the aviation industry.

Due to the changing nature of the situation we cannot guarantee all details of this article are current. For advice specific to your situation, MYOB advises seeking council from an accredited accountant or relevant business advisor. Click here to find a specialist advisor near you.