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Essential Member COVID-19 Update

20 March 2020

COVID-19 is a globally unprecedented and rapidly evolving situation, which could severely affect our families, communities, and businesses. The Government’s announced a $12.1 billion COVID-19 Economic Response Package, which is a positive step, about how they intend to support small to medium businesses and employees during this testing period. 

The Package offers a range of measures that can benefit our members. Over $5 billion is available for wage subsidies and the COVID-19 leave payment scheme will assist self-employed and employees in self-isolation, who are ill with COVID-19 or are caring for affected dependents. An additional $2.8 billion will fund business tax changes that will assist member’s cash flows. 

More information about the Package and links to websites where you can apply for the wage subsidy and the leave payment are below. 

The Banking Association has also been working with the banking sector to assist businesses. It’s crucial that members contact their banks if they have concerns about the impact of COVID-19 on their business. 

What the Package means for our members
Government’s package announcement click here

Wage subsidies
Wage subsidies will be available for all businesses, who can prove a 30% decline in revenue for any month between January and June 2020 compared to the year before (including projected revenue). If eligible, employers receive $585.80 per week for full time staff, and $350 for part time staff for 12 weeks. Applications are open from today. 

For more information click here.

COVID-19 leave payment scheme
The COVID-19 leave payment scheme provides support for those people unable to work because they are in self-isolation, are sick with COVID-19 or are caring for dependents who are in either of these situations. The payments will be $585.80 per week for full time staff, and $350 for part time staff, available for a maximum of eight weeks. Employers can request backdating payments to 17 March 2020.

For more information click here.

Immediate tax deductions for low value assets
From April 1st, businesses can fully deduct the cost of low-cost assets when they are purchased. There is a temporary threshold increase from $500 to $5,000 (the new permanent threshold is $1,000). 

For more information click here.

Increased threshold for provisional tax
From April 1 2020 the threshold for provisional tax will lift from $2,500 to $5,000. This measure will reduce cash flow pressure and compliance costs for small taxpayers by allowing roughly 95,000 businesses to defer their tax payments.

For more information click here.

Relief on interest for late tax payments
For businesses severely financially impacted by COVID-19, IRD will potentially waive the interest on late tax payments. 

For more information click here.

What the banks are committing to 
The Banking Association of New Zealand released potential loan and financing options for businesses impacted by COVID-19. Members should be in regular contact with their bank about the impacts of COVID-19 on their business. 
Depending on your individual circumstances, banking support options could include:

• Reducing or suspending principal payments on loans and temporarily moving to interest-only repayments
• Helping with restructuring business loans
• Consolidating loans to help make repayments more manageable
• Providing access to short-term funding
• Referring individual customers to budgeting services.

To read the Banking Association announcement click here.

I expect more announcements in the coming days and weeks, which I’ll communicate to you. In the meantime, I want to reiterate to all our members to stay vigilant and seek medical help if you start to feel unwell. The COVID19.govt.nz website is a one stop shop for all information about COVID-19. Finally, I want to reconfirm our commitment to supporting our members during this incredibly challenging period.