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COVID-19 frequently asked questions

The government has acted quickly and decisively, ensuring that New Zealanders can concentrate more on their health and less on their finances.

Unfortunately, it can take a while to iron out the details, raising more questions. As your trusted advisors, we are here to help.

Do you have a business question?

Please use our form to ask any questions you may have as a business owner or employer, check in regularly, as your question may be added to our FAQ (your name will not be shared).

Wage subsidy eligibility:

Where do I find information about the government's economic response package and eligibility?

The government has provided this information on the Business New Zealand website.

You will also find some useful resources in our News section.

How does the wage subsidy work; how do we receive the funds?
The Wage subsidy will be received by business as lump sums into their bank accounts being $7,029.60 for a full-time employee and $4,200 for a part time employee.  These subsidies are only to be used for wages. Payments to employees are then just treated as normal salary and wages and PAYE, and other payroll deductions will need to be deducted as normal. Your accountant can help with how to setup codes in the accounting system for processing the receipts of wage subsidies and your Payroll team can assist with payroll. Our clients are welcome to call us with any queries.
What evidence do I need to have to support my claim?

As claims can be audited, please note the following: 

  • In making the claim you are declaring you meet the eligibility criteria
  • We recommend you document you have sought advice from third parties (banks etc)
  • Document internal procedures taken to reduce the financial effects of COVID-19 on your business
  • Keep accurate records evidencing how you calculated a 30% reduction in revenue

Any claims made in error may be subject to repayment.

How long does it take to receive the subsidy?

Current indications are between 2 and 7 working days.

How do I measure whether revenue has decreased by at least 30%?

A business must experience a 30% decline in:

  • actual revenue, or
  • predicted revenue and
  • that decline is related to COVID-19

One month’s revenue must be compared against the same month the previous year.   If you are a new business (i.e. less than a year) revenue can be compared against a previous month that gives the best estimation of revenue decline.  

Revenue means the total amount of money earned from its normal business activities, before expenses are deducted.

Practically this means you will need to measure your revenue the same way each month to establish a decline.

I accidentally left some people off my wage subsidy application what do I do?

We recommend contacting MSD directly if you have made any errors.

As the $150,000 cap has been removed, if you originally applied for a larger amount, MSD will automatically top you up.

You are also able to apply for an additional wage subsidy if you originally limited your application $150,000 but needed more.

If I receive the Wage Subsidy, do I have to top up the amount I pay to employees pay to 80% of their ordinary wages?

You must make best endeavours to pay employees a minimum of 80% of their wages ‘ordinary’ wages and salary for the named employees for the subsidised period. Best endeavours is not defined, but clearly business conditions can change and events regarding COVID-19 are always evolving and businesses need to respond. You must retain the employees named in your application and cannot unlawfully compel or require them to use their leave entitlements for the period you receive the subsidy.

At a minimum, the government expects the full value of the subsidy (after deducting PAYE etc) to be passed on to workers.

Note, you must have discussed your application with the named employees and employees must have consented to the application and any changes to their working arrangements (including reduced hours or wages).

Am I entitled to the full $350 wage subsidy if I pay my part time employee less than that?

As long as the person is a permanent part timer, there is an entitlement to the subsidy. The purpose of the subsidy is to enable people to remain employed, rather than be made redundant.

The full $350 wage subsidy can be claimed, even if the ordinary pay of your part time employee is less. However, it is expected the employee would be paid their full wage and any surplus would be used to support the wages of other employees.

 

NOTE: a permanent part timer includes contractors, casual staff or fixed term workers if they were scheduled to work during the lockdown.

If I have contractors, can I still apply for the subsidy?

Generally contractors would apply in their own right. If circumstances make this difficult, we recommend confirming the number of hours worked, and the conditions of the contract for aspects such as guaranteed hours of work. We can assist with contract reviews.

This will be the same for employees on commission, seasonal workers and casual employees.

How do sole traders / Partnerships / Trusts apply for an NZBN?

