14 May 2020
As part of the $50 billion Covid-19 Response and Recovery Fund announced in the 2020 Budget, the Government has allocated another $3.2 billion to its wage subsidy scheme – and made pre-revenue start-ups eligible.
Scheme extension details
The scheme was due to wrap up on 30 June 2020. It’s now been extended for an additional 8 weeks, with tighter revenue-loss conditions.
The new Wage Subsidy Extension payment will be available to all employers, including sole traders. It has tighter conditions than the initial scheme. Employers now need to show a revenue loss of more than 50% for the 30 days before application (compared to the same period last year).
Applications open on 10 June 2020. Employers cannot apply for the extension for an employee until any original 12-week wage subsidy is finished.
- Pass the subsidy on to employees
- Retain employees for the duration of the subsidy
- Endeavour to pay employees at least 80% of normal pay
- Show they have taken active steps to mitigate the impacts of Covid-19 on their business
High growth and new firms now eligible
The Government has announced high growth and new firms will now be eligible for the Wage Subsidy Scheme. This includes pre-revenue research and development start-up firms recognised by Callaghan Innovation.
These businesses can treat actual or projected income from capital raises as revenue, for the purposes of the scheme’s requirements around revenue decline.
Work and Income is expected to release more information on this shortly.
Support for R&D
As part of Budget 2020, the Government has announced $150 million for a research and development loan scheme. The scheme is intended to encourage research and development businesses to retain as much of their programme as they can.
Loans will potentially cover 50% of a business’ annual research and development expenditure, with a cap of $100,000.