NZ Government Business Support Package

The Small Business Cashflow (loan) Scheme has been extended until the end of 2020. Applications opened on 12 May 2020 and can now be submitted up to and including 31 December 2020. You can find out more information below.

The Government’s Unite Against COVID-19 website here continues to be the up to date source for all information on financial support for businesses.   

The Government has also created a helpful tool – COVID-19 Financial Support Tool – for you to work through what financial support might be available from the Government for you.

We have updated the below q and a to reflect some of the changes as a result of the COVID-19 Response (Further Management Measures) Legislation Bill which was passed into law on 15 May 2020, introducing a wide range of measures to support businesses and other entities through the pandemic. A summary of these changes can be found here. 

Read more about some of the recent changes below:

  • Small Business Cashflow (loan) Scheme: The Small Business Cashflow Scheme has been extended until 31 December 2020. Applications opened on 12 May 2020 and can now be submitted up to and including 31 December 2020.  You can find out more information about this here.
  • Border Exceptions for ‘Other critical worker’: Employers can request to bring critical workers into New Zealand while the border is closed on the basis of them being ‘other critical workers’ (this group was previously called ‘essential workers’)The criteria are very specific and the threshold will be extremely high. Our initial view is that vintage roles such as vintage cellarhand will not meet the criteria. It is possible a winemaker may meet the criteria, or technician for specialist equipment such as wine presses. You can find the information on the criteria and process to apply here.  

  • Financial help for foreign nationals on temporary visas stranded in New Zealand: The Government has announced The Assistance for Foreign Nationals impacted by COVID-19 Programme which will provide temporary, in-kind assistance to eligible people to help meet basic needs such as food and accommodation.

  • Wage Subsidy Extension and criteria amendment: A Wage Subsidy Extension payment will be available to support employers, including sole traders, who are still significantly impacted by COVID-19 after the original Wage Subsidy ends. The Wage Subsidy Extension will be available from 10 June 2020 until 1 September 2020 so employers can keep paying their employees. Applications opened from 10 June 2020.  In addition, the Government reduced the threshold for revenue loss to apply for the Wage Subsidy Extension from 50% to 40%, meaning you must have had a revenue loss of at least 40% for a continues 30 day period.  You can find out more information about this here.

While NZW is not able to provide employment advice, we can help seek answers to any queries you may have on the scheme from government. Please email these to virusresponse@nzwine.com 

The below Q&As include some information about different kinds of relief and support offered by Customs, IRD and Work and Income in these circumstances.

Please note that excise entries must still be lodged in the usual timeframes, as this is a legal requirement. It is important that if you have any difficulty making payment that you still lodge an entry as that will support Customs to assess payment options. Please contact your local excise officer at the earliest opportunity if you will have difficulty lodging your entry.  

GOVERNMENT FINANCIAL SUPPORT TO BUSINESSES AND THEIR STAFF

Q: Where can I find the Government’s information about wage support for our staff?  

The latest information from Work and Income is available here.    

The Government’s support package is designed to support you to retain your staff through this crisis when your business has been impacted by COVID 19.   

The package provides: 

  • Wage Subsidy: to support your business if you're impacted by COVID and face laying off staff or reducing their hours because of COVID-19;  
  • COVID-19 Leave support scheme: to support your business if you have staff who are required to stay home or cannot work from home due to COVID-19.
  • Business support with loans and tax relief.

Q. What kind of financial support is available for my business? 

NEW - Loans for small business: Government will provide one-off loans to small businesses, including sole traders and the self-employed, impacted by COVID-19 to support their cash flow needs.

The Small business cash flow loan scheme will provide assistance of up to $100,000 to businesses employing 50 or fewer full-time employees.

Details of the loans include:

  • $10,000 to be provided to eligible businesses
  • an additional $1800 per equivalent full-time employee
  • interest free if the loan is paid back within a year
  • an interest rate of 3% for a maximum term of five years
  • repayments not required for the first two years.

Applications are open until the extended date of 24 July 2020. To check your eligibility and how to apply, visit the COVID-19: Cash flow loans and support page.

Temporary loss carry back scheme: Business expecting to make a loss may be eligible to use the temporary loss carry back scheme. Find out more here

Provisional Tax: Increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021. Find out more here

Depreciation and Small Asset threshold: Amending depreciation for commercial and industrial buildings, and increasing small asset threshold from $500 to $1000- and to $5,000 for the 2020/21 tax year. Find out more here

Q.We are having difficulty complying with our  statutory obligations, or obligations under our companies constitutions or rules because of COVID-19, is their any relief available? 

