Relaxation in threshold of 10 June Wage Subsidy Scheme
The Government announced to further extend Covid-19 support schemes for businesses, dropping the required revenue drop threshold from 50 per cent to 40 per cent.
Finance Minister Grant Robertson announced that the change in criteria for the extended wage subsidy scheme would see an extra 40,000 businesses eligible. The scheme has paid out $10.997 billion to date, covering 1.66 million jobs.
The Minister said small businesses will also be given more time to apply for the Small Business Cashflow Loan Scheme, with the application date being extended from June 12 to July 24.
The extension of the Covid-19 wage subsidy scheme (WSS) was revealed in Budget 2020.
From June 10, businesses will be able to apply for the extended wage subsidy scheme (EWSS).
The EWSS will provide payments of $585.80 for a full-time worker and $350 for a part-time worker for a period of 8 weeks. This equates to $4,686.40 and $2,800 for a full time and part-time worker respectively.
Initially, to be eligible for the EWSS a business must have experienced a 50 per cent reduction in revenue in the 30-day period prior to the application date versus the nearest comparable period in 2019.High growth and new businesses would be able to compare revenue to a comparable period within 2020.
But on Friday, 5 June the Minister said after feedback from businesses, the Government had taken the decision to change the required revenue drop threshold from 50 per cent to 40 per cent for a 30-day period in the 40 days immediately prior to the application date (but beginning no earlier than 10 May 2020), versus the nearest comparable period last year.
Up to 230,000 businesses were now forecast to be eligible for the new eight-week scheme from June 10, covering up to 910,000 workers.
The changes mean the scheme is now forecast to provide between $2.6b and $3.9b to businesses to help them with their wage bills, up from a top estimate of $3.2b under the old threshold. It will be funded through the COVID Response and Recovery Fund.
Almost two thirds of businesses surveyed said the wage subsidy meant they were better able to use other cashflow for non-staff overheads, like commercial rent.
About 89 per cent said the wage subsidy would help them keep operating for the foreseeable future, while 6 per cent of those surveyed indicated they were considering redundancies in the next
few months.
For the offical release, click here.