Today I am attempting to demystify the various schemes, but all of them come with their own little wrinkles so please do your own research. It’s a lot to take in but hopefully you will find the below a useful guide and summary along the way.
I also apologise for any confusion that our incorrect links in Friday's Business Response Group communication may have caused.
Support for paying your employees
The wage subsidy, short term absence payment and leave support scheme are all available now to businesses to keep paying eligible employees.
A business can only apply for one of these for each employee so it’s important to think through your options and consider what's easiest.
The criteria for the short term absence payment is a COVID test and the criteria for the leave support scheme is self-isolation. Both of these are only available if your employee cannot work from home.
The wage subsidy is different in that its only criteria is revenue decline, and it doesn’t matter whether your employees can or cannot work from home.
If your business qualifies for the wage subsidy (due to the revenue decline), it is most likely that will be the simplest for you to apply for.
If you are on the cusp with your revenue decline, and you have eligible employees, you might want to apply for the leave support scheme (it’s a similar value two week payment), but only if they can’t work from home. If you later qualify for the wage subsidy, you can then leave that employee(s) out of your application.
These wage support payments are not taxable income and do not incur GST but note that the associated wage expense cannot be claimed against business income. The wages paid with any of these payments remain taxable in the hands of the employees.
Short term absence payment
The short term absence payment is for people who have had a COVID test, are waiting for the results and cannot work from home. This also applies to employees who are close contacts or caregivers of a household member who is waiting on results. It’s a one-off payment of $350 and doesn’t depend on the amount of time a person is off work waiting on the results.
It’s a payment to the business, but it comes with responsibilities.
You pay your employee their normal entitlement, sick leave in the first instance, and if they don’t have sick leave, you should try and pay them as if they worked that day. Where that is not possible you need to pass the absence payment on to your employee.
Leave support scheme
The leave support scheme is a bigger payment, a two week lump sum of $585.80 per week for a full-time employee of 20 hours or more, or $350 per week for a part time employee being less than 20 hours. Note these are last year’s rates and may increase to the new wage subsidy rate of $600/359 per week per full/part time employee. The business applies for a two week period.
There are lots of reasons that an employee would qualify for this, such as if they:
- are sick with COVID and must self-isolate
- have been identified as a close contact and have been asked to self-isolate by the national contact tracing process
- are the parent or caregiver
- are considered ‘high risk’ by a medical practitioner, such as immuno-compromised, elderly, pregnant
- are a caregiver or household member of someone who is high risk
It’s a payment to the business, but again it comes with responsibilities.
By taking this payment you are committing to pay your employee 80% of their usual pay and if you can’t, you must at least pass through the payment. This is unless the payment is greater than the employee’s normal wages, in which case you must use the extra to pass onto other employees.
The wage subsidy is available if you have had, or you are predicting, a 40% decline in revenue, comparing 17 August to 30 August (2 weeks) to a comparable period in the prior 6 weeks (16 August backwards). The key thing here is you can apply before the end of the two week revenue decline.
If you are a seasonal business, you can compare to the same period in the previous two years (2020 or 2019).
This is a two week payment, $600 per week for each full time (over 20 hours) or $359 per week for each part time worker (less than 20 hours).
Again, it’s a payment to the business and your responsibilities include keeping the employees you claim for employed during this period and paying them at least 80% of their normal wages.
COVID Resurgence Support Payment
In addition to the support to pay wages, businesses can apply for the COVID resurgence support payment (RSP) for other business costs.
The RSP will generally be available when there is a change in alert levels for 7 days or more, but this is not guaranteed. Once it is activated, it is available nationally even if the alert level isn’t increased across the whole country.
The RSP is also a revenue decline test but only of 30% and over 7 days, and you must have experienced this. The 7 days is to be compared to a 7 day period in the previous 6 weeks. For seasonal businesses, you can compare this to the same period in 2020 (note this may be updated to include 2019).
It is a payment of $1,500 plus $400 per employee to a maximum of $21,500, or four times your demonstrated revenue decline, whichever is the lower.
Unlike the wage subsidy, with the RSP you cannot forecast the revenue decline, it must be realised and that is why this scheme is not open for applications until 8am Tuesday 24 August, for businesses affected between 17 August and 24 August.
RSP payments are not taxable income but do incur GST for GST registered businesses. The associated business expenses paid cannot be claimed against business income.
If you have made it all the way to the here, hopefully you have found this of some use.
If you have any questions that you think others would also like to know the answers to, or any insights into the current business climate you would like to share, I would love to hear from you.
The team is keen to help in anyway they can.