COVID-19 Update: wage subsidy cap removed and other measures announced
The Government has removed the $150,000 per business cap on wage subsidies that can be paid to employers affected by COVID-19. The announcement made today (23 March 2020) increases the expected cost of the scheme from $5.1 billion to $9.3 billion.
The wage subsidies scheme applies to all New Zealand employers, contractors, sole traders, self-employed people, registered charities and incorporated societies. All such entities can apply for a wage subsidy for their staff.
- Those who have already applied for and been granted the wage subsidy for their employees (and had the cap applied) do not need to do anything further, as the Ministry for Social Development will top up the difference.
- Those who have applied for the wage subsidy for staff, and claimed only enough to meet the cap, can reapply for any additional (above the cap) amount.
- New businesses (eg. that are less than a year old) and high growth firms (eg. firms that have had significant increase in revenue) are also eligible for the wage subsidy scheme. They need to demonstrate the revenue loss assessment against a similar time period, for example a 30% loss of income, attributable to COVID-19, in March 2020 compared to January 2020.
- Self-employed people with variable monthly incomes are eligible if can demonstrate the revenue loss assessment against the previous year’s monthly average (eg. 30% loss of income attributable to COVID-19 comparing March 2020 to the average monthly income in the period March 2019 to March 2020).
Other criteria still apply, including the 30% revenue reduction and for businesses, on their best endeavours, to maintain their named employees at 80% of their pre-COVID income. The same twelve-week period applies to the wage subsidy scheme. The new criteria will apply from midnight tonight.
In addition, the Government is expediting urgent work on additional income support measures for all workers (above and beyond the wage subsidy scheme) in line with how the economy will operate under Alert Level 4.
- The Government, Reserve Bank and retail banks have agreed in principle to significant temporary support for mortgage holders and a business finance guarantee scheme for those impacted by COVID-19 as the country moves towards Alert Level 4.
- Cabinet has agreed to freeze all rent increases and to look to extend no-cause terminations.
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