Wage Subsidy Scheme - Extended Support from NZ Government

Thousand of businesses are now eligible for wage subsidy. This extension makes 40,000 businesses eligible for the same.

From Wednesday, 10th June 2020 onwards, all businesses who have lost or are expected to lose at least half of their revenue, are eligible to apply for the Wage Subsidy Scheme.
The Government has taken the decision to change the required revenue drop threshold from 50% to 40%. Thus, now up to 230,000 businesses are expected to be eligible for the new 8-week scheme from 10 June, covering up to 910,000 workers. The wage subsidy extension is expected to cost between $2.6 billion to $3.9 billion. This will be funded through the COVID Response and Recovery Fund.

The wage subsidy scheme has paid out $10.997 billion to date, covering 1.66 million jobs.
Finance Minister Grant Robertson said “The move to make businesses that lost 40 per cent revenue eligible for the wage subsidy extension came after feedback from businesses. There are businesses that will feel the impact of this global pandemic for longer; the tourism, retail and hospitality sectors will in particular be supported by the extended wage subsidy and cashflow support”.

To date, more than $1.18 billion has been disbursed to more than 70,000 small businesses under the cashflow scheme. The loans are interest-free if repaid within a year. Businesses have five years to pay the loans off, with no repayments required during the first two years.

The Government has also amended the revenue test under the extended scheme so that the business must have a revenue loss of at least 40% for a 30-day period in the 40 days immediately prior to the application date (but beginning no earlier than 10 May 2020) versus the nearest comparable period last year.

Small businesses are also being given more time to apply for the Small Business Cashflow Loan Scheme, with the application date being extended from 12 June to 24 July.

The wage subsidy and small business cashflow scheme are part of the extensive support the Government has made available for businesses, which includes:

• The $11 billion wage subsidy and $3.9 billion extended wage subsidy

• The $5.2 billion Small Business Cashflow Loan Scheme

• $3.1 billion for business tax refunds through the loss carry-back scheme

• $2.8 billion for building depreciation tax deductions and other tax measures

• The $6.25 billion Business Finance Guarantee

• Commercial rent support, including $40 million to cover arbitration costs

• The $400 million initial support for the Tourism sector

• A $600 million aviation support package

• Funding for business advice through the Regional Business Partner Network

• A $400 million package to encourage R&D

Some Key points for Wage Subsidy Extension are:

• If you have given employees notice of redundancy, you won’t be eligible to receive the subsidy for those employees unless you withdraw the redundancy notice.

• If the amount of the subsidy is more than an employee's usual wages you must use the surplus to fund other employees wages where possible and, where this is not possible, return any surplus funding to MSD. These obligations will also apply to self-employed workers, ie if you are self-employed and you receive a subsidy that is more than your usual earnings, you will be required to repay the balance to MSD.

Source: www.beehive.govt.nz