COVID-19 Wage Subsidy August 2021
Help is available if you are experiencing financial distress because of COVID-19.
Please note there are now two separate rounds of the Wage Subsidy, the initial two-week Wage Subsidy August 2021 & the Wage Subsidy August 2021 #2. See the updated text in bold under "To qualify:" & "When Can I apply?" for the specific dates below. Also an extract from work and income website, "Extra information for the second round of the wage subsidy:"
Who can get the wage subsidy?
- All New Zealand employers who have been affected by COVID-19 are eligible to apply. This includes the self-employed, sole traders and contractors.
- The business has experienced a minimum 40% decline in actual or predicted revenue over the period between 17 August 2021 and 30 August 2021, compared to a typical 14 day consecutive period of revenue in the six weeks immediately before the move to Alert Level 4 on 17 August 2021. For the second round of wage subsidy, the same rules apply except use the following dates 31 August to 13 September.
- If your business has high seasonal revenue, you must have at least 40% decline over the period 17 August 2021 and 30 August 2021 compared to the same 14 consecutive days in 2020 or 2019, provided you can demonstrate that the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature. For the second round of wage subsidy, the same rules apply except use the following dates 31 August to 13 September.
- Your business must be registered in NZ
- Your employees are legally working in NZ
- This 40% decline must be because of alert level 4.
- Your business has taken active steps to mitigate the impact of COVID-19 e.g. talking with your accountant or engaging with your bank.
- You must retain the employees named in your application for the period of the subsidy.
How much money will I receive?
- $600.00 for people working 20 hours or more per week (full-time rate) $359.00 for people working less than 20 hours per week (part-time rate) The subsidy is paid as a lump sum and covers 2 weeks per employee.
When can I apply?
- Applications will be open from 9am 20 August 2021 and will be open for two weeks. Ministry of Social Development will endeavour to process your application within 3 days. This is going to close at 11.59 on Thursday 2 September. There will be a second round of the wage subsidy (Wage Subsidy August #2 opening at 9.00 am Friday 3 September) for businesses that continue to be affected by Alert Levels 3 and 4.
As an employer, what are my obligations under employment law at this time?
- Your obligations under employment law haven't changed.
What do I need to pay my staff?
- If you are receiving the COVID-19 Wage Subsidy, you must make your "best efforts" to pay the employee named in your application, at least 80% of their usual wages. If that isn't possible, you need to pay at least the subsidy rate. If your business cannot afford to pay the 80% subsidy rate, the employer and employee can negotiate an alternative approach. Such "best efforts" would need to be documented by the employer.
- Whist best efforts are still recommended, an employment contract must support a reduction in wages to align with the Ministry of Social Developments. It would be prudent to review your employees employment contracts to see what is applicable.
Extra Information for the second round of wage Subsidy: (extracted directly from "work and income" website for clarity) updated 31.08.21
- Businesses that applied for the initial Wage Subsidy August 2021 payment and who meet all the eligibility criteria for Wage Subsidy #2, can apply for another wage subsidy payment two weeks after their previous application. So, if someone applied on 23 August, they could apply for Wage Subsidy #2 on 6 September. Early applications can't be accepted as each payment is for two weeks.
- We will email these businesses to let them know when they can apply for the new Wage Subsidy #2.
- Businesses that didn't apply for the initial wage subsidy are welcome to apply for Wage Subsidy #2 from 3 September providing they meet all the eligibility criteria.
- To ensure payments are processed as quickly as possible, it's very important the information provided in the application matches that held by Inland Revenue. If the information doesn't match, it may delay the processing of an application.
How can I apply?
- The link below will take you to the application forms.
Work & Income - Wage Subsidy Link (Click here)
COVID-19 Resurgence Support Payment August 2021
The Resurgence Support Payment (RSP) is available to help support viable and ongoing businesses or organisations due to a COVID-19 alert level increase to level 2 or higher. If your business or organisation is facing a reduction in revenue due to an alert level increase, you may be eligible for the RSP.
- A business or organisation must have experienced at least a 30% drop in revenue or a 30% over a 7 day period, due to the increased COVID-19 alert level.
- This decrease in revenue is compared with a typical 7 day revenue period in the 6 weeks prior to the increase from alert level 1.
- Businesses and organisations must have been in business for at least 6 months.
- The business or organisation must be considered viable and ongoing.
- Businesses and organisations must have a New Zealand Business Number – if your business or organisation doesn't currently have one of these, feel free to contact any of our staff as we are able to help with this.
- Your business or organisation may receive both the Resurgence Support Payment and Wage Subsidy.
- You can spend the Resurgence Support Payment on anything relating to your business. It is not restricted on wage costs.
- For seasonal businesses and organisations, the comparative revenue period should be a 7 day period that is at a similar point in the seasonal cycle for a year prior to the revenue decrease.
- It is possible that the Government could decide to activate the Resurgence Support Payment multiple times if there are multiple alert level increases from level 1. Businesses and organisations can apply for the RSP each time it is activated, as long as they meet the eligibility criteria.
How much money can I receive?
The Resurgence Support Payment is capped at the lesser of:
- $1,500 (base amount) + $400 per full time employee up to a maximum of 50 full time employees
- Four times (4x) the actual revenue decline experienced by the applicant. You can receive up to a maximum of $21,500 through the Resurgence Support Payment.
When can I apply?
- Applications for the alert level increase announced on 17 August will be open at 8am on 24 August at 8am.
- Applications are made through your myIR login or we, as tax intermediaries, are able to apply on your behalf with your consent.