Government announces $12.1b support package in response to Coronavirus (COVID-19)

The Labour-led government has outlined a ‘once in a lifetime’ support and economic stimulus package to address the unrivalled impacts of COVID-19 on New Zealand.

This is an evolving situation that will undoubtedly change the world as we know it. The $12.1b package - representing 4.1% of this country’s GDP - aims to alleviate some of the pain New Zealand’s businesses and individuals are feeling.

Support for businesses

1) Wage subsidies
The package includes $5.1b to assist businesses or sectors that can demonstrate a decline (or forecasted decline) in monthly revenue of 30% when comparing any month between January and June 2020 to 2019. Employers can access the subsidy by an online application to the Ministry of Social Development (MSD). Payments will be $585.80 per week for a full-time employee (20hrs or more) or $350.00 per week for a part-time employee (less than 20hrs) paid as a lump sum for a maximum of 12 weeks. The maximum any employer can receive is $150,000. To qualify, employers will be required to declare they intend to employ affected employees at a minimum of 80% of their usual pay for the subsidy period and take active steps to mitigate the impact of COVID-19.

2) Leave and self-isolation support
This payment will be available to employees and self-employed in self-isolation, or otherwise unable to work due to COVID-19. Payments will be $585.80 per week for full time and $350 per week for part-time workers and does not affect any paid leave entitlements. The payments may be backdated to 17 March 2020. Again, employers will be required to complete an online application.

3) Tax changes
The government has announced measures aimed at improving cashflow and stimulating investment:

While these announcements are a good start, there are further obvious opportunities to make a more meaningful impact to small-medium businesses and we hope that these are addressed in future announcements, such as the Budget, due 14 May. Cash flow will be the immediate concern for many businesses.

Support for individuals

The Government also announced increases to some social entitlements, including a permanent increase of $25 a week for all main benefits (effective 1 April 2020) and an increase to the Winter Energy Payment. The increases will be applied universally to those eligible.

Changes to the In-Work Tax Credit (ITC) will apply from 1 July 2020, removing the existing requirement to work at least 20 hours a week - for sole parents - or 30 hours a week - for couples.

For more detail on the business support package and Government factsheets, see here.

The past few months have seen devastating natural disasters in New Zealand and Australia, now followed by the global outbreak of COVID-19. Governments, businesses, and communities all around the world are facing unprecedented challenges. The importance of maintaining stability, minimising disruption, and ensuring cash keeps flowing effectively through economies cannot be overlooked.

We are committed to leading the way in these difficult times so please do not hesitate to contact us to discuss how we may be able to help or simply to have a chat about how you're feeling. 03 474 0475

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