COVID-19: The latest Wage Subsidy information – 10 June 2020

As well as making the move from Alert Level 2 to Alert Level 1 and the clear signal our economy is moving from “responding” to “recovering” from COVID-19, this week marks the end of the Wage Subsidy Scheme and the beginning of the Wage Subsidy Extension Scheme.

The Wage Subsidy Scheme was designed to run from 17 March through to 9 June. With that period now finished, its successor the “Wage Subsidy Extension Scheme” (WSE Scheme) takes its place. Over 71% of all businesses in New Zealand received support under the Wage Subsidy Scheme due to the major impact the Level 4 lockdown had on businesses. The WSE Scheme is designed to be more targeted towards the businesses who are still needing support, with an estimated 230,000 eligible businesses.

While identical in many respects, there are some key differences between the WSE Scheme and the original Wage Subsidy Scheme.

What is the same?

  • The same business types can apply, including companies, partnerships, self-employed, contractors, charities, etc.
  • Payment is made in an upfront lump sum.
  • Payment rates are $585.80 per week for a full-time worker and $350 per week for a part-time worker.
  • A full-time worker is one who works 20 or more hours per week and a part-time worker is less than 20 hours.
  • Employers need to seek written consent from employees that a wage subsidy can be sought in respect of them. Employers should share privacy information with employees.
  • Employers need to commit to retaining staff, which the WSE Scheme is received in respect of.
  • The WSE Scheme amount must be passed on in full to employees (unless they ordinarily earn less).
  • Employers should do their best to pay employees at least 80% of their normal pay and must follow all employment laws.
  • Recipients need to have taken active steps to mitigate the impact of COVID-19 on their business.
  • New businesses, high growth businesses, and R&D start-up businesses will be able measure revenue decline in slightly different ways; e.g. making a comparison to revenue within 2020 rather than comparing to 2019.
  • All recipients need to read and agree to a detailed declaration.
  • Applications are made through the Work & Income website, with a separate CSV upload process for employers with over 100 staff.

You can find further details about the original Wage Subsidy Scheme in our previous articles here, here and here.

What is different?

  • Businesses need to have suffered a 40% (rather than 30%) decline in revenue over a 30-day continuous period, compared with a comparable period in 2019.
  • The WSE Scheme runs for an eight week period rather than 12 weeks, meaning the payments are $4,686.40 for a full-time employee and $2,800 for a part-time employee.
  • It is clearer when repayments are required. For example, if a self-employed person makes a claim, they must repay the subsidy to the extent that it is greater than what they would ordinarily draw from the business. If an employee leaves, the WSE funds must be used to help other employees. If there are no other employees, any balance must be repaid.

When can claims be made?

While the WSE Scheme opened for applications at 9am on 10 June, there is not expected to be an avalanche of applications on that date. That is because it’s not possible for an applicant to be in receipt of the original wage subsidy and the new WSE at the same time; i.e. an applicant must have waited 12 weeks from the date they applied for the original wage subsidy before applying for the WSE Scheme.

When the Wage Subsidy was originally introduced on 17 March, New Zealand didn’t have an Alert Level system and it was largely business as usual for many. In addition, the Wage Subsidy was restricted to providing a maximum benefit of $150,000 per employer (equivalent to supporting 21 full-time workers). However on 21 March, the Alert Level system was introduced and with New Zealand moving to Alert Level 3 on 23 March, the decision was made to remove the $150,000 cap on the Wage Subsidy. As can be seen in the aggregated Wage Subsidy data (Table 1), after 40,415 applications in the first few days of the scheme, more than 280,000 applications were submitted following the move to Alert Level 4. The following week, after further amendments were made to the Wage Subsidy on 27 March to provide more flexibility for employers, an additional 96,000 applications were submitted.

What this means is that from 10 June, there will be a potential pool of 40,415 businesses who will be able to apply for the WSE Scheme if they meet the new scheme criteria. The following week, an additional 280,000 businesses can consider applying. After a couple of weeks, 72% of existing Wage Subsidy recipients will be eligible to potentially re-apply.

One of the issues for businesses to grapple with is the need to make multiple applications if a business did not apply for all its employees at the same time. Given the numerous changes to the rules of the original scheme, a number of businesses may have made a number of Wage Subsidy claims. Simply due to the logistical headache of manually filling in the online form when the benefit was capped at $150,000, an employer might have just filled in 22 names, then needed to reapply for other employees after 23 March. If an employer had new starters during the 12 week period, they would have completed separate applications. As a result, for each tranche of employees a new assessment of revenue loss will need to be made alongside separate applications. 

Table 1: Aggregate weekly Wage Subsidy applications as at 29 May 2020


Table 2: Weekly Wage Subsidy payments as at 29 May 2020 ($m)


What is the new revenue reduction test?

The new issue for businesses to grapple with is the need to demonstrate at least a 40% reduction in revenue. The original Wage Subsidy Scheme offered the ability to apply on the basis of a prediction of having a 30% reduction of revenue in any month prior to 9 June. Under the new WSE Scheme, it is necessary for the revenue loss to have already occurred prior to application. This will be a stumbling point for a number of businesses.

