Covid assistance for business owners

COVID government support

When New Zealand moves to the Covid-19 Protection Framework (the traffice light system), the wage subsidy and resurgence payments will no longer be available. This will be from 11:59pm on 2 December 2021. Read further in the links below.

Covid-19 Protection Framework ** NEW **
Transition Payment ** NEW **
Advice and planning support UPDATE (Auckland only)
Wage Subsidy
Resurgence Support Payments (RSP)
Short Term Absence Payment
Leave Support Scheme
Small Business Cashflow Loan (SBCS)
Calculating your revenue from Xero – account transactions
Calculating your revenue from Xero – profit and loss

Covid-19 Protection Framework ** NEW **

As highlighted at the beginning of this blog, the the wage subsidy and resurgence payments will no longer be available from 11:59pm on 2 December 2021.

Across the board support will not be provided for areas designated Orange or Green…

The above is from Grant Robertson’s (Finance Minister) announcement on 22 October 2021. The reasoning is that under Orange and Green, businesses will be able to operate as normal.

If areas of New Zealand are at Red, financial assistance may be provided, but only in the afflicted area.

If (when) you apply for Wage Subsidy #8 and/or Resurgence Payment #6, payments will still be made if you meet all of the other conditions.

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Transition Payment ** NEW **

The following is from the Covid 19 website.

“On 29 November 2021, the Government has announced a one-off transition payment for businesses as we move to the COVID-19 Protection Framework (traffic light system).

This payment will be made available through the Resurgence Support Payment.

The one-off transition payment is $4000 plus $400 per full-time employee (FTE), up to 50 FTE, with a maximum payment is $24,000.

The eligibility criteria is the same as the Resurgence Payment…”

(40% decline in business revenue)

Applications for the Transition Payment open on 10 December 2021, in the same manner as the current Resurgence Payments.

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Advice and planning support (Auckland only)

The grants for advice no longer require a matching contribution from the business.

Businesses will be able to apply for up to $3,000 worth of advice and planning support, and then receive up to $4,000 to implement that advice.

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Wage Subsidy 

The eighth payment will be the last available, due to the introduction of the Covid-19 Protection Framework from 11:59pm on 2 December.

One of the common questions we have is whether a shareholder-employee can receive the subsidy if they’re not formal employees. The good news is yes – if the shareholder-employee works in the company and has more than $1,600 of drawings each year, the company can apply for the wage subsidy. The drawings are to demonstrate that the company is a source of your funds used for personal living expenses.

Applications for the August 2021 subsidy (called Wage Subsidy August 2021 #8) opened on 26 November, and will close on 9 December 2021.

Click on this link to go to the Covid application forms – you’ll need to select whether you’re self-employed, an employer, or a large employer.

Below is the message on the WINZ website. Please follow their instructions for the two-week waiting period.

Eligibility criteria for only the wage subsidy revenue test

  • Calculate the revenue from a typical 14-day period between 6 July 2021 and 17 August 2021 (A)
  • Calculate the (actual or expected) revenue between 23 November 2021 and 6 December 2021 (B)
  • Now multiply (A) by 40% and you’ll get (C)
  • Subtract (C) from (A) to arrive at (D)

If (B) is less than (D), then the wage subsidy revenue criteria has been met.

Rates

For the Wage Subsidy August 2021, employers will receive $600 for each full-time employee, and $359 for part-time employees. The subsidy is paid every two weeks, in one lump sum.

You must reapply each time (every fortnight).

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Resurgence Supports Payments (RSP)

The sixth payment will be the last available, due to the introduction of the Covid-19 Protection Framework from 11:59pm on 2 December.

As with the wage subsidies, shareholder-employees not receiving PAYE-paid wages, are considered to be employees if they work in the company and have drawings more than $1,600 per year. The company should make the application.

Eligibility criteria for only the RSP revenue test

  • Calculate the revenue from a typical 7-day period prior to the announcement of Alert Level change (A)
  • Calculate the (actual or expected) revenue between 19 November 2021 and 1 December 2021 (B)
  • Now multiply (A) by 30% and you’ll get (C)
  • Subtract (C) from (A) to arrive at (D)

If (B) is less than (D), then the RSP revenue criteria has been met.

Rates

Payments #1 to #4

Payment amounts are $1,500 plus $400 per FTE (Full-time Equivalent Employee), up to a maximum of $21,500.

For the self-employed, the maximum amount that can be received is $1,900.

Payments for #5 and #6

Whichever is lower:

  • $3,000 plus $800 per FTE, up to 50 FTE
  • Eight times (8x) the actual revenue decline – this is (D) from your workings above

To apply for the RSP, click here.

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Short Term Absence Payment

For those waiting for a Covid test result and are unable to work from home.

The link here will take you to the application section within the WINZ website.

Lump payment rate – $359 for each eligible employee for both part-time and full-time workers.

This will remain the same under the Covid-19 Protection Framework. There is no distinction between Red, Orange, or Green, and currently no end date for applications. However, you can only apply once (for each eligible employee) every 30 days.

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Leave Support Scheme

For those who are required to isolate and are unable to work from home.

Payment rates per week – $600 for full-time workers and $359 for part-time workers.

The link here will take you to the application section within the WINZ website.

This will remain the same under the Covid-19 Protection Framework. There is no distinction between Red, Orange, or Green, and there is currently no end date for applications. However, you can only apply once (for each eligible employee) every 30 days.

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Small Business Cashflow Scheme (SBCS)

You can apply for loan until 31 December 2023 via myIR. On your myIR home screen, you’ll see ‘I want to…”. Click on that, and then ‘Apply for a Small Business Loan’.

The maximum loan amount is $10,000 plus $1,800 for every FTE (Full-time Equivalent Employee). The limit for sole traders is $11,800.

The repayment due date is within five years of your application being approved.

  • If the loan is repaid within 24 months, you won’t be charged interest
  • If the loan is not repaid within 24 months, you’ll be charged interest at 3% of the outstanding amount from the date the loan is approved

This will remain the same under the Covid-19 Protection Framework. There is no distinction between Red, Orange, or Green.

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Calculating your revenue from Xero

  • Click on the tab ‘Accounting’, then select ‘Reports’
  • Click on ‘Account Transactions’ and you’ll come to a screen which looks similar to this:
  • Select your revenue account(s), change the date range for (A), then click ‘Update’
  • Make a note of the total revenue you see
  • Change the date range for (B) and click update
  • Make a note of this figure as well

Use these figures for the revenue criteria tests (Wage Subsidy and RSP).

Back to Wage Subsidy
Back to Resurgence Support Payments (RSP)
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Calculating your revenue from Xero – Profit and Loss

Thanks to a suggestion from one of our wonderful clients, there is a second option which you may find useful (she certainly does)!

  • Click on the tab ‘Accounting’, then select ‘Reports’
  • Click on ‘Profit and Loss’ and you’ll come to a screen which looks similar to this:
    Select the date range – we suggest a recent 7-day period
  • Click into ‘Compare with’ and you’ll be able to compare to multiple periods in the past. You’ll probably want more than four periods, so just click on the down arrow, then on ‘Other’ and see what suits you best.

Use these figures for the revenue criteria tests (Wage Subsidy and RSP).

Back to Wage Subsidy
Back to Resurgence Support Payments (RSP)
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We’re not able to apply for any of these subsidies or loans on your behalf, but please get in touch if you have any further questions.

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