A year has passed and multiple assistance packages have come and gone since the COVID-19 pandemic started early last year (damn you 2020!). While NZ is still doing better than the rest of the world (generally speaking) we continue to battle occasional flare-ups here and there (but mostly just in Auckland, really). The last lockdown saw Auckland going into Level 3 for a three days and then a WHOLE WEEK which triggered many angry reactions, (despite the fact that it really was shorter than the 3 month long lockdown the ENTIRE country had last year).
Fortunately, the government was quick on the response with the resurgence support payment and shortly thereafter announced the March 2021 COVID-19 wage subsidy would start on 8 March 2021.
There is not much difference between this new wage subsidy and the old one, so I’m just updating this old post with a little bit of new info for those of you looking to apply.
How does the Wage Subsidy work?
The most important part of any business is the team that drives it – so the wages subsidy helps your business subsidise your team’s wages. To qualify for this support you need to meet a few criteria first:
(taken from the WINZ site here)
- Your business must be registered and operating in New Zealand
Are you registered in NZ? Is your business based in NZ? Are your employees legally working in NZ? If you answered yes to all the above – you check this box.
Sole traders and self-employed people rejoice! You are covered as well! Make sure you have your personal IRD number, any licenses and permits for your business needs and any qualifications or registrations for your profession handy when filling in your application.
- Your employees must be legally working in New Zealand
Pretty self-explanatory. Your employees MUST be either:
NZ or Australian citizen (including a person born in the Cook Islands, Niue or Tokelau) or
Hold an NZ residency class visa or
Have an NZ work visa or a visa that allows them to work in NZ
- The business must have experienced a minimum 40% decline in actual or predicted revenue related to the recent rise in alert levels
This is the biggest difference between the wage subsidy this year and last year. To quote the WINZ guideline:
To qualify, your business needs to experience or expect a 40% decline in revenue over a consecutive 14-day period between 28 February and 21 March, compared to a typical 14-day period between 4 January and 14 February 2021 (6 weeks before the change in alert levels).
It is important to note two things though:
First – You can only use any 14 day period between 4 Jan and 14 Feb 2021
Second – The decline in sales must be related to the change in alert levels. How do you justify this? If you are in retail, people can’t come into your shop at level 3. If you are in a band that does gigs, level 3 would have killed all your gigs. If you are in tourism, you would have to cancel all your bookings for level 3. If you are an accountant that works online – sorry buddy, the level change does not affect your business.
Fancy Divers Ltd operates out of Auckland and when Level 3 was announced, they had to cancel all their bookings – this led to a loss of sales during the alert level period. Between 4 January and 18 January (a 14 day period) they made sales of $3,000. From 15 Feb to 1 March 2020, they made sales of $1,500. This is a 50% decline and since they can trace the decline to the change in alert levels, they can apply for the wage subsidy.
Obviously if you just setup your business when the alert levels changed, you can’t apply for this subsidy (since you have no sales or capital investment to use as a benchmark),
If you have seasonal revenue, you can choose to compare the decline to a same period of 14 consecutive dates in 2020 or 2019.
- Your business must have taken active steps to mitigate the impact of COVID-19
To meet this criteria, you need to show WINZ that you are actively engaging with organisations like your chamber of commerce, your bank, industry associations or Regional Business Partner (seriously, sign up as a member!) in getting advice and doing business continuity planning.
Keep a record of your communications and any documentation you have with these organisations as they will be key in proving that you are taking active steps to mitigate the impact of COVID-19.
- You must make best efforts to retain employees and pay them a minimum of 80% of their normal income for the subsidised period.
Basically this means that you must do your very best to retain the employees you are seeking the subsidy for. You can reduce their pay to stretch the subsidy further but you cannot reduce it beyond 80% of their normal pay for the 2 weeks that their wages are being subsidised.
- What if you are already receiving a COVID-19 payment?.
If you have already applied for the:
Short term Absence Payment
Leave Support Scheme
For one of your employees (or yourself, if you are self-employed) you cannot apply for the COVID-19 wage subsidy for them.
That being said, you can apply for both the Resurgence Support Payment AND the March 2021 COVID-19 wage subsidy! So if you are eligible for both, you should apply for both of them!
How much will the Wages Subsidy cover?
Same as last year – the wages subsidy comes in two flavors:
- $585.80 a week for up to 2 weeks for each employee that works more than 20 hours a week (full-timers). This is a lump sum payment of up to $1,171.60 per employee.
- $350.00 a week for up to 2 weeks for each employee that works less than 20 hours a week (part-timers). This is a lump sum payment of up to $700 per employee.
The two-week period starts from the date you applied for the subsidy or March 8 if you applied before March 8.
How often can I apply for the Wage Subsidy?
You can receive the wage subsidy once from EACH income source. This means that if you are an employee AND are self employed as well- you can claim the subsidy on your self-employed work and your employer can claim it for you through your work.
If you work for multiple employers, they can each make a claim for you through their business.
Bear in mind that if you are the shareholder owner/operator of multiple businesses you could theoretically claim the subsidy through each business for yourself (since they are different income sources). Try to not abuse this though as if you are claiming the wage subsidy for yourself through LOTS of different sources, you will attract the attention of the authorities.
Ok, I’m pumped – tell me how to apply!
If you want to apply – start your application here:
For Large Employers (80 or more employees)
How long will it take for me to receive the payment?
There is no set time frame currently, but payments are being made relatively quickly.
If you haven’t received the subsidy after applying, you can contact WINZ at 0800 40 80 40.
Can I game the system, grab the payouts and not pay my employees?
Well, this hasn’t changed – No, no you can’t.
What kind of monster are you? The Government WILL find out and you will be investigated for fraud. This entire support package hinges on the honesty and goodness of Kiwi business owners everywhere – so be a good kiwi and do it the right way!
Stay safe and stay educated! Most of all, stay resilient and strong!
For more info on how to use the subsidy – check out this updated post here.
Kia Kaha NZ!!!
Gemini
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