Yes - the  COVID-19 Response (Further Management Measures) Legislation Bill has passed into law, introducing a wide range of measures to support businesses and other entities through the pandemic. This includes: 

Business debt hibernation: Enabling companies and other business entitites affected by the pandemic to place existing debts into hibernation for up to 7 months. You can find out more here.  

'Safe harbour' for company directors: New legislation introduces a temporary ‘safe harbour’ from personal liability for directors of companies facing significant liquidity problems owing to COVID-19 - find out more here

Law changes to aid compliance: The legislation introduces new laws which allow certain modifications to constitution rules, enable use of electronic means, exemptions from compliance obligations. You can find out more here

PERSONAL SUPPORT FOR WORKERS

Q: What can I do to help my workers cope with the stress? 

The Government has put together some tools and tips for looking after your mental health during the COVID-19 crisis here. 

If you feel that you or your workers are not coping, it is important to talk with a health professional. For support with grief, anxiety, distress or mental wellbeing, anyone can call or text 1737 – free, anytime, 24 hours a day, 7 days a week – to talk with a trained counsellor.  

FINANCIAL SUPPORT FOR WORKERS

Q. Is there any government financial help for foreign nationals on temporary visa stranded in New Zealand? NEW

In addition to the support from local Civil Defence and Emergency Management, the government has recently announced a new support package to provide financial support for temporary visa holders. Beginning on 1 July and lasting for three months,, assistance will be available to those who are unable to immediately return home and:

  • the person is experiencing serious hardship, and
  • all other avenues of potential support have been exhausted, such as access to savings or other assets, insurance cover, consular assistance from their own foreign missions, or help from family and friends. 

Under the new Programme, assistance may be provided for:

  • food and household goods required to meet urgent and immediate needs
  • blankets, hot water bottles and basic clothing to meet urgent and immediate needs
  • over-the-counter medication to meet urgent and immediate needs
  • accommodation (including rent, boarding costs and rent arrears)
  • utilities (electricity, gas). Excludes internet and broadband connection and plans
  • if required, pre-paid phone cards to enable emergency communication and communication with consulate/embassy
  • petrol/travel (limited to travel required to shift to new location for employment purposes or to airport to leave New Zealand).

No cash payments will be offered.

The government is identifying a provider and more details will be provided when they are available. You can read more about this funding here.  

Q: Who is eligible for the wage subsidy? NEW

The wage subsidy is paid to employers when their business has been impacted by the current pandemic to pass onto workers to enable them to keep those employees as ‘on leave on pay’

After feedback from businesses, the Government has taken the decision to change the required revenue drop threshold from 50% to 40%. Up to 230,000 businesses are now forecast be eligible for the new 8-week scheme from 10 June, covering up to 910,000 workers.

  • If you're applying for an employee you've already applied for the Wage Subsidy for, you can't apply for them until their 12 week Wage Subsidy has finished.
  • It will cover 8 weeks per employee from the date you submit your application.
  • It will be paid to you as a lump sum at the same weekly rate as the Wage Subsidy.
  • If you've given an employee notice of redundancy before you apply, you can't apply for those employees unless the redundancy notice is withdrawn.
  • You'll need to agree to certain obligations, such as to:
    • pass the subsidy on to your employees
    • retain your employees for the duration of the subsidy
    • do your best to pay your employees at least 80% of their normal pay
    • take active steps to mitigate the impact of COVID-19 on your business.

You can find more information here. 

All payments will be subject to audits and reviews, so remember to maintain full records and be able to document payments. 

The wage and leave subsidies are available for all New Zealand employers, contractors, sole traders, self-employed people, registered charities and incorporated societies to pass onto their employees. 

Q: Can I apply for the wage and leave subsidy for casual workers and fixed term workers? 

Whether your casual or fixed term workers are eligible to receive the subsidy may depend on the circumstances, so for now we suggest that you include them in your application if they are part of your workforce. The criteria contemplate part time workers but does not distinguish other classes of workers. 

Q. Is there any financial assistance for people who have lost their jobs as a result of COVID-19?

If you lose your job (including self-employment) from 1 March 2020 to 30 October 2020 due to COVID-19, you may be eligible for the COVID-19 Income Relief Payment.  Under this you can get up to 12 weeks of payments, to help with living costs after a sudden job loss, and give you time to find other work.  You cannot get this Income Relief Payment at the same time as a main benefit. 

Find out more about eligibility here

Q: Is there any support for workers who are unable to work due to COVID-19 related restrictions or requirements?  

The COVID-19 Leave Support Scheme (used to be 'COVID-19 Essential Workers Leave Support') is available for employers, including sole traders, to pay their employees who can't work.

