A Week in Review

Covid-19 wage subsidy changes

At the time of writing last week’s AWIR, we were sitting at Level 2, most of us continuing our daily lives as normal, although on notice that things could change in the weeks ahead, if evidence of community spread presented itself.

Within hours we had jumped to Level 3, and we had 48 hours before Level 4 would be invoked – complete lock-down for the country and a new “normal” of working completely from home for the next 4 weeks, “at least”.

Initially the Government had announced that two specific support packages were available to those impacted by the effects of Covid-19 – a wage subsidy for those employers who had or would experience a 30% decrease in revenue, and a Covid-19 leave payment for those individuals required to quarantine at home for 14 days for whatever reason, and who could not work from home during that time.

As the country quickly moved from Level 2 to Level 4, the Government also immediately set the wheels in motion to adapt the support measures to the “new normal” of a lock-down scenario. The $150k cap on the wage subsidy was removed, all businesses suffering the 30% revenue decline (including the self-employed/sole traders with no employees) were now able to apply, and from 3pm on March 27^th, the Covid-19 leave payment was no longer available (for obvious reasons) although existing applications would still be processed.

The other significant amendment was the relaxing of the 80% maintained income rule. Under the initial criteria, the applicant had to undertake to use their “best efforts” to retain employees during the 12-week subsidy period, and to maintain at least 80% of their incomes. If the applicant could not satisfy these criteria, then they shouldn’t be making a claim.

Post the 3pm announcement on the 27^th March however, the Government has stressed that the focus must now be on saving jobs, particularly during the lock-down period. Consequently, while ideally the employer will maintain 80% of the employee’s income, where they are unable to do so, then at the very least, they should simply pay them the wage subsidy amount.

For those part-time employees (
It was also restated, the Covid-19 has not resulted in any amendments to NZ’s employment laws, so employers always need to mindful of their continuing obligation in this respect.

Covid-19 tax relief measures now law

In last week’s AWIR, I set out the tax relief measures introduced by the Government to try to reduce the impact on businesses of Covid-19, which included:

• Restoring depreciation on non-residential buildings;
   
• Increasing the provisional tax threshold from $2,500 to $5,000;
   
• Increasing the low-value asset write-off to $5,000 (note for any acquisition post 17^th March 2020, so will apply to 2020 income tax positions);
   
• Bringing forward the broader refundability of R&D tax credit rules application date;
   
• Allowing IR to remit UOMI charges for payments due on or after 14^th February 2020;
   
• Enabling greater information sharing between IR and other Government Departments to facilitate Covid-19 responses;
   
• Providing wider access to the in-work tax credit ($3,770 per year) by removing the work hours eligibility requirement;
   
• Exempting from GST, wage subsidy and Covid-19 leave payments received by GST registered persons; and,
   
• Increasing the winter energy payment for the 2020 year only, by doubling both the single and couples existing rates.

The relief measures Bill has received the Royal Assent and is now law

KiwiSaver bill now law

The Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020, also received the Royal Assent during the week and consequently is now law.