September Tax Alert


COVID-19: Practical information about the Wage Subsidy and Leave Support Schemes

Tax Alert - September 2020

What are your entitlements under the schemes

By Robyn Walker and Blake Hawes

As the Greater Auckland region has now shifted to COVID-19 Alert Level 2 as of 11:59pm, Sunday 30 August the most recent addition to the government’s wage subsidies, the Resurgence Wage Subsidy Scheme, is set to close for applications at 11:59pm on 3 September.

If your business did not make an application for the Wage Subsidy Extension it may still be eligible to apply for the Resurgence Wage Subsidy Scheme, but your application needs to be made before midnight tonight.


Resurgence Wage subsidy
  • The two-week Resurgence Wage Subsidy Scheme (RWS) is available for businesses who have had, or predict they will experience, a 40% reduction in revenue in a two-week period between 12 August and 10 September, compared to a “similar period” in 2019.
  • The RWS payment is $1,171.60 for a full-time employee and $700 for a part-time employee.
  • The RWS applies across New Zealand and is not restricted to Auckland.
  • The RWS opened for applications at 1pm on Friday 21 August. Applications will close at 11:59pm 3 September 2020. Applications are made through the Ministry of Social Development.
  • The Wage Subsidy Extension Scheme (WSE) expired on 1 September 2020. If a business made an application on this date they will receive a lump sum to cover the salary and wage cost of the business for the proceeding 8 weeks.
  • A business cannot be in receipt of the WSE and the RWS at the same time.

Leave Support Scheme
  • The Leave Support Scheme provides the ability for employers to claim amounts to help support employees who are unable to work as a consequence of COVID-19. The Leave Support Scheme applies to four specific set of circumstances.
  • The Leave Support Scheme provides a four week payment in relation to affected employees; with weekly payment rate being the same as for the wage subsidy ($585.80 for a full time worker and $350 for a part time worker).

Resurgence Wage subsidy

The RWS provides two weeks of support, being $1,171.60 per full-time worker and $700 per part-time worker.

Businesses (including the self-employed) that have been financially impacted by COVID-19 are still able to apply for the Resurgence Wage Subsidy Scheme (RWS) if they:

  1. Meet the eligibility criteria; and
  2. Are not currently a recipient of the Wage Subsidy Extension (WSE)

1. Eligibility Criteria

To keep matters simple, the eligibility criteria for the RWS are largely consistent with the previous schemes, with some refinements to reflect the current context we find ourselves in.

Key RWS eligibility criteria include:

  • The business has had, or predicts it will have, a 40% decline in revenue over a 14-day period, and:
    • The revenue drop must be related to COVID-19;
    • The revenue drop must occur between 12 August 2020 and 10 September 2020;
    • The revenue drop must be compared to a similar period in 2019 (or to a period that gives the best estimation of the decline due to COVID-19 for high-growth businesses or businesses that have been operating for less than a year).
  • The business must have taken active steps to mitigate the financial impact of COVID-19, which can include drawing on cash reserves (if appropriate), making an insurance claim, talking to the bank, and seeking advice from an accountant or other support networks, such as a chamber of commerce or industry association.
  • The employees named in the application need to remain employed for the two weeks covered by the RWS. Applicants must have obtained employee approval to be included in an application.
  • The employer must endeavour to pay at least 80% of each named employee’s normal wages or salary for the duration of the subsidy, or pass on at least the full amount of the subsidy claimed to the employee for the two-week subsidised period (unless the employee is ordinarily paid less).

2. Not a recipient of the Wage Subsidy Extension

While the WSE is received in a lump sum payment (shortly after a successful application is made), the payment is considered an upfront payment for salary and wages for the proceeding 8-week period.

While applications for the WSE closed on 1 September 2020, businesses that made an application for the WSE within the 8 weeks before the 3 September 2020 RWS application deadline will not be eligible for the RWS.

A RWS claim also cannot be made in respect of any employees who are the subject of a Leave Support payment (see further below).

How to measure revenue and find a comparative period

Because the RWS applies for only a 14-day period, those businesses who only prepare periodic invoices (e.g. monthly) may struggle to specifically isolate the revenue which relates to a particular 14-day period – either in 2020 or in the 2019 comparative period. There is not currently any guidance as to how businesses should measure revenue in these circumstances.

A pro-rata approach may be one solution. We recommend that anyone seeking to make use of the RWS clearly document the basis on which any application is made, as all payments made will be subject to reviews and audits by the Ministry of Social Development.


Riaan’s Rugby School (RRS) is an Auckland based business owned and operated by Riaan, a rugby fanatic. RRS provides weeknight rugby training services for clubs and teams in need of specialist help. Payment is usually received in full the night a training session is held. After the initial outbreak of COVID-19 in New Zealand was bought under control many New Zealanders decided to take up sports including rugby – business was booming, and Riaan did not make an application for the WSE. During Alert Level 3 in Auckland, sports (including rugby practices) were not permitted and therefore RRS suffered a large decrease in revenue. Riaan, who was not sure when Alert Level 3 restrictions would be lifted, waited for a period of two weeks to pass in order to be comfortable that RRS’s revenue had dropped by 40% when compared to a similar period in 2019, after which made an application for the RWS.