You will need to apply for an NZBN under 'your trust name' which you can do here:
https://www.nzbn.govt.nz/get-an-nzbn/get-your-nzbn/

You will need to scroll down and click “Operating a Trust? Get your NZBN here”

  • You can then start an online application
    • You will need Trustee Details
      • Full Names, date appointed and may need to provide a copy of an identity document for one of the trustees (NZ Driver licence or passport)
    • Proof of trustee status (Trust Deed) – this must match the names of the trustees above
    • RealMe login (or you can create one)
    • Then set up a user account
If I am a charity or organisation not operating in a company. Can I still apply for the subsidy?

The subsidy is broadly available and is designed to support employers to retain employees regardless of structure.

Can full time investors get any kind of wage subsidy or any leave help during COVID-19 as they are also paying tax?

Unfortunately full time investors are unlikely to meet the criteria for relief under the government’s wage subsidy package.

However, there are several other items where full time investors may obtain relief. These include:

  • The ability to claim a deduction for assets purchased between 17 March 2020 and 16 March 2021 with a value of less than $5,000
  • The ability to claim depreciation on commercial and industrial buildings from the 2021 year
  • The ability to file an estimate of 2020 provisional tax where this is expected to be lower

All the above are subject to specific criteria, please discuss this with your advisor.

We have previously received the wage subsidy based on a decline in 30% revenue. Now that our staff are on forced lock-down can we also submit a leave payment claim?

From 3pm on 27 March 2020, the COVID-19 Leave Payment is no longer available for employers. Therefore, if you had not applied for the leave subsidy prior to this date, you will not be able to make a leave payment claim.

It is our view this decision was made to prevent businesses that had already applied for the wage subsidy, applying for the leave subsidy as well. As majority of the country are now in self-isolation, the leave scheme was no longer fit for purpose. The leave subsidy is now included under the wage subsidy scheme. Leave payments for those with COVID-19 or those caring for the sick or self-isolated (an unbale to work) will still be made, however an employee will not receive a sick leave payment, as well as a wage subsidy payment.

Tax and payroll considerations:

How do employers treat the subsidy for tax purposes?
  • The subsidy is not subject to GST
  • PAYE and other payroll deductions such as Kiwisaver must be withheld when the subsidy is on-paid to employees (i.e. it is the net amount the employee receives).
  • The subsidy is not taxable income to an employer on receipt
  • There is no tax deduction for the subsidy when its paid out to employees
How do self employed people treat the subsidy for tax purposes?
  • The subsidy is not subject to GST
  • The subsidy is taxable (because no wage/salary is paid)
Where an employer has received the wage subsidy under the 30% decline and has $585 per week for employees - what amount gets paid as wages?...

...Does the employer pay gross $585 to the employee via payroll, is the $585 net or is it expected they will pay regular salary?

 

The $585.80 has to be paid via payroll and will attract PAYE. To receive the subsidy, the employer must commit to using their best endeavours (if they applied for the subsidy from 4 pm 27 March onwards) to pay at least 80% of the employee’s ordinary wages over the subsidy period or at least pay the full amount of the subsidy to the employee. Which every option applies the $585.80 will be taxed.

If I have 10x employees and have received the subsidy for all of them, can I offset some that normally earn less than $585 with the others who earn over $585...

...as long as I am trying to give all employees 80 - 90% of their normal weekly income?

 

It is your obligation to use the wage subsidy to retain and pay your employees. You must use your best endeavours to pay at least 80 per cent of each named employee’s wages and salary. Furthermore, the Government has announced that the entire wage subsidy must be passed on to the employee for which it was applied for. However, where the ordinary wages or salary of an employee is lawfully below the amount of the subsidy, you may only pay the employee their normal wage or salary.

It is our view that the money you receive is connected to the number of employees you applied for but is not directly tied to them. Therefore, you may offset the money left over from those who do not usually earn $585 a week to others who earn over $585 a week. As per the government guidelines, the wage subsidy is designed to keep staff employed during this period of business disruption, therefore, any difference should be used for the wages of other affected staff.

Prior to the announcement on Monday we had received the wage subsidy based on a 30% decline in revenue. Now that all our employees are on self isolation and unable to work from home...

...(hospitality industry) are we still obliged to pay them minimum 80% of the salary as per the original wage subsidy agreement?

 

The wage subsidy requires that businesses try their hardest to pay the employees named in the wage subsidy application, at least 80% of their normal wages. In some cases, this will require the employer to top up the amount given by the government.

