Wage Subsidy Round Three

The third round of the wage subsidy will be available from 9am on Friday 17 September. Applications for the second round close at 11.59pm Thursday 16 Sept (tomorrow). The revenue test period will be from 14 September to 27 September, with the anticipated comparable being a typical two week period in the six week period prior to 17 August. We anticipate the other key criteria would be the same as before, being:

• At least a 40% revenue decline over the period, or
• If your business has highly seasonal revenue, you must have at least 40% decline over the revenue test period compared to the same 14 consecutive days in 2020 or 2019, provided you can demonstrate the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature.
• You must have taken active steps to mitigate the impact of the move to Alert Level 4 on 17 August 2021 on your business activities. This includes (but is not limited to) engaging with your bank, drawing on your cash reserves as appropriate, or making an insurance claim.
• Best endeavours must be made to pay at least 80 per cent of the ordinary wages or salary of each employee and each employee must at least receive the full amount of the subsidy unless it is above their ordinary wages or salary, in which case they should continue to be paid their ordinary wages or salary.
• Predicted falls in capital income can be used in limited circumstances.

Note that a business can only be in receipt of one wage subsidy at a time. This means that you need to wait two weeks from the time you lodged your last wage subsidy application before applying for the next round.

One caveat is the government’s announcement stated A reminder that this is available for those in Auckland, but also those around the country who can establish that their revenue loss is a result of Alert Level 3 or 4 in Auckland. This suggests there may be scrutiny around applicants who would otherwise meet the criteria but have suffered a revenue decline for other reasons, for instance, due to the current Level 2 restrictions outside Auckland establishing density and capacity limits in hospitality. An example of where the requirement may be met for those in Level 2 is if there are stoppages or delays in getting raw materials from Auckland that hold up business activities. We hope the government provides further clarity in this area in coming days.

Resurgence Support Payment Round Two announced last week

Late last week the government announced a second round of the Resurgence Support Payment with applications opening at 8am on Friday 17 September.

In order to be eligible, a business will need to show a 30% decrease in revenue in a 7-day period from 8 September until immediately before the whole of New Zealand returns to Level 1, compared with a typical 7-day period in the 6 weeks before 17 August.

Other criteria remain the same, including the amended requirement for businesses to have been in business for 1 month before 17 August 2021 (previously this was 6 months).

Businesses who applied for the first round of the Resurgence Support Payment can apply for the second round.

All businesses in New Zealand can apply if they meet the eligibility criteria.

The government has also indicated the resurgence support payment will operate on a three weekly cycle while any part of the country is still at Level 2 or higher

Comment

While it is good to see government support for business, we are concerned that businesses outside of Auckland who are suffering from density and capacity limits, as well as general nervousness by the population, may not be eligible for the support they need to enable the retention of their staff.

If you have any queries regarding the support available for business, please contact your Baker Tilly Staples Rodway advisor.