However, the WSE Scheme is intended to be targeted towards those businesses who are most impacted by COVID-19; for example, the tourism and hospitality sectors who may be likely to easily satisfy this test. Other businesses will need to stop and fully assess before rushing to make applications.

One aspect which may cause confusion is the statement on the WSE application page: “Your business must have experienced a minimum 40% decline in revenue for a continuous 30 day period. This period needs to be in the 40 days before you apply (but no earlier than 10 May 2020) and must be compared to the closest period last year. The decline must also be related to COVID-19.” What this is saying is:

  • A business needs an actual 40% revenue loss before it can apply.
  • The revenue loss is measured on a 30 day period, but there is generally 10 days leeway to complete necessary administrative processes (see below) before an application needs to be made.
  • The revenue loss needs to have occurred from 10 May 2020 (i.e. towards the end of New Zealand’s second phase in Alert Level 3). Therefore, businesses applying in the first five days of the WSE Scheme won’t have a full 40 day period to evaluate due to the inability to look further back than 10 May 2020.
  • Revenue is compared to the closest logical period in 2019. For example, if a business does not operate seven days a week, it should do a comparison to a period with the same number of working days.

Administrative requirements

An important aspect of the WSE Scheme is ensuring there is transparency over who is receiving it. That means there is a requirement for applicants to notify in writing all employees included in an application, and to obtain consent that an application can be made. This position is the same as with the original Wage Subsidy Scheme, although in that instance there was conflicting guidance released by the Privacy Commission advising that employee information could be provided without approval. This was due to the Civil Defence National Emergency status in place at that time. Given this is no longer in place, completing this step prior to applying is essential this time around. There are a number of obligations in relation to communicating with employees included in the declaration and these should be followed before applying.

It is also important the businesses document in full how they are eligible for the WSE Scheme and the steps taken to mitigate the impact of COVID-19. We have seen an increase in audits and reviews of Wage Subsidy applications, so being prepared at the time of application is an important step (you can read more about being audit-ready in this article). For those who applied for the Wage Subsidy Scheme on the basis of a predicted revenue drop to 9 June 2020, we expect to see more queries from the Ministry of Social Development asking applicants to verify that the predicted revenue drop has actually materialised. If not, the Wage Subsidy will need to be repaid (as 29 May 2020, $136.4 million of Wage Subsidy payments have been refunded from 4,036 applicants). 


The Boxy Cinema has been severely impacted by COVID-19 - at first having to reduce cinema capacity by 50% to allow social distancing between groups of cinema-goers, then being shut from 23 March when the country moved to Alert Level 3. Since re-opening in Level 2 from 14 May, because of limited cinema capacity, a lack of new release blockbusters, social distancing requirements for the café and cancelled events, the Boxy Cinema continues to be over 40% down on revenue when comparing revenue to May/June 2019. Since March 2020, the Boxy Cinema has been taking active steps to mitigate COVID-19, including introducing online streaming events and home deliveries of food, as well as engaging with its bank and advisors. 

The Boxy Cinema has 30 employees. When the Wage Subsidy Scheme first started on 17 May, the Boxy Cinema made a claim for 22 full-time employees, allowing them to receive the maximum Wage Subsidy amount (at that time) of $150,000. On 23 March an additional Wage Subsidy claim was made for the remaining eight employees when the cap was removed.

On 10 June, after reading the declaration in full and notifying employees, the Boxy Cinema can make a claim for 22 full-time employees based on reduced revenue in the period of 11 May 2020 – 9 June 2020. On 20 June, the Boxy Cinema is able to make another application for its eight remaining employees. It is also able to use the same revenue loss as calculated for the first WSE Scheme application as 11 May 2020 is the 40th day before 20 June 2020.   

We have a team of specialists who are helping our clients with Wage Subsidy claims and audits. If you need advice on the scheme, please get in touch.

The content of this article is accurate as at 10 June 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.

10 June, 2020 by Robyn Walker, Darren Johnson, Phil Stevenson, Andrew Button, Business continuity

Robyn Walker

Robyn Walker

Robyn is a Partner within the Tax Team at Deloitte in New Zealand. This involves many things, including preparing submissions on behalf of Deloitte and developing thought leadership in the area of tax. She likes to think about how tax developments really impact on Deloitte's clients and has a particular interest in tax policy and keeping up to date with all the many tax developments. 

Darren Johnson

Darren Johnson

Darren enjoys working with people who are excited about what they do every day and who have a drive to succeed. To be able to help effectively, it is essential to first understand their vision and the issues they face. He then works with them on how Deloitte Private can help them meet their goals and overcome any challenges through using his own specialist tax knowledge.

Phil Stevenson

Phil Stevenson

Phil is a Partner in the Tax team at Deloitte New Zealand. Whether it’s using his tax specialist skills to manage transactions in a tax efficient manner, his ability to develop business opportunities or simply being on the end of the phone as a sounding board, he values being a part of his client’s success stories.

Andrew Button

Andrew Button

Andrew Button is a Partner in our Tax team. While his speciality is providing tax advice, and developing good tax governance structures, he thoroughly enjoys working with businesses, and introducing people with other specialist skills to take these businesses to the next level. 

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