(3 minute read – COVID support)
Hi there accounting fans in NZ!
It’s been a long, hard journey for the past 12 weeks as part of the country remains under strict lockdown. But with 90% full vaccination rates in some areas (especially Auckland) we’re almost there! In the meantime, Waikato is poised to move to Level 3 Step 2 today (2 November 2021) and Auckland may move to Level 3 Step 2 on 9 November 2021.
Once we hit 90% vaccination though, we can expect greater freedom of movement.
So if you haven’t gotten your vaccine, go and book your vaccine today!
While waiting for 90%, businesses in Aotearoa NZ will have to wait just a bit longer! In the meantime, remember to apply for these COVID support if you are eligible!
COVID support: COVID Wage Subsidy
Who can apply for it?
Any business (sole trader/partnership/company) based in Aotearoa. They can apply for themselves and/or their employees (if they have employees). They must have had a revenue decrease of at least 40% from any 14 day period before the alert levels (17 August 2021) were raised compared to a 14 day period after the wage subsidy was announced.
How much does it pay?
$600 a week for full time employees (more than 20 hours a week). Currently it is being paid out in 2 week lump sums of $1,200 per full time employee (including the owner/shareholder).
$359 a week for part time employees (less than 20 hourse a week). To be paid out in 2 week lump sums of $718 per part time employee.
We are on wage subsidy #6 as of the writing of this article and we may see a few more before business returns to normal.
How to apply for it?
Apply through the MSD website. If you have applied before, you will get an email notifying you when you are eligible to apply again. You can apply for the current wage subsidy 2 weeks after your last wage subsidy was approved.
How do I pay tax on it?
Companies don’t pay taxes on wage subsidy income. Wage subsidy income is taxed in the individual’s name. For employees – this simply means that taxes are paid through regular payroll filings when the wage subsidy is paid out to them.
For shareholder employees (owner operators), you calculate the wage subsidy as part of your personal income tax at the end of the year. This is the same for sole traders.
There is NO GST on the wage subsidy.
COVID support: Resurgence Support Payment (RSP)
Who can apply for it?
Any business (sole trader/partnership/company) based in Aotearoa. They must have had a revenue decrease of at least 30% from any 7 day period before the alert levels were raised (17 August 2021) compared to a 7 day period after the RSP was announced.
How much does it pay?
The lower of 4 times the actual decrease between the comparative periods OR $1,500 plus $400 per each full time employee in the business per application.
How to apply for it?
Apply through your MyIR login on the IRD website. IRD will announce when the RSP is open for application. Currently we are on the 4th RSP for the period 22 October 2021 until we get back to level 1 Alert level. Applications for this payment will close on the first working day that is 1 month after a nationwide return to Alert Level 1.
How do I pay tax on it?
The RSP is not taxable income. It does however come with a GST inclusive component. You will need to pay the GST collected on the RSP. You may use GST paid on expenses to offset the GST collected on RSP as per normal.
COVID support: Small business cash flow loan
Who can apply for it?
Any business (sole trader/partnership/company) based in Aotearoa with fewer than 50 full time employees. Businesses need to have been in business for 6 months at least and have experienced a 30% revenue decline over a 14 day period in the 6 months before applying compared with the same 14 day period one year ago.
How much does it pay?
$10,000 base amount for each business plus $1,800 for each full time employee to a maximum of $100,000 per business.
How to apply for it?
Apply through your MyIR login on the IRD website. The application period for the small business cash flow loan has been extended until 31 December 2023. So you have plenty of time to apply for it if you need it.
How do I repay it?
If you fully repay the loan within 2 years of applying – it is interest free. Otherwise it will be subject to a 3% per annum interest rate (including the first two years). You have 5 years to repay the loan in full + interest.
Repayments are only made compulsory after the first 24 months. After which, you have to make regular, compulsory payments for the principal and interest.
You can make repayments via your usual IRD payment methods. These include a variable direct debit payment through your MyIR logon or internet banking transfer. You can also ask for the IRD to apply a tax refund you would receive from them to your loan balance.
Need more information?
We have written quite a bit about the latest COVID 19 support here. We have also written about the small business cash flow loan when it first came out in 2020 (bear in mind that the information in this article is a bit dated)
Want to take a loan? You need to read this first!
For information direct from primary sources – check out the IRD page on COVID support and the MSD website for the wage subsidy.
Take care, stay safe, get all the help you are eligible for!
Stay positive team! We’ll get through this!