However, if a business is unable to top up this amount to 80% due to the effects of Alert Level 4 on their business, then it is satisfactory that the employer just pass on the wage subsidy payment amount owed to the employees via payroll. It is likely that this scenario applies to most staff in the hospitality industry who are unable to work from home.

The bottom line is a minimum of $585.80 (for people working 20 hours or more per week) or $350.00 (for people working less than 20 hours per week) should be paid to the employee for the 12 week period covered by the wage subsidy.

Other matters:

Subsidy repayment:

I think I may need to repay some of the wage subsidy? What do I do?

You will need to repay some or all the COVID-19 Wage Subsidy if:

  • you no longer meet the criteria for the subsidy
  • you’re not meeting your obligation to use the subsidy to retain and pay your employees
  • you’ve received insurance (eg, business continuity insurance) for any costs covered by the subsidy
  • you provided false or misleading information in your application.

You can check the obligations here: 

Obligations if you applied before 4pm on 27 March

Obligations if you applied on or after 4pm on 27 March

You can also make a repayment if you think you need to pay back some or all of the COVID-19 Wage Subsidy. This could be because you were overpaid or made a mistake on your application.

How to repay the subsidy

You can email COVID19subsidy_overpayment@msd.govt.nz with your:

  • business name
  • IRD number
  • New Zealand Business Number (NZBN), if you have one
  • phone number
  • email address
  • postal address

You’ll also need to tell them:

  • the amount you need to refund
  • why you want to refund it.

Once they’ve received your email, they’ll contact you to confirm the refund amount and how you can make the repayment.

What happens if I need to make a staff member redundant, but I have received the subsidy for that person?

We understand if the subsidy was obtained in good faith there will be no adverse consequences, apart from most likely repaying the subsidy. However, ensure good records are kept to support your position.

Please also contact us, our Human Resources department will be able to assist with employer obligations in respect of redundancies.

Other questions:

How do I take active steps to mitigate the financial impact of COVID-19?
  • activate your business continuity plan

 Seeking advice and support from:

  • Baker Tilly Staples Rodway
  • your bank
  • the Chamber of Commerce
  • a relevant industry association
  • the Regional Business Partner programme
Do I have to pay FBT for using my work vehicle during lockdown if using it to access essential services/I am an essential service?

Usual FBT rules apply during this time; if you previously paid FBT, then you are probably going to be required to continue to pay FBT. FBT on a motor vehicle arises on the basis a vehicle is available for private use, not whether a vehicle is actually used for private purposes. Home to work travel is a private use. 

FBT can be complex, especially where vehicles are provided to enable staff to provide services to the operation of plant and machinery, the supply of energy or fuel or emergency services to the health and safety of the public. For non-essential workers there may be scope to argue their car is not available because of the lockdown. We recommend discussing any specific details with your regular advisor.

Essential services:

What businesses are considered 'essential services'?
Please refer to the official website which outlines these services.

https://covid19.govt.nz/government-actions/covid-19-alert-level/#essential-businesses

I'm in the primary sector (food production), and 'essential service' - can we just work as normal?
No, there are strict MPI rules in place and a series of questions you have to be able to answer. The expectation is that you must adapt your way of working/operations/supply chain to minimise spreading the virus. You must register with MPI and be able to answer a series of questions. There will be an online registration process on the MPI website soon. Keep checking in there.
We're a business with 'essential workers' - some who are unable to work due to be being vulnerable, sick or otherwise unable to work due to COVID-19. Can we apply for the wage subsidy for them?

No. There will be a new Essential Leave Scheme available as of Monday 6 April 12pm. The scheme is similar to that of the wage subsidy but enables businesses that may not qualify for the wage subsidy to be able to support their essential workers. The criteria and details can be found here: https://www.beehive.govt.nz/release/essential-workers-leave-scheme-established

COVID-19 FAQ: submit your questions

DISCLAIMER: Our team is dedicated to helping you continue with business as usual, as much as you can. Information on government help is changing constantly and within hours of articles being added, the specifics may be out of date or only partially accurate. While we endeavour to keep this website accurate and current, our top priority is providing our clients with dedicated and relevant personal advice. If you need specific and up-to-date information, please seek help from your usual advisor directly.

No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.

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