Quality Umbrella’s Limited (QI) is a retail store owned by Mr Chapman that sells umbrellas in Wellington. QI has recently suffered from a bad month of business, as a result of umbrella sales falling unusually low during winter and several thefts from the store. As a result of the bad month in business Mr Chapman determines that QI’s revenue has decreased by more than 40% during the 14-day period 13 August to 27 August and intends to make an application for the RWS. Unfortunately as QI’s revenue decrease in not related to COVID-19 the RWS cannot be claimed.

COVID-19 Leave Support Scheme

Since early April 2020, there have been a number of variations to the Leave Support Scheme. Beginning life as the Essential Worker Leave Support Scheme (EWLS Scheme), the EWLS Scheme was designed to ensure that essential workers who were required to take leave from work to comply with Ministry of Health public health guidance continued to receive income if they could not work from home.

From 1 May, the EWLS Scheme was extended to all businesses, organisations and self-employed people experiencing hardship due to COVID-19 and was renamed the COVID-19 Leave Support Scheme (LSS). From 21 August 2020, an employer no longer needs to have been financially affected by COVID-19 in order to be eligible for the LSS. We outline below some key information about the LSS as it applies from 21 August.

Who can use the Leave Support Scheme?

Employers (including the self-employed) will be able to apply for the LSS on behalf of individual employees if those employees cannot work, and an employee has advised that they are in one of the four following affected groups:

  1. They are deemed 'higher-risk' if they contract COVID-19 and Ministry of Health guidelines recommend that they remain at home for the duration of the COVID-19 public health restrictions.
  2. They have household members who are deemed 'higher-risk' if they contract COVID-19 and Ministry of Health guidelines recommend the employee also remains at home to reduce the risk of transmitting the virus to other household members.
  3. They have come into contact with someone who has contracted COVID-19 and are required to remain at home for 14 days (as required by Ministry of Health guidelines).
  4. They have tested positive for COVID-19 and are required to remain off work until they've been cleared by a health professional to be released from self-isolation.

Employers intending to access the LSS will also have to read, understand and agree to a declaration when making an application. Importantly, employers will have to confirm that they have completed the following:

  • Discussed the application with the employee(s) before making it;
  • Received employee consent to the relevant points outlined in the declaration; and
  • Confirmed the employee(s) meet the Ministry of Health Guidelines at the time of application (it is only necessary for the employee to confirm to the employer that they meet one of the criteria - they do not have to confirm what it is).

Employers are also expected to have a conversation about how best to support the employee. For example, they may choose to use existing sick or annual leave, with the LSS used to support paying that. If full paid leave options aren't available, the subsidy could be used to top up what is available. Employers are expected to endeavour to pay the relevant employees at least 80% of their usual wages or pay at least the LSS payment amount.

What do you get?

The LSS will provide a subsidy payment for a period of four weeks at a time for each affected employee. The weekly LSS payment amount is the same as for the Wage Subsidy, being $585.80 per week for a full-time employee, and $350 per week for a part-time employee. Therefore, four-week payments of $2,343.20 and $1,400 are received for full-time and part-time workers respectively. If an employee ordinarily earns less than these amounts, they should be paid their ordinary amount and any surplus should be used to pay other staff or returned.

Employers are able to re-apply for the same employee after each four-week period (if required) and can submit multiple applications relating to different employees.

Can a business get both a wage subsidy and the LSS subsidy?

No - employers cannot receive a wage subsidy and a Leave Support Scheme payment in respect of the same employee at the same time.


Seaside Milkshakes (‘SM’) is a popular café run by Hiran that has several part time employees. One of SM’s part time employees, Denver, lives with her grandparents who are both in their 80s. Denver took advice from the Ministry of Health that she remain at home over the three weeks following the resurgence of COVID-19 in New Zealand as she lives with people who are at ‘high risk’ if they were to contract COVID-19. SM can make an application under the LSS for Denver. SM receives a payment of $1,400 which is used to pay Denver her usual pay of $300 per week for the three weeks she is advised to stay at home. SM treats these payments like a normal wage payment to Denver and withholds PAYE and other required deductions. As SM does not have any other employees using the LSS, SM returns the unused balance of $500 ($1,400 less $900) to the Ministry of Social Development.

Greg runs a successful motor dealership, V8s for Mates Limited (V84M). V84M has dealerships and garages operating across the upper North Island. Greg has a number of staff who live in South Auckland but ordinarily work at the Huntly V84M dealership; those staff are unable to get to work during the period of Alert Level 3 travel restrictions and their work cannot be done from home. While turnover is down, it is not down the required 40% in order to claim the RWS, so Greg wants to know whether the Leave Support Scheme is available to provide any assistance to the staff who are unable to work. Unfortunately the staff who cannot work because of the COVID-19 restrictions do not fall within any of the four ‘affected groups’ and therefore it is not possible to use the Leave Support Scheme.

Thanks to the careful planning and systems we have already implemented as a firm, we are well positioned to provide advice and support to all of our clients as the nation is affected by COVID-19. This includes aiding businesses as they access government support and entitlements.

The content of this article is accurate as at 3 September 2020, the time of publication. This article does not constitute professional advice. If you wish to understand the potential implications of current events for your business or organisation, please get in touch. Alternatively, our COVID-19 webpages provide information about our services and provide contacts for relevant experts who can help you navigate this quickly evolving situation.

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