The government has released an economic response package to help cushion the impact of COVID-19 and support the economy during the COVID-19 crisis
General Details of the Package
The main component of the relief package is a wage subsidy scheme. Under this scheme:
- Eligible businesses will be provided a lump sum payment of $585 per week per full-time employee and $350 per week per part time employee for 12 weeks up to a cap of $150,000.
- Those who are either self-isolating or contract coronavirus will receive a payment of $585 per week, which can be applied for by their employer. This will not be available to those who can work from home and will only be in place for an initial 8-week period.
- In order to be eligible for the lump sum payment, a business will need to have suffered a 30% decline in revenue month on month for any month between January and June this year and have spoken to their bank about relief.
More information on who qualifies for the wage subsidy, definitions for wage subsidy qualifications, can be found on the Work and Income website. CLICK HERE
If you wish to apply for a wages subsidy - CLICK HERE
Other key components of the package are:
- Benefits will be increased by $25 per week
- The Winter Energy Payment for main beneficiaries and superannuitants will be doubled from $450 to $900 for singles and $700 to $1,400 for couples
- A $100 million funding package to support worker redeployment and training
- A $500 million funding package to support the health sector
Further packages for the aviation sector and large employers will be announced in coming weeks.
The wage subsidy scheme is available as of right now.
Tax Details of the Package
Key tax components of the package are:
- Depreciation deductions for commercial and industrial buildings are being restored as of the 2021 year
- The threshold at which taxpayers become subject to provisional tax will increase from $2,500 to $5,000 as of the 2021 year
- The definition of low value assets will increase from $500 to $5,000 for the 2021 year before settling back to $1,000 from the 2022 year onward
- Inland Revenue will remit use of money interest for payments due on or after 14 February 2020 where payment was not made on time due to COVID-19. This could apply for up to two years.
In addition, Inland Revenue has announced information on tax relief for taxpayers that will also be available.
More information on this tax relief can be found on the Inland Revenue website - CLICK HERE
The details on how these will be able to be accessed are not yet known as the Government has to pass an act of Parliament to allow these to occur. We will update you as we know more.
What you should do
There are a few steps you should do now:
- Review at your business forecast cash flows for the next few months and in particular consider how much headroom you have if cash receipts fall. If you can foresee difficulties, start the conversation with your bank, your landlord and other stakeholders as appropriate, to put contingency plans in place.
- Speak with your bank. In order to have access to the wage subsidy scheme, you need to have evidence of discussions with your bank. This is also sound commercial practice as it provides some room should economic conditions stay bad for longer than anticipated.
- Keep an eye on turnover. Again, in order to have access to the wage subsidy scheme, you need to have a 30% decline in revenue for any month between January and June compared with the same month in last year.
Please give Tony a call if you wish to talk about matters that affect you and your Business, we are here to help and support.