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 Stewart & Co Blog

Budget 2022

 

Response to the Cost of Living Crisis

Today's budget announcement included measures to assist middle income New Zealanders through to cost of living crisis.  These include:

  • For eligible persons earning less than $70,000 a year, IRD will be making a Cost of Living Payment made up of 3 payments of $116 ($350 total) from 1 August 2022.  There will be no application process to receive this payment, it will be made automatically to your bank account listed with the IRD. To ensure you receive your payment, please ensure that IRD have your current bank account. 
  • The fuel tax cuts of 25c a litre and road user charges have been extended by 2 months to the end of August.
  • A 2 month extension of the 50% cost reduction to public transport has also been made with a further announcement that Community Service Card holders will have this extension made permanent. 

 

Health

$13.2b has been promised to the new nationalized health body Health NZ over the next 4 years, with the first $1.8b in the first year.  $11.1b will cover cost pressures and $2.1b is earmarked for new services. 

The addition of 248 new paramedics and front-line staff, 48 ambulances and 13 other vehicles. 

$202m to be spent on specialist mental health services and addiction services.

A new Ministry for Disabled People will be established with funding of $943m to go towards this as well as investing in the regional-based rollout of the Enabling Good Lives approach. 

Pharmac has been given a funding boost of $191m over 2 years to make more well-evidenced drugs and treatments available.

 

Supermarkets

New legislation will be going through the House under urgency to stop supermarkets from essentially blocking other competitors from entering the market.  This will encourage more competition with the intention of reducing prices. 

They will also look at the role of a Code of Conduct and a dedicated regulator could play. 

 

Funding for Small to Medium sized Enterprises

Th Government will look at partnering with retail banks to invest $100m in a Business Growth Fund, to invest in small and medium sized enterprises. 

 

Housing

The house price cap on first-home buyer grants has been lifted in the major centers as follows:

  • Auckland from $700,000 to $875,000
  • Wellington & Queenstown Lakes from $650,000 to $925,000
  • Hamilton urban from $600,000 to $725,000
  • Tauranga from $600,000 to $875,000
  • Christchurch from $550,000 to $750,000

These caps will now be reviewed every 6 months. 

Support For Businesses During Omicron



Covid Support Payment

On 21 February 2022 the Government announced a new Covid Support Payment will be made available for business who have been impacted by the shift to the Red Setting due to the Omicron outbreak. 

Businesses must compare their revenue for 7 consecutive days in the six weeks prior to the move to Red Phase 2 on 15 February 2022 with a 7 day period after 15 February 2022, and show a 40% drop in revenue. 

The payment will be $4,000 plus $400 per full time equivalent employee, capped at 50 full time equivalent employees or $24,000.  The payments will be on a fortnightly basis for six weeks with applications open on 28 February 2022 and the first payments being made on 1 March 2022. 

 

Small Business Cashflow Loan

The small business cashflow loan is still available to businesses to help them with business costs.

Changes have now been made to the scheme to allow businesses to draw down an additional $10,000 with a new repayment period of five years with the first two years being interest free.

The interest free period on the original loans have also now been adjusted.  Previously, if the loan was not repaid within two years, interest would apply from the first day of the loan.  Now, no interest will accrue in the first 2 years but will start from the beginning of year three of the loan.  This applies to business who have already taken out the loan, as well as new loans.

 

Sick Leave and Omicron

With the Omicron variant now in the New Zealand community employers are asking what their obligations are around paying staff if they need to isolate.  There are currently two support schemes available to employers where employees are impacted by Covid-19 and these are on an employee by employee basis rather than business-wide.

Short term absence payment - STAP ($359 one-off payment / once every 30 days)
www.workandincome.govt.nz/covid-19/short-term-absence-payment/how-to-apply.html

Leave Support Scheme - LSS ($600 full-time or $359 part-time weekly payments)
www.workandincome.govt.nz/covid-19/leave-support-scheme/how-to-apply.html

Below are the most common scenarios employers will face.

Scenario One – An Employee is sick with Covid-19

·         The employer can apply for the Leave Support Scheme.  Sick leave or annual leave can then be used to top up wages to 100% if there is a shortfall.

·         If the circumstances mean the subsidy is not available, then sick leave can be taken. 

 

Scenario Two – An employee has symptoms & is waiting for a test result

·         The employer can apply for the Short Term Absence Payment.  Sick leave or annual leave can be used to top up wages to 100% if there is a shortfall.

·         If the circumstances mean the subsidy is not available, then sick leave can be taken. 

 

Scenario Three – An employee does not have symptoms but is testing for a valid reason

·         A valid reason must be given by the employee for the test and time off needed. 

·         The employer can apply for the Short Term Absence Payment and annual leave can be used to top up to 100%.

·         Sick leave cannot be used in this situation as the employee is not sick.

 

Scenario Four – The employee needs to isolate due to having Covid-19 Or other Covid-19 related reasons

·         If the employee can work from home then pay their normal wages.

·         If the employee cannot work from home and has Covid-19 then the employer can apply for the Leave Support Scheme and wages can be topped up by from sick leave or annual leave.

·         If the employee cannot work from home, and they or a dependent is a close contact or under a health directive and required to isolate for at least 4 days, then the employee can apply for the Leave Support Scheme and top up with annual leave.

 

Note, in all cases where annual leave is being considered to top up an employees wages, the employee must agree to this and know that it is their choice to do so. 

The employer can also pay Special Leave to employees rather than using up an employees annual leave or sick leave.  There is no obligation for an employer to do so and it is an extra benefit being given to the employee. 

Transitional Payment

As we move into the COVID-19 Protection Framework, (traffic light system), the government have announced a new support payment will be made available for businesses impacted by the August Covid-19 lockdown, to help them transition into the new system. 

Called the Transition Payment, this support payment is a one-off payment of $4,000 plus $400 per full time equivalent employee (FTE), up to a maximum of 50 FTE and $24,000.  Applications will open on 10 December 2021 and can be made through MyIR.  Applications will close on 13 January 2022. 

To be eligible a business will need to show a drop in revenue of 30% for a 7 day period between 3 October 2021 and 9 November 2021 compared to a typical 7 day period in the 6 weeks prior to 17 August 2021.  The decline in income needs to have been as a result of the impact of Covid-19 on your business. 

This payment is not a loan and will not need to be paid back, provided that the eligibility criteria have been met. 

 

Resurgence Support Payments

Applications for the Resurgence Support Payments are still open.  There are 6 payments available, however the final date to apply for the first 3 rounds is 1 December 2021.  Details are as follows:

Period

Amount

Final day to apply

17 Aug to 1 Nov 2021

Up to $1,500 + $400 per FTE

1 December 2021

8 Sep to 1 Nov 2021

Up to $1,500 + $400 per FTE

1 December 2021

1 Oct to 1 Nov 2021

Up to $1,500 + $400 per FTE

1 December 2021

22 Oct to 1 Dec 2021

Up to $1,500 + $400 per FTE

13 January 2022

5 Nov to 1 Dec 2021

Up to $3,000 + $800 per FTE

13 January 2022

19 Nov to 1 Dec 2021

Up to $3,000 + $800 per FTE

13 January 2022

 

Wage Subsidy

Applications for the 8th and final wage subsidy are currently open and will close on 9 December 2021.  There are no plans for any further wage subsidies to be made available.  Applications can be made through MSD. 

 

If you have any questions or need any help with the above, please do not hesitate to be in touch with the team at Stewart & Co. 

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