Can my Agribusiness claim the COVID-19 Wage Subsidy?

20 May 2020

Every organisation in New Zealand that employs staff or from which a person derives their income is eligible to apply for the government’s COVID-19 wage subsidy.

In the past weeks, there has been a lot of discussion around how the wage subsidy applies to farming and more recently, the government announced an extension to the scheme in their Budget 2020 announcement.

Employers can expect to receive $585 a week per full-time employee and $350 a week per part-time employee for up to 12 weeks if their application is successful but first, they need to ensure they meet the following three key criteria:

  1. The employer must have experienced or be able to project they will experience a 30 percent decline in revenue compared to last year for any month between January 2020 and June 2020 (when the subsidy ends).
  2. The employer is required to declare it will make its best endeavours to continue to employ affected employees at a minimum of 80 percent of their normal income for the duration of the subsidy.
  3. The employer must show it has actively tried 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.

On 14 May 2020, the government announced an extension to the wage subsidy scheme. From 10 June 2020, for a 12-week period, employers can apply for an eight-week lump sum at the same weekly rates as the initial wage subsidy scheme.

The eligibility criteria will change slightly, with employers needing to show a revenue loss or expected revenue loss of at least 50 percent for the 30-day period prior to application when compared to the same period last year.

Farmers who are considering applying for a wage subsidy for their employees need to consider the mitigation steps available to them and decide which ones are appropriate for them to follow.

For example, if sending stock to the works is delayed by a month due to processing capacity, income might be effectively deferred by a month but not completely forgone. One potential course of action to mitigate this delay in income could be to approach the bank for one month’s extension of the overdraft.

It’s important to note that farming situations differ from many other businesses. In the situation of a café, the income would be completely forgone so the argument that deferral of income for one month would warrant a farmer to apply for the wage subsidy is debatable and may not fall within the intention of scheme.

However, this is a rapidly evolving environment and farmers will be faced with varying scenarios. In certain circumstances, an application for a wage subsidy through the Ministry of Social Development may be appropriate.

If you have further questions or would like to discuss the wage subsidy further, please get in contact with your Adviser.

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.


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