How The Government’s Coronavirus Relief Package Could Help You
We explain how the Government's announcement affects individuals and businesses.
As we head into uncertain times with the spread of Covid-19, the announcement of the coronavirus Government relief package on 17 March 2020 was a welcome initiative for many Kiwis facing financial hardship in the months ahead. While we can’t determine what effect Covid-19 is going to have on our country and our economy, the Government is being proactive to soften the potentially significant impact.
Out of a total of $12.1 billion outlined by Finance Minister Grant Robertson, $8.7 billion is dedicated to supporting businesses and jobs, while an additional $2.8 billion is reserved for income support and to boost consumer spending. The business continuity package also has proposals related to tax for businesses that are affected during the pandemic.
Here’s what the initial package included:
- $500 million for the health system
- $5.1 billion in wage subsidies for affected businesses
- $126 million in COVID-19 leave and self-isolation support
- A $2.8 billion income support package for our most vulnerable
- A $100 million redeployment package
- $2.8 billion in business tax changes
- A $600 million initial aviation support package
The coronavirus Government relief package offers a lot of financial support to get New Zealanders through the challenging times ahead. This is not necessarily all that will be available, as the Government will be adjusting its response as the situation progresses.
After the announcement that New Zealand would move to Alert Level 4 at midnight on 25 March 2020, updates to the original package are now being implemented. These include an additional $4.2 billion for wage subsidies, removal of the cap for each business and wider eligibility. On 27 March 2020, applications for the previous leave payment for people in self-isolation were closed. The leave payment is now rolled into the wage subsidy scheme.
As to be expected, guidelines have been put into place about who gets what and how. Making a false application with misleading information is considered fraud and will be dealt with accordingly.
How the relief package helps businesses
Now that Kiwis are instructed to stay home for at least four weeks from midnight 25 March and the closing of non-essential businesses, having to lay off staff or even permanent closure is becoming a reality for some businesses.
While many industries will see financial hardship over the coming months, those businesses in tourism, events, sports and hospitality will be hardest hit. The coronavirus Government relief package has been designed to reduce the blow for these businesses and keep as many employees in work as possible.
If your business has at least a 30% decline in actual or predicted revenue due to Covid-19, you may be entitled to the wage subsidy. You must be doing all that you can to retain employees and will need to pay employees a minimum of 80% of their usual income. If you meet the eligibility requirements, you can receive $350 for employees working 20 hours or less per week and $585.80 for those working more than 20 hours a week. The wage subsidy covers 12 weeks and is paid in a lump sum. There was previously a limit on how much each business could get, but this cap was lifted on 23 March 2020. Self-employed Kiwis and contractors are also eligible for the wage subsidy.
The wage subsidy is managed through Work and Income. Employers, contractors and self-employed Kiwis can check the requirements and then fill in the application form online. Even though the leave payment scheme has closed, applications are still being processed that were received before 3pm on 27 March 2020.
As of 31 March 2020, $4.1 billion has been paid out to 642,000 workers.
Work and Income are also offering support and advice to businesses that are thinking about reducing staff hours or making people redundant. Rapid response teams have been set up around the country to discuss your situation and also assist employees with re-training, financial support and finding another job.
Tax reform measures
To free up cashflow while experiencing a downturn in business, the IRD has had five proposals from the business continuity package:
- The reinstatement of building depreciation
- A provisional tax threshold lift from $2,500 to $5,000
- Writing off interest on late payment of tax
- Removing the hours test from the In-Work Tax Credit
- Increasing the small asset depreciation threshold
For the latest information and eligibility requirements, visit the IRD website.
How the relief package helps individuals
It’s not only businesses that will benefit from the relief package, as individuals affected by the impact of Covid-19 are also being looked out for.
- Thanks to the business continuity package and the wage subsidy, individuals may be able to keep their jobs that would otherwise be lost. Work and Income are providing advice and support to businesses to reduce the need for redundancies.
- Beneficiaries who receive the Jobseeker Support, Sole Parent Support, Supported Living Payment, Young Parent Payment or Youth Payment will see an extra $25 a week in their account.
- Those that receive the Winter Energy Payment will see their payment doubled for 2020.
- If you lose your job and are eligible for a benefit, the usual stand down period is waived so payments start the week after you’re approved.
There are also the following tax relief measures outlined by the IRD:
- Child support payments can be re-assessed if you are having trouble paying by the due dates.
- You may be able to get increased or more frequent payments if you are receiving Working for Families Tax Credits and your income decreases.
- You can arrange to pay your outstanding tax in instalments or apply for a write-off in cases of serious financial hardship.
- You may be entitled to a certificate of exemption if you do contract work with schedular payment deductions.
- If you have a loss to carry forward, you may be moved to a reduced tax rate.
If you have concerns about any tax-related matters, visit the IRD website for more information.