On 17th March, the Government has released an economic response package to help cushion the impact of COVID-19 and support the economy during the COVID-19 crisis.
The package includes:
- wage subsidy scheme
- leave and self-isolation support
- business cash flow and tax measures
- wider $12.1 billion package.
Wage subsidy scheme
Wage subsidies will be available for all employers that are significantly impacted by COVID-19 and are struggling to retain employees as a result. The scheme will be open to all businesses, including sole traders and the self-employed.
Wage subsidies will be available for businesses in all sectors and all regions that can show a 30 per cent decline in revenue for any month between January and June 2020 compared to the year before (including projected revenue).
The subsidy will be $585.80 per week for a full time employee (20 hrs or more) or $350.00 per week for a part time employee (less than 20 hrs). The payment will be made as a lump sum for a period covering 12 weeks. This means employers will receive a payment of $7,029.60 for a full time employee and $4,200 for a part time employee. The maximum amount any one employer can receive is $150,000.
More information on who qualifies for the wage subsidy, definitions for wage subsidy qualifications, and how to apply, can be found on the Work and Income website.
Leave and self-isolation support
Workers and businesses have responsibilities to prevent the spread of COVID-19. The purpose of the COVID-19 leave and self-isolation scheme is to support workers financially to self-isolate, or while ill with COVID-19, where this is required so that all businesses and workers can do the right thing.
From 17 March 2020, the COVID-19 Leave Payment will be available to support people financially if they need to self-isolate, cannot work because they are sick with COVID-19 or cannot work because they are caring for dependents who are required to self-isolate or who are sick with COVID-19.
The payments will be $585.80 per week for full time and $350 per week for part time workers. The COVID-19 Leave Payment will be available for eight weeks from 17 March 2020. Employers will be able to apply for this more than once.
More information on who qualifies for the leave payment, and how to apply, can be found on the Work and Income website.
Business cash flow and tax measures
There are a number of business cash flow and tax measures that have been announced, including:
- The Government has announced that it is proposing to give Inland Revenue the ability to write-off the interest charged for late payments, also known as use-of-money interest (UOMI).
- Increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021.
- Increasing the small asset depreciation threshold from $500 to $1,000 — and to $5,000 for the 2020/21 tax year.
- Allowing depreciation on commercial and industrial buildings from 2020/2021.
- Removing the hours test from the In-Work Tax Credit (IWTC) from 1 July 2020.
More information on the business cash flow and tax measures can be found on the Inland Revenue website.