INFORMATION ON COVID-19

With the internet age and social media forcing information on us, the information we are receiving every time we look at something can be overwhelming. So we thought to try and eliminate some confusion and have the relevant information for our clients and friends in one place.

This page will be regularly updated as questions are answered by the powers that be and we can confirm the correct the course of action. Please do check out the official page at www.covid19.govt.nz.

For help and assistance with Business Continuity Planning, you can receive free assistance with this via the Regional Business Partner Network.  Information can be found on our website here.

(Information current as at 27 March 2020)

The Wage Subsidy is to support you to pay your employees

If you employ staff, you can apply for a wage subsidy to assist you in your obligations to pay them during the lock down period.

Each business can only apply ONCE for a wage subsidy. You can find the information and application forms here for employers and sole traders.

All information can be found here

How do I code my payment when I receive it?

We created a training video for you on how to do this on Xero. You can do the same process on any software.

Do I need to get permission from my employee to provide their information to MSD?

Yes you must get their permission in writing and keep in on file. The Employee privacy statement is here.

Processing and payment timeframes

Our staff are under considerable pressure supporting New Zealanders. We are processing and approving applications as quickly as we can, please be patient.

You will get a text and email once the payment is made.

Your bank will use a specific reference – MSD COVID19C

Audits and reviews

You will need to declare you meet the criteria for payment as part of your application. All payments will be subject to audits and reviews.

Leave Payment

From 3pm on 27 March 2020, the COVID-19 Leave Payment is no longer available for employers. Applications already submitted will continue to be processed and paid. 

What about Shareholder employees?

If I am a shareholder in a business, can I apply for the wage subsidy?

If you work for the business and you are paid a wage, salary or draw an income for the work you do for the business, you can apply for the wage subsidy.

If I work for a business where there are multiple shareholders, how do I apply for the wage subsidy?

The business you work for should make one application for all of its employees and shareholders who work for the business and are paid a wage, salary or draw an income for that work they do.

Which form do I use?

You can use the ‘employer’ form and the other shareholders if they are paid a wage, salary or draw an income for the work they do for the business, need to have their details entered into the employee section of the form.

Partnerships

If my business operates in a partnership, can I apply for the wage subsidy?

If each partner that works for the business is paid a wage, salary or draws an income for the work they do, you can apply for the wage subsidy.

Which form do I use?

One partner must apply on behalf of the other partner(s) using the ‘employer’ form and using the other partners as named employees.

Contractors

If I am a contractor, am I entitled to apply for the wage subsidy?

Yes. Contractors can apply for the wage subsidy using the ‘self-employed’ application, provided you meet the criteria.

How do I calculate whether I qualify for the part time or full-time subsidy if my income fluctuates?

Use an average of hours you worked per week over the last 12 months. If you have been contracting for less than twelve months then use the average for the period you have been contracting.

If this average is 20 hours or more, you can apply for the full-time rate, and if it’s under 20 hours you can apply for the part-time rate.

Casual Employee(s)

As an employer, can I apply for the wage subsidy on behalf of my casual employee(s)?

Yes. You can apply for the wage subsidy for any casual employee(s) that are employed by you at the time you apply and who would have been expected to work during the time you will receive the wage subsidy.

How do I assess whether my casual employee(s) qualifies for the full-time or part-time wage subsidy rate?

Casual employees may have variable hours, so to assess their subsidy rate, the employer should average their hours over the last year. If this average is 20 hours or more, they can apply for the full-time rate, and if it’s under 20 hours they can apply for the part-time rate.

If they have worked for less than a year, the employer should average the hours worked during their total employment period.

What does registered and operating in New Zealand mean?

This means that a business is:

  • registered with the New Zealand Companies Office, and
  • physically located in New Zealand, and
  • their employees legally work in New Zealand.

Sole traders

Sole traders are not required to be registered with the New Zealand Companies Office, but must have:

  • a personal IRD number for paying income tax and GST, and
  • government licences and permits for their business needs, and
  • qualifications or registrations for their trade or profession.

Sole traders must still meet the requirements to be physically located and legally working in New Zealand.

What does legally working in New Zealand mean?

Legally working in New Zealand means a person is both working in New Zealand and is legally entitled to work in New Zealand. A person is legally entitled to work in New Zealand if they:

  • are a New Zealand or Australian citizen (including a person born in the Cook Islands, Niue or Tokelau), or
  • have a New Zealand residence class visa, or
  • have a New Zealand work visa or a condition on their New Zealand temporary visa that allows them to work in New Zealand.

