There are a range of grants available from Government and Inland Revenue to support Kiwi businesses. Please take some time to read the following information which covers:
- wage subsidy and resurgence support
- how to treat the resurgence payment and wage subsidy in your accounting software
- leave support scheme
- small business loan scheme
- NZTE support for businesses impacted by COVID-19
Please get in touch with us if you need support or advice about the following packages available from Government.
The Government continues to provide a fiscal and economic response to the COVID-19 pandemic including a wage subsidy scheme and resurgence support payments. An overview of each subsidy is outlined below; be sure to contact your Grant Thornton advisor to discuss the best option for your organisation.
Wage subsidy #2
A new wage subsidy is now available for eligible businesses and sole traders that have been impacted by the continuation of alert levels 3 or 4 from 17 August 2021. Eligible businesses can apply for a contribution to wages if they expect or will have a 40% decline in revenue over a period of 14 consecutive days between 31 August 2021 and 13 September 2021 inclusive, compared to the same period during the six weeks immediately before the move to alert level 4 last month. Wage subsidy #2 will cover a two week period; $600 per week per full-time equivalent employee (20 hours or more per week), and $359 per week (less than 20 hours per week) per part-time employee.
Applications for the first wage subsidy (WSA) have now closed. If you applied for this subsidy and need wage subsidy #2, you need to agree to a different declaration. You also need to wait until two weeks after applying for WSA before making an application for wage subsidy #2.
Applications for wage subsidy #2 close on 16 September 2021. More information and a link to the application form can be found here.
Resurgence support payment (RSP)
Businesses that have had a revenue drop of at least 30% over a seven-day period compared to a typical seven-day period in the six weeks before the increase in alert level are eligible for this payment. It’s important to note that business need to demonstrate a decrease in revenue due to the alert level change, not just COVID-19 in general. The RSP must be used to help cover business expenses such as wages and fixed costs. The payment isn’t a loan and does not need to be repaid. The RSP is the lesser of:
- $1,500 plus $400 per FTE employee, up to a maximum of 50 FTEs
- four times (4x) the actual revenue decline experienced by the applicant
More information about eligibility criteria can be found here, and applications will open at 8am on 24 August 2021.
If your business does not meet the criteria for the RSP, but you’re experiencing cashflow problems, please get in touch with your Grant Thornton advisor.
Short-term absence payment (STAP)
The STAP is a one-off (once per 30 days) payment available to employers (or self-employed people) where employees are awaiting a COVID-19 test result and cannot work from home. The rate is $350 for each eligible employee.
We are receiving a lot of enquires about how to account for the resurgence payment and wage subsidy. Here are some key things to note:
The resurgence payment
- This is subject GST and is non-taxable income in the hands of the business
- We suggest that you create a new code in the Revenue section in your accounting system’s chart of accounts called "Resurgence Payment Received " and make it a GST code
- This payment does not get passed on to employees, it is to cover business expenseslike utilities and rent etc
- The expenses covered by the resurgence payment are not tax deductible but are subject to GST as normal
The wage subsidy
- The subsidy is not subject to GST and is non-taxable income in the hands of the employer
- We suggest that you create a new code in the Revenue section in your accounting system’s chart of accounts called "Wage Subsidy Received" and make it a No GST code
- When you start paying the subsidy amounts to employees through your payroll system, normal deductions like PAYE and Kiwisaver still need to be made
- The wage subsidy portion of your payroll is also non-deductible for tax purposes, so we recommend setting up another code to capture this portion of your wage bill. This will help you easily track how much has been paid and the balance remaining
The leave grant is available for employers (including sole traders) to pay employees who have to remain at home due to Ministry of Health guidelines (eg, have tested positive for COVID-19, have had close contact with someone who has the virus, are at higher risk of contracting the virus etc) and/or can’t work from home. The rates are $585.80 per week for FTE employees, and $350 per part-time employee.
The Government is now providing one-off interest-free loans for a year to SMEs impacted by COVID-19. The SBCS has been set up to support affected business’s immediate cashflow needs and for those that are experiencing loss of actual or predicted revenue. Eligible companies are those that employ 50 or fewer people, and the maximum amount loaned is $10,000 plus $1,800 per full-time-equivalent employee. Repayments are not required for the first two years. Loans that are paid back within two years will not incur any interest; after that period, an interest rate of 3% for a maximum of five years will apply. Applications close on 31 December 2023. The scheme is being managed by Inland Revenue; more information about how to apply can be found here.
The Government has provided New Zealand Trade & Enterprise (NZTE) with additional funding for Kiwi businesses impacted by COVID-19. Companies can apply for up to $5,000 in funding to access certain business consultancy services Grant Thornton New Zealand has been approved to provide finance and cashflow management, business continuity planning, HR, and digital enablement strategy services under NZTE’s COVID-19 support programme. We can also help guide you through the application process. More information about eligibility criteria and how to apply can be found here.
Keep in touch
We are committed to supporting Kiwi businesses through this challenging time. Our advisors can assist you with applying for any of the Government grants outlined above. We can also help you identify steps to manage your cashflow and any decline in revenue that your business is currently experiencing. For more support and insights, be sure to visit our COVID-19 resource hub.
We hope that you, your teams and other stakeholders remain well – we’re all in this together.