As the country moves into Alert Level 2 and many businesses slowly reopen, a new round of government support measures has been introduced. These initiatives are designed to give further help to businesses affected by COVID-19 and include an extension of the wage subsidy, a small business loan scheme and a tax loss carry-back scheme.
Wage subsidy extended
Announced at the Rebuilding Together Budget 2020 was an extension of the wage subsidy for a further eight weeks from 10 June. It is for businesses who can show a 50% reduction in turnover in the 30 days prior to application compared to the previous year.
Here are the key points:
- You must have had, or expect to have, a revenue loss of at least 50% for the 30 days before you apply, compared to the closest period last year.
- It will cover eight weeks per employee from the date you submit your application.
- It will be paid to you as a lump sum at the same weekly rate as the Wage Subsidy.
- You’ll need to agree to certain obligations, such as passing the subsidy on to your employees.
- It will be available from 10 June until 1 September 2020
Small Business Cash Flow Loan Scheme (SBCS)
The government has announced new one-off loans to help small businesses (including contractors and self-employed), with their cash flow. Applications opened this week for eligible businesses.
Details of the loan include:
- $10,000 to be provided to each eligible businesses
- an additional $1800 per full-time employee equivalent
- interest free if the loans are paid back within a year
- an interest rate of 3% for a maximum term of five years
- repayments not required for the first two years.
The scheme is open for businesses who have 50 or fewer full-time employee equivalents. $10,000 will be provided to eligible businesses, with additional $1800 for full-time employee equivalents and no repayments required for two years.
We suggest getting in touch with us before applying to make sure the loan is the best option for you.
Loss carry-back scheme
Inland Revenue has announced a temporary loss carry-back scheme. If your business is expected to make a loss in the 2020 or 2021 year, you can use that loss to offset profits you made the year before. This means you can carry the loss back one year. This can be done before the loss year return is filed.
For example, if you expect to make a loss in the year ended 31st March 2021, you can offset this loss against profit you made this financial year. Where provisional tax has already been paid for the tax year 2020, this may result in a refund.
There are certain requirements to meet for the loss carry-back scheme and you must let the IRD know if you are going to use it. See more details at ird.govt.nz, or ask us if you’d like to discuss how this might apply to your business.
Again, please do get in touch if you need help in applying for, or you have any questions about these support schemes.