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In need of Covid-19 support? | Calculating foreign tax credits |

By August 31, 2021 No Comments
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In need of Covid-19 support?

Firstly, I hope you are all coping ok with our latest lock-down, which I suspect, for those of us located in Auckland at least, will extend for another week, or if not two, just to ensure we do completely stamp out this community outbreak.

Moving to Alert Level 4 has activated a raft of Covid support measures, which you or your clients may now wish to seek. I thought it would be useful to outline them here for you, although remember, the best place to check for anything regarding the pandemic is here.

Wage Subsidy Scheme (WSS) – any eligible employer (including those who are self-employed) in New Zealand can apply for the WSS if they expect a loss of 40% of revenue (as a result of the move to Alert Level 4 on 17th August):

  • over the period 17 August 2021 to 30 August 2021 (inclusive) (revenue test period), when compared to a typical 14-day consecutive period of revenue in the six weeks immediately prior to the move to Alert Level 4 on 17 August 2021 (default comparator period); or,
  • if you are an employer that has highly seasonal revenue, of at least 40% over the revenue test period when compared to the same 14 consecutive days in 2020 or 2019 (seasonal comparator period), provided you can demonstrate that the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature; and
  • in relation to your above two calculations, you exclude any payments made to you in relation to this subsidy, other Covid-19 Wage Subsidy schemes, the Covid-19 Short-term Absence Payment scheme, Covid-19 Leave Support schemes, Covid-19 Essential Workers Leave Support scheme, Covid-19 Resurgence Support Payment scheme or the Covid-19 Small Business Cashflow scheme.

For commonly owned groups, it is a whole of group approach as opposed to individual companies within the group. When you apply for the WSS, the rules are the same as previously in terms of including such things as:

  • the need to sign a declaration, which includes signing off that prior to applying for the WSS, you took active steps to mitigate the impact of the lock-down on your business (e.g. talked to your bank, used cash reserves etc);
  • retaining evidence of how the decline in revenue was attributable to the move to alert level 4;
  • existing employment law obligations remain, and you will confirm that you will retain the named employees for the period of the subsidy claim;
  • you’ll use your best endeavours to pay the named employee at least 80% of wages; and,
  • you’ll repay any amount of the subsidy as appropriate.

Note that the rates of the WSS have increased to $600 per week per full-time equivalent employee and $359 per week per part-time employee. The wage subsidy will be paid as a 2-week lump sum and applications are already open.

Resurgence Support Payment (RSP) – you are entitled to claim this support as well as the WSS, and it is available if you incur a loss of 30% of revenue (or decline in capital-raising ability) as a result of the alert level increase (compared with a typical 7-day revenue period in the 6 weeks prior to the increase from alert level 1). When the RSP is activated, eligible businesses and organisations can apply to receive the lesser of:

  • $1,500 plus $400 per full-time equivalent employee (FTE), up to a maximum of 50 FTEs, or
  • 4 times (4x) the actual revenue decline experienced by the applicant.

To be eligible, you must have been in business for at least six months, be considered viable/ongoing, have a physically present New Zealand business, the 30% decline must be actual and not forecast, and you must have a NZBN (New Zealand Business Number).

You can find out more about the RSP criteria here.

Leave Support Scheme (LSS) – this support provides a two-week lump sum payment of either $585 per week for full-time workers, or $350 per week for part-time workers, who must self-isolate and cannot work from home. You can check here for the full eligibility criteria.

Short-term Absence Payment (STAP) provides a one-off (once per 30 days) $350 payment for workers who must miss work due to a Covid-19 test and cannot work from home. This payment is also available to self-employed workers. You can check here for the eligibility criteria.

This article from the ‘A Week in Review’ newsletter was originally published Monday 23rd August 2021. If you have any questions or would like a second opinion on any national or international tax issues, please contact me richard@gilshep.co.nz. 

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