Understanding Wage Subsidy eligibility and how to apply

August 2021 Wage Subsidy Scheme opens

As of 9:00am Friday 20 August, the Government’s COVID-19 Wage Subsidy Scheme is open for a two-week period via Te Hiranga Tangata (Work and Income). Businesses can now apply online here.   

This subsidy pay-out will cover a two week working period, with weekly payment rates as follows:

  • $600 for employees that work 20 hours or more per week (full-time rate) 
  • $359 for employees that work less than 20 hours per week (part-time rate). 

As an example, an eligible employer that applies for and retains 3 full time employees along with 2 part time employees, may receive $5,036.  As was the case with previous wage subsidies, this pay-out is non-assessable income for tax purposes (but equally, the employer cannot claim a tax deduction for the wages that it covers).

Are you eligible?

Before applying, businesses must ensure that their revenue assessments meet the criteria. The scheme is open for a two-week period to Friday 3 September 2021, providing a window for businesses to confirm entitlement.

Eligibility criteria includes the requirement for businesses to demonstrate they have had, or predict to have, a decline in revenue that can be attributed to the effect of the move to Alert Level 4 on 17 August 2021. Businesses must demonstrate at least a 40% decline over the period between 17 August 2021 and 30 August 2021 inclusive (this is the revenue test period), compared to a typical 14-day consecutive period of revenue in the six weeks immediately before the move to Alert Level 4 on 17 August 2021 (this is the default comparator period).

Businesses with highly seasonal revenue may compare their revenue over the revenue test period with the same fortnight in either 2020 or 2019 to determine whether they meet the required revenue drop to be eligible.  Applicants will need to demonstrate why their revenue is seasonal and why they cannot use the default comparator period.

Employers cannot receive the Wage Subsidy for any employees for whom they are receiving the Leave Support Payment or Short Term Absence Payment

However, employers can also apply for the Resurgence Support Payment (see more below).

Important: Making your declaration 

In applying for the Wage Subsidy, businesses must agree to a declaration which clearly states that any non-compliance may result in civil proceedings and/or punishment under the Crimes Act 1961.  This means it is vital for applicants to read and understand what they are confirming - and we are here to help you with this important part of the process.

Some of the key points within the declaration are: 

  • The applicant is required to prepare and retain evidence to support the revenue decline calculation. Actions taken to mitigate the impacts of the Alert Level changes must also be documented. This might include engaging with their bank and drawing on cash reserves.  We are aware that MSD audits of earlier subsidies focussed on this area.
  • The applicant must have obtained consent from employees to include them in the application and the sharing of their personal details.
  • The applicant agrees to specific conditions regarding retaining and remunerating the employees for whom they have applied for the subsidy.
  • Applicants must immediately repay the subsidy if they are no longer entitled to it (e.g. if a predicted decline in revenue did not eventuate).
  • A public register will name those that receive the subsidy.

Additional support: Resurgence Support Payment

In addition to the Wage Subsidy Scheme, businesses can also apply for the Resurgence Support Payment (RSP) if eligibility criteria are met. Applications will open 8:00am on 24 August for businesses that have experienced at least a 30% decrease in revenue.

The RSP will allow businesses to receive up to $1500, plus an extra $400 per employee up to a maximum of 50 full-time employees.


Need further help?

Please get in touch with your local BDO adviser if you would like to discuss your application including any aspect of the declaration, whether you are eligible, and what payment you might receive under the scheme.