More detailed information on eligibility and payments can be found in our separate Covid Support blog.
The lockdown announced 17 August 2021 has triggered three of the government’s existing policies – Resurgence Support Payment, the Covid Wage Subsidy, and the COVID-19 Leave Support Scheme. The terms ’employee’ and ‘business’ below include sole traders and shareholder-employees (only those who receive income from the business).
Some information and applications may not be immediately available, so keep checking the websites regularly.
▶ Resurgence Support Payment
▶ Covid Wage Subsidy
▶ COVID-19 Leave Support Scheme
▶ Short-Term Absence Payment (STAP)
▶ Small Business Cashflow Scheme (SBCS)
▶ GST and Income Tax implications
▶ Accounting for government assistance in Xero
▶ Summary of online resources
Government assistance available
- To be paid as a lump sum
- Can be used for general operating costs
- The amount is to be the lower of:
- $1,500 plus $400 per full-time equivalent employee (up to 50 FTEs), or
- Four times the actual revenue decline experienced by the business
For businesses which expect a loss of at least 40% revenue as a result of this lockdown
- To be paid as a two-week lump sum
- Can only be used for wages, not general operating costs
- $600 per week for each full-time employees
- $359 per week for each part-time employee
Applications opened on 20 August via Work and Income NZ.
This policy remains in place and can be accessed at any time if eligible.
The SBCS is a loan obtained via Inland Revenue with a low interest rate. If you repay the loan within two years, you won’t be charged interest. More information can be found on our website here, and applications can be made in this section of the IRD’s website.
If the payment is taxable (see table below), we suggest setting aside 20% – 30% to cover the income tax portion.
We often get asked “how do I code it in Xero”. This will depend on how you operate your business and how you pay yourself from the business. Please see below for different scenarios and accounting treatment.
You may need to create a new account code within your Chart of Accounts. Please head to this link for guidance on how to do this in Xero.
Covid small business loan
To reconcile your loan payment, you will need to set up a (new) code with the type being ‘Current Liability’ in the Chart of Accounts Make sure that it’s set to No-GST. Any repayments will also be coded to this loan.
Interest on small business loan
This should be recorded as an interest expense.
Resurgence Support Payment
Please record this as Other Revenue. If you’re registered for GST, you need to include this as income in your GST return.
Wage subsidy / COVID-19 Leave Support Scheme / Short-Term Absence Payment
- Sole traders and partnerships – please reconcile to a (new) code within equity
- Companies where you are a shareholder-employee and you are an employee receiving PAYE-paid wages, please code it to a (new) code with the type ‘Other Revenue’ in the Chart of Accounts
- Companies where you are a shareholder-employee and you’re not receiving any PAYE-paid wages from the company, please record this as a (new) account with the type ‘Current Liability’ in the Chart of Accounts
The links below will take you to relevant online resources.
Financial support for businesses (covid19.govt.nz)
Resurgence Support Payment (IRD website)
Covid Wage Subsidy (WINZ website)
COVID-19 Leave Support Scheme (WINZ)
Short-Term Absent Payment Scheme (IRD website)
Be safe everyone.