$12.1 billion COVID-19 support package announced to support New Zealand economy

17 March 2020

The Government today announced a $12.1 billion package to assist the New Zealand economy cope with the impact of the COVID-19 pandemic.

The headline figures are:

  • An $8.7 billion package to support businesses and workers.
  • A $2.8 billion boost in income support payments.
  • An additional $500 million of spending on the health system.

Business and workers

The $8.7 billion business package includes a wage subsidy for affected businesses, self-isolation payments and changes to the tax system. Key features of the business package are:

  • A wage subsidy of $585 a week per full-time employee and $350 a week per part-time employee for up to 12 weeks with a cap of $150,000 per employer (effectively the subsidy applies to a maximum of 21 full-time employees).
    To be eligible the employer must have suffered or be able to project it will suffer a 30% decline in revenue compared to last year for any month between January 2020 and June 2020 (when the subsidy ends). The employer is required to declare it will make its best endeavours to continue to employ affected employees at a minimum of 80% of their normal income for the duration of the subsidy. There is a further requirement that the employer has taken active steps to mitigate the impact of COVID-19 on their business (e.g. engaged with their bank and financial adviser) and sign a declaration form to that effect.
    Applications can be made through the Ministry of Social Development website.
  • Leave and self-isolation support for up to eight weeks for people with COVID-19, who are caring for people with COVID-19, or in self-isolation at the same rate as the wage subsidy. The payment is not available to those who are able to work from home or anyone who leaves New Zealand after 16 March 2020 and returns.
    Employers will apply for the payment via the Ministry of Social Development website on behalf of eligible employees and be required to pass the payment onto the employee. These payments can be backdated to 17 March 2020 and will be paid fortnightly.
  • Increasing the provisional tax threshold from $2,500 to $5,000 from 1 April 2020.
  • Reinstating depreciation on industrial and commercial buildings.
  • Temporarily increasing the low value asset write-off from $500 to $5,000 for a one-year period and then permanently increasing it to $1,000 thereafter.
  • Allowing Inland Revenue to cancel use of money interest on underpayments of tax when the taxpayer can show they were unable to make a tax payment because of the COVID-19 outbreak.

Income Support

The $2.8 billion income support package includes:

  • A permanent increase in main social welfare benefits of $25 per week after increases for indexation on 1 April 2020.
  • A one-off doubling of the winter energy payment to $1,400 for a couple and $900 for a single person (this payment is available to those on social welfare benefits and super annuitants).
  • Families with children not receiving a main benefit, but who are in work, will no longer need to satisfy the work test (20 hours per week for solo parents or 30 hours a week for couples) to receive the In-Work Tax Credit.

If you require more information or would like some support accessing any of the support measures announced, please contact the Findex Tax Advisory Team.

Findex has developed a Government Stimulus Health Check and free Business Wellbeing Toolkit to help businesses manage potential risks and take full advantage of eligible stimulus assistance. Book your Health Check here.

Findex NZ Limited, trading as Findex

While all reasonable care is taken in the preparation of the material in this document, to the extent allowed by legislation Findex NZ Limited accept no liability whatsoever for reliance on it. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Findex NZ Limited assumes no obligation to update this material after it has been issued.

This document contains general information and is also not intended to constitute legal or taxation advice. If you need legal or taxation advice, we recommend you speak to a qualified adviser.

March 2020