New COVID-19 Support Payment and other relief available

COVID-19Tax

3 March 2022

Finance Minister, Grant Robertson, has announced that a new COVID-19 Support Payment (CSP) will be made available to New Zealand businesses or organisations (including sole traders and not-for-profits) that are experiencing a decline in revenue due to the Omicron outbreak.

The CSP will be $4,000 per business plus $400 per full-time employee, capped at 50 full-time equivalent (FTE) employees. The maximum amount of each payment is $24,000 (for a business with 50 FTE employees).

To be eligible for the CSP, businesses will need to show a 40 percent drop in revenue or capital raising for seven days in a row in an affected revenue period due to at least one of the following circumstances:

  • The widespread presence of COVID-19 in the New Zealand community.

  • The public health legislative measures taken in order to reduce the spread of COVID-19 in the New Zealand community.

  • Any business circumstances that are, or are reasonably likely to be, a consequence of the circumstances described above.

A business is eligible if they can show a 40 percent or more drop in revenue for a continuous seven-day period since 16 February 2022 when compared against a typical seven-day revenue period in the six weeks between 5 January 2022 and 15 February 2022 (the comparison period). There is also the option to use an alternative comparison period of the six weeks between 5 January 2021 and 15 February 2021.

In addition to showing a 40 percent drop in revenue or capital raising, applicants for the CSP must meet the following criteria:

  • Have been in business for at least one month before 16 February 2022.

  • Be physically present in New Zealand.

  • Have evidence that their business is “viable and ongoing”.

  • Have a New Zealand business number.

  • Have taken all reasonably practical steps to minimise the decline in revenue.

  • If the business is regulated, it must have been operating in compliance with the COVID-19 Vaccine Certificate (CVC) requirements for regulated businesses or services (whether following the CVC or non-CVC rules) for both the comparator period and the affected revenue period.

  • Be 18 years or older and agree to the terms and conditions set out in the application.

The COVID Support Payment will be available on a fortnightly basis for six weeks, or three payments in total. The Government has said it will continue to monitor the situation and has the option to extend the payment if necessary.

Applying for the CSP

Businesses can apply for the first COVID-19 Support Payment from 28 February 2022. Payments start from 1 March 2022. However, businesses that use the alternative comparison period to calculate their decline in revenue will need to wait until 14 March before they can apply for the CSP.

Businesses can apply for the CSP through myIR Secure Online Services on Inland Revenue’s website. Once logged in select the “I want to…” tab and ‘Apply for COVID-19 Support Payment’ under COVID-19 Support.

Businesses that apply for the CSP should document how they satisfy each of the eligibility criteria, including a record of their calculations showing the 40 percent drop in revenue or capital raising, in case their application is ever reviewed.

Once Inland Revenue approves an applicant’s CSP they should receive the payment in full within five working days. Please be aware that if for any reason an applicant no longer meets the eligibility requirements, the CSP will need to be repaid along with interest.

Other Support

Businesses impacted by the Omicron outbreak may also be eligible for the Short-Term Absence Payment or the COVID-19 Leave Support Scheme.

Changes have been made to the Small Business Cashflow Loan Scheme (SBCS) through the introduction of a ‘top up’ loan, which increases the amount of funding available to eligible businesses. The ‘top up’ loan will allow businesses that have already obtained a loan to draw down a further $10,000, repayable over five years.

The Government has also decided to remove the first two years of accrued base interest from all borrowers who have, or will, take out a loan under the SBCS. As a result, interest will only start accruing at the beginning of year three.

Finally, the Commissioner of Inland Revenue’s powers have been extended to allow businesses impacted by Omicron flexibility around tax payment dates and terms. Businesses having difficulty paying their taxes should log onto myIR to see if they can delay payment dates or have any amounts written off.

If you require assistance assessing your business’ eligibility for the CSP or any of the other support measures available, please contact your Findex adviser or get in touch with one of our tax consultants.

Author: Greg James

Greg has over 25 years of tax structuring and consulting experience, including 20 years providing advice to New Zealand businesses and 8 years practicing tax in China, Hong Kong and New York. Greg prides himself in being able to communicate difficult tax law and regulations into easy to understand and practical advice, and to continually add value to his clients.