The New Zealand Government’s $12.1 billion support package is designed to fight the economic effects of COVID-19 and includes measures to help small-to-medium businesses face the challenges ahead. If you’re a sole trader or employ staff, there is a range of support options available to help you.
The package includes:
- wage subsidies for affected businesses in all sectors and regions
- COVID-19 leave and self-isolation support
- tax relief for business and measures to help free up your cash flow.
There are also measures including a benefit increase and doubling of the Winter Energy Payment to support seniors and low-income families. Plus, a spending boost has been announced to help health services combat the virus.
Paying your wages
If your business has been hard-hit by the virus – and is experiencing at least a 30% drop in revenue across a month compared to last year – you could be eligible to receive a one-off wage subsidy. The scheme is open to all New Zealand businesses, including sole traders and the self-employed.
It is designed to help you keep your staff employed while you consider any changes you need to make to ensure the future viability of your business. The amount is paid as a lump sum for wages only and covers 12 weeks per employee.
Under the scheme, full-time workers will receive $585.80 per week and part-time workers will receive $350 per week. To qualify, you must be able to show you’ve taken steps to reduce the impact of COVID-19, and you’ll need to do the best you can to retain your employees and pay them a minimum of 80% of their normal income for the subsidised period.
If you’re self-employed, you may also be eligible for the payment if you can show a 30% loss in revenue compared to last year’s monthly average.
Support for leave arrangements
If you're an employer, contractor, sole trader or self-employed, you may also qualify for the COVID-19 Leave Payment.
To help slow the spread of COVID-19, the leave payment may be available to anyone who needs to self-isolate, is unable to work because they have the virus, or because they are caring for dependents who are required to self-isolate or who are sick with the virus.
The payment is available for eight weeks and, as an employer, you’ll be able to apply for this more than once and must pass the payment onto your employees in full.
Tax relief for businesses
Tax relief and income assistance are also available to sole traders and small-to-medium businesses affected by a downturn in business. If you’re having difficulty paying outstanding tax, instalment arrangements can be set up, or you can apply for a write-off due to serious hardship when you know you won't be able to pay the full amount.
Another benefit is that the small asset depreciation threshold will be increased from $500 to $1,000, and then to $5,000 for the 2020/21 tax year. This means you’ll be able to immediately deduct the full cost of more low-value assets in the year that you buy them.
Extensions to filing dates for some income tax returns may also be available, and any penalties for late filing may be cancelled.
You may also be eligible for a certificate of exemption if you're currently undergoing contract work where regular tax payments are deducted, such as for forestry or bush work and fishing boat work with a profit-share arrangement.
For more information about how the support package can help your business, call the free government helpline on 0800 779 997 (8am–1am, 7 days a week) or visit https://covid19.govt.nz.
The above information was last updated 24.03.20.
Information provided in this article is general only and it does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including the appropriate legal advice) on whether it is suitable for your circumstances.