Government's Covid announcement brings much needed support for Auckland business.

Last week the Government announced the new Covid-19 Protection Traffic Light Framework, and along with it the additional support it will provide to impacted businesses and low-income earners. 

The announcement of the Red, Orange and Green traffic light system was not the silver bullet that many Aucklanders were hoping for, but instead outlined the Government’s longer term strategy on how New Zealanders will live with Covid once the desired 90% double vaccination target has been achieved across each District Health Board (DHB) region. You can find out more about the new traffic light system here. 

In the short term, this means that Auckland will not be able to move to the new framework until 90% of the eligible population of Auckland’s three District Health Boards are fully vaccinated. In the meantime, Auckland will stay at its current Alert Level lockdown. This leaves Auckland businesses, and those that rely on Auckland, with no definite horizon for when business resembling “some sort of normal”, will resume. 

From what we are witnessing as advisors, this lack of a clear way forward, especially for Auckland, has only increased the level of frustration and anxiety felt by SME business owners and their staff as they continue to forge a way though, either working from home or managing the fallout from lockdown trading restrictions. 

In response to this, the Government announced additional financial support and resources to assist businesses and low income workers while New Zealand transitions to the new framework. This support is temporary and lasts until the new framework is in place, at which time there will be a review of how this support will change as most businesses will be able to trade under all stages of the new system. 

Hardship Assistance for Low Income Workers 

Hardship assistance comes into force on 1 November and will continue until 28 February 2022. The Government is lifting the income limits for assistance to 40 hours at the minimum wage e. g. $800 per week and $1600 per week for a couple with or without children. This will result in a larger number of low income workers being eligible for the additional support to pay for daily living costs. 

Wage Subsidy and Enhanced Resurgence Payment (RSP) 

Until 12 November, the existing RSP is available to be claimed at its current rate of $1500 plus $400 per full time equivalent employee, up to a maximum of 50 employees. The next payment is due to be paid on 29 October. 

From 12 November, the first enhanced RSP payment will be paid. This will be fortnightly. This amount will be doubled to be $3000 per business and $800 for each full-time equivalent employee up to a maximum of 50 employees. The same criteria as the current RSP is required to qualify for the enhanced RSP. The enhanced RSP will continue to be available until Auckland moves to the new framework. 

As previously, the RSP is not subject to Income Tax, similarly expenditure funded by payments under the RSP is not deductible. GST registered businesses will need to pay GST on RSP received. But businesses are not restricted on how the funds are used if they are utilised in the business to cover overheads and trading expenses. It is not intended to be used to benefit owners via loan repayment or dividends. 

The Wage Subsidy will carry on in its current form while parts of the country are in Alert Level 3. The Wage Subsidy remains non-assessable for Income Tax, with the corresponding wage cost being non-deductible to the business. The Wage Subsidy must be used by an employer to meet wages and salary costs and any amount not utilised, must be repaid. 

Business Advice & Mental Health Support for Auckland Businesses 

In acknowledgement of the additional burden the current lockdown has put on Auckland businesses, the Government also announced a $60 million package to assist Auckland Businesses with business advice and mental health support. 

Businesses will be able to apply for $3000 worth of advice and planning support, and a further $4000 to implement that advice through the Regional Business Partners’ programme, with one of their advisors. 

To register your interest, contact the Covid-19 Business helpline on 0800 500 362, or email info@businesshelpline.co.nz 

Long term, the announcement of the new Covid-19 Protection Framework is a positive step for businesses over our current alert levels which focus on elimination and lockdowns. The enhanced financial and wellbeing support is long overdue. This new framework instead uses vaccination certificates, contract tracing and testing, and it provides better certainty for businesses to be able to fully open to vaccinated customers at green and orange, with some restrictions at red. 

Businesses should now be considering how they will implement the changes, which will ensure that they are able to continue to trade through the different stages. 

If you need any assistance accessing any of the support available don’t hesitate to contact us. As always, our team is working from home and is ready to assist you.