24 August 2020
In response to the resurgence of COVID-19 in the community and the moving of Auckland to Alert Level 3, the Government has announced an extension of the wage subsidy. The wage subsidy extension, referred to as the Resurgence Wage Subsidy (RWS), applies nationwide.
The criteria for the latest extension to the wage subsidy extension are:
- The business must have had, or be predicting to have, a decrease in revenue of at least 40% due to COVID-19.
- The decrease in revenue must be for any consecutive period of at least 14 days between 12 August 2020 and 10 September 2020 compared to last year. For businesses that invoice monthly it may be difficult to identify the revenue for a 14-day period both for the current period and prior year. At this stage there is no guidance on how these businesses should measure their income for a 14-day period.
The RWS only covers two weeks and businesses can apply to receive $1,171.60 for each full-time employee and $700 for part-time employees. Applications opened at 1 pm on Friday 21 August and will close on 3 September 2020.
As with the earlier wage subsidies, applications are made through the Ministry of Social Development website.
As mentioned above, the existing Wage Subsidy Extension (WSE) continues to be available until 1 September 2020 however, it’s important to note a business cannot be in receipt of the WSE and RWS at the same time.
If a business is already receiving the RWS it must ensure the period covered by the RWS has expired before it applies for the RWS. The WSE covers an eight-week period so, if you have not already applied for the WSE, you may wish to do so given it covers an eight-week period rather than the two-week period of the RWS, assuming you meet the eligibility criteria.
The other requirements that applied to the WSE also apply to the RSE. These include:
- The business must have taken active steps to mitigate the financial impact of COVID-19, which can include drawing on cash reserves (if appropriate), making an insurance claim, talking to the bank, and seeking advice from an accountant or other support networks, such as a chamber of commerce or industry association.
- The employees named in the application need to remain employed for the two weeks covered by the RWS. The original Wage Subsidy Scheme and the WSE required the business to have obtained employee approval to be included in an application. We assume this will be the case with the RWS.
- The employer must endeavour to pay at least 80% of each named employee’s normal wages or salary for the duration of the subsidy or pass on at least the full amount of the subsidy claimed to the employee for the two-week subsidised period (unless the employee is ordinarily paid less). A recent Employment Authority decision has highlighted this does not relieve an employer of the obligation to pay at least the minimum wage.
Should you need help with determining whether you are eligible for the RWS or WSE or need help with making an application, please contact your Findex adviser or get in touch with the Tax Advisory team.
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August 2020
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