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The New Zealand government has provided details with regard to support for small businesses impacted by the latest COVID – related lockdown.

That lockdown commenced late on Tuesday evening and affects all of New Zealand for 3 days with Auckland being locked down for 7 days.

Auckland’s lockdown, at level 4, is likely to have a significant impact on businesses throughout New Zealand given that Auckland is the commercial and industrial hub of the New Zealand economy.

You should note that assistance is only available to New Zealand businesses who employ New Zealand-resident workers. It does not apply to Australian-controlled businesses who effectively conduct the business from Australia.

What Does Auckland’s Latest Lockdown Mean?

The level 4 lockdown as the “stay-at-home” level and will be enforced by the authorities. It means:

  • vaccinations are paused for 2 days
  • all non-essential businesses are to close
  • masks are likely to be mandatory in public
  • all education facilities are closed, including for children of essential workers
  • people have 48 hours to return to their homes if away from home
  • one person per household can go to a local supermarket, and
  • People can exercise locally but must maintain 2 metres distance from others.

New Zealand Government Support to Struggling Businesses

The New Zealand government has activated a number of avenues of financial assistance for businesses anywhere in New Zealand that are affected by the Auckland lockdown.

If you are considering making an application you need to be mindful that New Zealand will be very proactive after-the-fact with regard to audit activity. New Zealand has one of the harshest tax penalty regimes in the world and “ignorance is no excuse”.

Therefore, if you are considering making a claim I strongly suggest you contact us first.

In saying that the avenues of current support available to businesses impacted by the latest lockdown include:

The Wage Subsidy Scheme (WSS)

New Zealand’s wage subsidy scheme allows eligible employers anywhere in New Zealand to apply if they expect a loss of 40% of revenue as a result of the alert level increase.

This isn’t restricted to Auckland businesses. Any New Zealand business can make a claim if it expects a loss of 40% of revenue as a result of the lockdown being introduced.

There has been an increase in the wage subsidy. The rate has been increased to reflect the increase in wage costs since the scheme was introduced back in March 2020 when New Zealand was first impacted by COVID-19.

Businesses impacted by the lockdown will now be eligible for $600 per week per New Zealand-resident full-time equivalent employee and $359 per week per part-time employee. The wage subsidy will be paid as a two-week lump sum.

Applications will open on Friday, 20 August 2021 and you can expect the first payment after 3 days.

The Resurgence Support Payment (RSP)

There is a 2nd level of support that is also available to businesses impacted by the lockdown.

This is over and above the wage subsidy scheme payments. In other words, if you are impacted by the various stages of lockdown, you can apply for both levels of assistance.

In order to receive the resurgence support payment, you must be able to demonstrate a loss of 30% of revenue as a result of the new lockdown. When this claim is activated eligible businesses can apply to receive the lesser of:

  • $1500 + $400 per full-time equivalent New Zealand-resident employee; or
  • 4 times the actual amount that revenue declined as a result of the latest lockdown

The resurgence support payment can be activated by the government at any time that New Zealand enters into any level of lockdown. It is possible that can be activated on a number of occasions in quick succession.

Businesses impacted by the measures can apply for a resurgence support payment each time the resurgence support payment (RSP) is activated.

The RSP offers 2 levels of assistance.

Firstly, the Leave Support Scheme (LSS) provides a two-week lump sum payment of either $585 per week per New Zealand-resident full-time worker or $350 per week for each New Zealand-resident part-time worker who is required to self isolate and cannot work from home.

The Short Term Absence Payment (STAP) is the 2nd level of assistance for the resurgence support payment. It provides for a one-off (once every 30 days) $350 payment for New Zealand-resident workers who need to miss work as a result of a COVID-19 test and cannot work from home.

 

The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.