COVID-19 update from Laurenson Chartered Accountants
As you will be aware the COVID-19 financial support details are fluid, over the weekend we have seen changes to the way the support is applied.
Below we outline the latest information directly from the government websites, this information is based on the questions we are receiving from our clients:
Wage Subsidy scheme
The COVID-19 Wage Subsidy will be paid at a flat rate of:
- $585.80 for people working 20 hours or more per week
- $350.00 for people working less than 20 hours per week.
Employers must make best endeavours to pay employees 80% of their normal income. Where that is not possible – in particular where a business has no activity whatsoever due to the shutdown and workers are not working any hours – employers must pass on at least the whole value of the wage subsidy to each affected worker. If a person’s income is normally less than the subsidy, they can be paid that normal salary.
The subsidy is paid as a lump sum to the employer to pass on to employees and covers 12 weeks per employee.
The wage subsidy is a Government payment to help employers pay wages. It does not change any other employment law obligations, meaning employees must be paid appropriately under their employment agreements for the hours they work during the lockdown.
Key takeout at this stage:
- The subsidy is paid out as a lump sum to the employer to pass on to employees and covers 12 weeks per employees
- The wage subsidy is to help employers pay wages
- Employers must make best endeavours to pay 80% of their normal income
- If they cannot do this – because the business has no activity whatsoever due to shut down – employers must pass on at least the whole value of the wage subsidy to each affected worker
- Only if the employee’s income is normally less than the subsidy, they can be paid that normal salary
- Employers must undertake to keep employees in employment for the period of the subsidy
- Self-employed people with variable monthly incomes are eligible if can demonstrate the revenue loss assessment against the previous year’s monthly average (e.g. 30% loss of income attributable to COVID-19 comparing March 2020 to the average monthly income in the period March 2019 to March 2020).
Protection for renters and tenants
Residential renters and tenants
Support is available to ensure renters stay in their rental properties with a 6-month freeze on residential rent increases and increased protection from having tenancies terminated.
- There is now a freeze on rent increases
- Tenancies cannot be terminated during the lock-down period, unless the parties agree, or limited circumstances, regardless of the notice period give
- Tenants will still be able to terminate their tenancy as normal, if they wish
- Tenants will have the ability to revoke termination notices that they have already given, in case they need to stay in the tenancy during the lock-down period.
Period of measures
- The measures take affect by Thursday 26 March
- The rent freeze applies for an initial period of six months
- The protections against terminations will apply for an initial period of three months
- At the end of the initial periods, the Government will evaluate whether they need to be extended
For more information, click here
Commercial tenants should check their leases – the Auckland District Law Society lease provides relief to tenants in circumstances where, the event of emergency, the tenant is unable to gain access to its premises for reasons relating to public safety or the need to overcome any harm or hazard. It should be noted that the relevant provisions are contained only in lease documents which post-date 2011.
We recommend you make contact with your lawyer to get them to check the version of your lease and to get advice on this.
Mortgage repayment holiday schemes
New Zealand’s retail banks are offering to defer repayments for all residential mortgages for up to 6 months for customers financially affected by COVID-19.
Mortgage repayment deferrals mean that affected customers who apply to their bank will not make principal and interest payments on their loans for up to 6 months. This package is in addition to what banks are already doing individually to provide assistance to affected customers.
Key details of this scheme:
- It’s important to know that interest on these loans will still accrue, and deferred interest will be added to the principal amount of the loan.
- Banks will assess the suitability for each customer who is asking for a deferral.
- Banks will have different approaches to how they manage the process for customers to opt into a mortgage deferral. Those details, including eligibility criteria, will be available on bank websites.
- Customers should contact their bank for further details or queries about the scheme.
Click here for COVID-19 website and further details about Financial support.
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