Wage subsidies, self-isolation and other support
Venkat Raman
Auckland, March 17, 2020
Finance Minister Grant Robertson has unveiled a whopping $12.1 billion budget, offering relief to employers, employees, businesses and beneficiaries.
Announcing the proposal in Parliament a short while ago, he said that the package provides $5.1 billion for wage subsidies and $2.8 billion as low income support.
Recession inevitable
Mr Robertson said that the package is one of the largest such relief provided anywhere in the world based on per capita and population to fight the Novel Coronavirus (CVID-2019).
He warned of the impending global recession which will impact on New Zealand.
“There will be job losses, businesses will fail. But we will fight this virus together and get through this crisis together,” he said.
Mr Robertson said that the package of $12.1 billion is not a one-off and that the government will announce further relief measures in the Budget 2020.
Support to businesses and employees
He said that employers, sole traders and self-employed people will also receive support for those who are unable to work either because they are sick, in self-isolation and caring for dependents who may be in either of these situations.
Employers will still be expected to meet all their sick leave and other employment expectations. The key parameters for the scheme are (a) An entitlement period of 14 days for those self-isolating and for the entire period of sickness for those who contract COVID-19 (b) Eligibility is open to all firms, the self-employed and for contractors but not for those who can work from home.
“The scheme will be available to all businesses in all sectors nationwide. Eligible firms will be provided a lumpsum payment of the equivalent of $585 per week per full-time employee and $350 per week per part time employee for 12 weeks up to a cap of $150,000. To qualify, businesses must declare they have had a 30% decline in revenue due to COVID-19 month-on-month for any month between January and June this year (compared to last year), and that they have talked to their bank about assistance.
Mr Robertson warned that any false declaration would be treated as fraud.
He said that the package provides $500 million for health and that further support will be announced in due course to increase capacity and capability.
Tax changes
The package also ushers in tax changes to help increase cash flows and stimulate investment. The changes include (a) Reinstatement of depreciation deductions for commercial and industrial buildings at a 2% diminishing value applying from the 2020-2021 tax year (generally beginning next month); (b) Increasing the threshold for provisional tax from $2500 to $5000 applying from the 2020-2021 tax year (generally beginning next month); (c) Increasing the threshold for writing off low value assets to $5000 for the next tax year, before reverting to $1000 in the longer term;
(d) Giving a time-limited discretion to Inland Revenue to remit use of money interest (the interest on tax debt) if a taxpayer is unable to pay on time due to the impacts of COVID-19.
Mr Robertson said that the government is providing for an increase of $25 permanently to main benefits effective April 1, 2020. Winter Energy Payment made to the eligible families will be doubled this year.
“The hours test from the ‘In Work Tax Credit’ will be removed to assist those facing variable hours,” he said.
