Who can get the Wage Subsidy Extension

New Zealand employers who are still significantly impacted by COVID-19 are eligible to apply.

This includes:

• registered charities
• Non-Government Organisations (NGOs)
• the self-employed and sole traders
  • if you're also an employee of a business, your employer can also apply for a Wage Subsidy Extension for you
• contractors
• incorporated societies, and
• post-settlement governance entities
• local government organisations
• kindergartens and Early Childhood Centres.

If you're an eligible employer, you can apply:

• for casual employees if they're employed by you at the time you apply, and they would have expected to work during the time you will receive the Wage Subsidy Extension
• if you're a shareholder in a business (ie, you work for the business and are paid a wage, salary or draw an income for the work you do)
• if you're a partner in a business (ie, each partner is paid a wage, salary or draws an income for the work they do).

You can't apply for an employee on ACC earnings related compensation. But you can apply for them if they've returned to work and no longer get ACC.

State sector organisations

State sector organisations are generally not eligible to receive the COVID-19 Wage Subsidy Extension. This includes:

• government agencies, such as:
  • Ministry of Health
  • District Health Boards
  • Inland Revenue
  • Ministry of Social Development
• Crown entities, such as:
  • Kāinga Ora
  • Accident Compensation Corporation (ACC)
• schools
• tertiary education institutions, such as:
• universities
• polytechnics
• institutes of technology
• Wānanga

State sector organisations do not include:

• local Government, such as:
  • Regional councils
  • City councils
  • District councils
• kindergartens
• Early Childhood Centres
• Non-Government Organisations (NGOs).

A state sector organisation, with its monitoring agency, can ask for an exception to become eligible to apply for the Wage Subsidy Extension. State sector organisations should contact their monitoring agency if they wish to discuss this.

Businesses contracted to provide services to state sector employers

These businesses (eg cleaning, security, etc) are not state sector employers. They can apply for the subsidy if they meet the other qualifications.

Your business must be registered and operating in New Zealand.

This means your business must be:

• registered with the New Zealand Companies Office
• physically located in New Zealand, and
• your employees legally work in New Zealand.

Sole traders

Sole traders are not required to be registered with the New Zealand Companies Office, but must have:

• a personal IRD number for paying income tax and GST
• government licences and permits for their business needs, and
• qualifications or registrations for their trade or profession.

Sole traders must still meet the requirements to be physically located and legally working in New Zealand.

Legally working in New Zealand means a person is both working in New Zealand and is legally entitled to work in New Zealand.

A person is legally entitled to work in New Zealand if they:

• are a New Zealand or Australian citizen (including a person born in the Cook Islands, Niue or Tokelau), or
• have a New Zealand residence class visa (eg, permanent residence visa or returning resident visa), or
• have a New Zealand work visa or a condition on their New Zealand temporary visa that allows them to work in New Zealand (eg, work visa or student visa that allows them to work).

For more information, visit the Employment New Zealand website.

Your business must have experienced a minimum 40% decline in revenue for a continuous 30 day period. The 30 day period must be:

• in the 40 days before you apply (but no earlier than 10 May 2020)
• compared to the closest period last year.

The decline must also be related to COVID-19.

Definition of revenue

Revenue means the total amount of money a business has earned from its normal business activities, before expenses are deducted (this doesn't include the Wage Subsidy).

If you are a pre-revenue research and development start-up business, you can include a drop in projected capital income when determining a 40% decrease in revenue.

The 40 days before you apply

The 40 day window is to give employers enough time to calculate their revenue loss and engage with their employees before applying for the subsidy.

The 40 days cannot start earlier than 10 May 2020. This is to ensure businesses who are still struggling in Alert Levels 1 and 2 can get the support they need.

For example:

• you apply on 29 June 2020. Your 40% decline in revenue must be for a continuous 30 day period between 19 May and 28 June 2020.
• you apply on 10 June 2020. Your 40% decline in revenue must be for a continuous 30 day period between 10 May and 9 June (as the 40 days can't start earlier than 10 May).

Comparing to the closest period last year

Businesses must compare their revenue to the closest period last year. The revenue in the affected period must be at least 40% less than it was in the period it was compared against.

For most businesses, this will be the same period as last year.

For example:

• you apply on 30 June 2020, and
• compare 31 May-29 June 2020 with 31 May-29 June 2019.

Some businesses may have experienced an event, eg a fire, which means the comparison period of a year ago is not the best period to use. In these cases it may be that another 30 day period will better reflect the decline in revenue. However the comparison period can't go back further than January 2019.

For example:

• you apply on 30 June 2020, and
• use a 30 day period between 31 May 2020 and 29 June 2020.
• You find that the revenue for the same period in 2019 was significantly down because of a specific event out of your control (eg, a fire).
• In this case you can use a different comparison period in 2019 that better reflects the normal pre-COVID-19 revenue for a 30 day period. For instance, you could compare 31 May-29 June 2020 to 31 March-29 April 2019.

Businesses operating for less than a year or have high growth

New businesses which have been operating less than a year, or high growth businesses (e.g. that have had a significant increase in revenue), can apply for the Wage Subsidy Extension.

To determine whether these businesses meet the 40% decline in revenue assessment, they must compare their revenue against a more recent 30 day period, that gives the best estimation of the revenue decline related to COVID-19.

For example, 40% loss of revenue attributable to COVID-19 comparing the 30 days before you apply to the closest period in 2019.

Your business must have taken active steps to mitigate the financial impact of COVID-19.

This could include:

• drawing from your cash reserves (as appropriate)
• activating your business continuity plan
• making an insurance claim
• proactively engaging with your bank
• seeking advice and support from:
  • the Chamber of Commerce
  • a relevant industry association
  • the Regional Business Partner programme.

You must retain the employees named in your application for the period of the Wage Subsidy Extension.

Employers are required to agree that, for the duration of the Wage Subsidy Extension, they will retain the employees the subsidy was paid for.

If you are receiving the COVID-19 Wage Subsidy Extension, you must:

• try your hardest to pay staff at least 80% of their usual wages;
  • if that isn't possible, pay at least the rate of the Wage Subsidy Extension that applies to that employee
• if the employee's usual wages are lower than the rate of the Wage Subsidy Extension, continue paying that amount for the duration of the subsidy.

Redundancies

If you've already made an employee redundant, you can't apply for the Wage Subsidy Extension for them.

If you want to apply for them, you must cancel their redundancy notice and re-hire them.

You can then apply for that employee and you must retain them for the period of the Wage Subsidy Extension.