For more information, see: https://www.employment.govt.nz/starting-employment/right-to-work-in-new-zealand/

What does a 30% decline in revenue mean?

This means a business has experienced a 30% decline in:

  • actual revenue, or
  • predicted revenue (e.g. for businesses who have seen a reduction in bookings such as accommodation providers), and
  • that decline is related to COVID-19.

The business must experience this decline between January 2020 and 9 June 2020.

Definition of revenue

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

Determining a decline in revenue

To determine a decline in revenue, the business must compare one month’s revenue against the same month the previous year (e.g. February 2020 compared with February 2019). The revenue of the month in the affected period must be at least 30% less than it was in the month it was compared against.

Businesses operating for less than a year

Where a business has been operating for less than a year, they must compare their revenue against a previous month that gives the best estimation of the revenue decline related to COVID-19.

What are active steps to mitigate the impact of COVID-19?

A business must take active steps to mitigate the financial impact of COVID-19 on their business. This could include activating their business continuity plan and seeking advice and support from:

  • drawing from your case reserves (as appropriate)
  • activating your business continuity plan
  • making an insurance claim
  • seeking advice and support from:
    • their bank
    • the Chamber of Commerce
    • a relevant industry association
    • the Regional Business Partner programme

What does retaining affected staff mean?

Employers are required to agree that, for the duration of the subsidy, they will make best efforts to:

  • retain the employees the subsidy was paid for, and
  • pay those employees at least 80% of their normal wage or salary. If that’s not possible, you must pass on at least the full rate of the wage subsidy to each employee named in your application. Even if their usual wage was less than the subsidy.

Employer obligations

The subsidy is being administered under a high trust model and employers will not be asked for verification before the subsidy is approved. However MSD will have the ability to check applications and verify information at a later date. Where false or misleading information has been provided, employers can be subject to fraud investigation.

To receive the COVID-19 Wage Subsidy, the employer must agree to the declaration which can be found here. Declaration Covid19 Wage Subsidy

Closing up shop

Some businesses have been economically impacted by COVID-19, leading to down-sizing or closing their operations. MSD can provide support and advice if you need to consider redundancies or reducing people’s hours. MSD have set up rapid response teams throughout the nation.

How they can help?

  • meet with you to talk about your situation,
  • discuss ways to help you retain your staff,
  • co-ordinate with other agencies, eg. Inland Revenue or Careers New Zealand,
  • meet with your employees to talk about what support is available (either one-on-one or group sessions),
  • help your employees with:
    • finding another job
    • re-training
    • skills assessment
    • financial support.

If you want redundancy support, you need to call the Employer Line 0800 778 008

More information from MSD for employers considering redundancies

Tax questions

If, as an employer I am receiving the wage subsidy on behalf of an employee, do I have to pay GST on the subsidy?

No – it will be treated as exempt from GST.

As an employer, do I have to pay tax on the wage subsidy I receive for an employee?

No, you don’t have to pay tax on a wage subsidy as it’s classified as excluded income.

Does an employee need to pay tax on a wage subsidy payment?

Yes, they will as the subsidy is paid to the employer as part of their normal wages. This means it is subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.

If, as an employer I am receiving the leave payment on behalf of an employee because they are in self-isolation, do I have to pay GST?

No – it will be treated as exempt from GST.

If I’m self-employed do I have to pay tax if I receive a leave payment because I am in self-isolation?

This payment will be treated as income for tax purposes.

If I’m an employee do I need to pay tax if I receive a leave payment because I am in self-isolation?

The leave payment will be paid to your employer, and you will receive it like normal wages. This means it’s subject to the usual PAYE, Student Loan, KiwiSaver deductions, etc.

Charities questions

If I’m an employer of a registered charity, incorporated society, non-government organisation, or post settlement governance entity am I entitled to apply for the wage subsidy for my employees?

Yes, you can apply for the wage subsidy if your business has been adversely affected as a result of COVID-19 and you are struggling to retain your employees.

If I’m an employer of a registered charity, incorporated society, non-government organisation, or post settlement governance entity am I entitled to apply for the leave payment for my employees?

Yes, you can apply for the leave payment if your employees are required to self-isolate because of Ministry of Health Guidelines and cannot work from home. Employees may not be able to work from home because:

  • of the nature of their occupation e.g. trades people or you cannot provide employees the ability to work from home e.g. no access to laptops.
  • they have been diagnosed with COVID-19
  • they are caring for dependents.

All the above information supplied cutesy of MSD