The Government has just announced its $12.1b stimulus package for New Zealand businesses which is worth 4% of GDP, and is bigger than the packages provided in Australia and the UK on a per capita basis.
As anticipated, to reduce the impact of COVID-19 on our economy, the package includes wage subsidies and a cash injection for the health sector; here are the key points your business needs to be aware of:
- Wage subsidies: a $5.1b wage subsidy scheme has been put in place, which pays a lump sum of up to $150,000 to employers - $350 per week per part time worker, and $585.80 per week per full time worker from today. To qualify for this subsidy, your business will need to declare a loss of at least 30% in revenue compared to last year for any month between January 2020 and the end of the scheme in June 2020, and you will need to demonstrate that you have spoken to your bank about your situation. Businesses can apply for this funding in five days’ time.
- Employee self-isolation incentive: to stem the spread of COVID-19 by encouraging workers to self-isolate, $126.5m has been allocated to cover 14-day isolation periods, or an employee’s entire period of sickness. This covers employees, contractors, the self-employed and sole traders. The sum allocated for each staff member is also $350 per week per part time worker, and $585.80 per full time worker. Employers are still required to meet their current sick leave obligations to employees over and above this incentive.
- Tax changes:
- Depreciation for commercial buildings at 2% diminishing value for the 2021 income year has been reintroduced
- Low value asset threshold write-off has increased from $500 to $5,000 for the 2021 income year; this will revert to $1,000 in the 2022 income year
- Provisional tax threshold has increased from $2,500 to $5,000
Inland Revenue has been given discretion to remit use of money interest.
Other sources of support
Tax relief and income assistance from IRD
Inland Revenue is also offering tax relief and income assistance to those affected by the coronavirus downturn, including re-estimating provisional tax, early refunds and payment in instalments. It’s possible that businesses could also get an extension to filing dates for income tax returns, and penalties on late filings for PAYE and GST may be remitted.
Supply chain and business continuity planning
Two further areas of concern for Kiwi companies are supply chain and business continuity. This type of planning is critical and often doesn’t feel urgent until it is. If you’re updating or creating a disaster response plan for your organisation, our COVID-19 business checklist is a useful resource.
Please keep in touch
If you need to discuss any of the information above and your organisation’s specific circumstances, please don’t hesitate to get in touch with me; our specialists across business risk, business continuity, workforce, tax, compliance, supply chain and restructuring, are here to help.