This means your employees:

  • can't come into work because Ministry of Health guidelines recommend they stay at home, and
  • can't work from home.

This payment used to be called 'COVID-19 Essential Workers Leave Support' because it was only available to essential businesses. It's now called 'COVID-19 Leave Support Scheme' because it's available for all employers returning to work who meet the criteria.

You can find out more here. 

SUPPORTING BUSINESSES

Q. Where can I find up to date information/commentary on the economic impacts of COVID-19? 

The Treasury is publishing weekly economic updates, including a dashboard report tracking the impacts of COVID-19 on the economy.

The dashboard provides real-time domestic and international data. It is designed to assist independent analysis, or give businesses a sense of what is happening across different parts of the economy.

https://treasury.govt.nz/information-and-services/new-zealand-economy/covid-19-economic-response/commentary

Q: What if I am unable to pay my business taxes? 

IRD has announced that if your business is unable to pay its taxes on time due to the impact of COVID-19, they understand and you don’t need to contact them to confirm this. They are providing some breathing space for businesses to reorganise and will waive penalties and interest. 

They would like businesses to continue to file relevant returns such as GST and PAYE, as the information is used to make correct payments to people, and to help the Government continue to respond to what is happening in the economy. See the announcement here.  

Q. How should I contact IRD in the lockdown period?

IR phone services will be severely limited and the most effective way to contact Inland Revenue will be online, through the myIR service. 

More information can be found on the IRD website  www.ird.govt.nz/covid-19

You can also find updated guidance and information about IR activities in a recent update here.

Q. Is there any tax-related guidance for employers about wage subsidies? 

It is important employers pass wage subsidies to workers, and process them as part of the employees normal wages. 

All deductions (such as PAYE, Kiwisaver and child support) should be made as normal.  If the total wage (the subsidy plus the employer funded pay) amounts to the same wage as previously paid, the pay and deductions on their payslip should be the same. 

Employers won't be liable for income tax or GST on the subsidy received from MSD and will not be entitled to an income tax deduction for wages paid out of the wage subsidy. 

If you have any further questions please contact IRD online through myIR. 

Q. Is there any guidance issued from the Government about employment matters during COVID-19? NEW

Employment NZ has prepared a helpful one pager about key tips and information for managing Employment matters here. 

Q: Can I get a loan to cover any losses and keep operating? 

The Government has announced the $6.25 billion Business Finance Guarantee Scheme. It will provide short-term credit to cushion the financial distress on solvent small and medium-sized firms affected by the COVID-19 crisis. 

This scheme leverages the Crown’s financial strength, allowing banks to lend to ease the financial stress on solvent firms affected by the COVID-19 pandemic. 

The scheme will include a limit of $500,000 per loan and will apply to firms with a turnover of between $250,000 and $80 million per annum. The loans will be for a maximum of three years and expected to be provided by the banks at competitive, transparent rates. 

The Government will carry 80% of the credit risk, with the other 20% to be carried by the banks. 

Talk to your bank about accessing this scheme. 

CUSTOMS SUPPORT

Q: What if I run out of storage space for wine at my winery? 

Customs may be able to issue a permit to remove finished wine from your Customs Controlled Area and store it elsewhere. More information is available here.  

Q: I am struggling to pay my excise duty on time due to the impact of COVID-19. Does Customs have any support for this?  

Yes. Customs realises the economic shock of COVID-19 has had a significant effect on cash flow. Where they can show cash flow issues due to the impact of COVID-19, Customs is negotiating instalment payment options, for those that are unable to pay in the short-term. Customs is also waiving late payment penalties for excise manufacturers and importers, if this is the first time in two years they have been late in making payment.

 If you are unable to pay your Excise duty on time due to the impact of COVID-19, please contact Customs on revenue@customs.govt.nz (including your Customs client code and due date) to discuss payment options and they will do our best to accommodate. Please quote your Customs client code and due date.

[Updated 22 April] 

Q: Is there any other relief from excise duty available?  

Customs have advised that it is urgently considering what other measures it can take to provide relief from the payment of excise duty. Unfortunately the Minister has declined our request to suspend the annual excise adjustment, which will take place on 1 July.

Remissions or refunds of excise duty are still available in the usual circumstances. Please contact the excise officer at your local Customs office if you have any questions, or wish to submit an application for remission or refund.  

Customs has received enquiries from manufacturers seeking guidance on remission of stock that has been sold to the hospitality industry, and treatment if returned or destroyed. We are reviewing our policy on this issue and will provide guidance on this question as soon as practicable.  

 [Updated 22 April]

 

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