Tuesday, 22nd February, 2022
The Government has taken steps to acknowledge the financial impact that the current COVID management policies are having on some businesses.
Yesterday afternoon Minister Robertson announced a new targeted COVID Support Payment that will be made available for businesses struggling with revenue during the Omicron outbreak. This payment is modelled on the previously available Resurgence Support Payment and will be administered in the same way through the IRD.
Each COVID Support Payment will be $4000 per business plus $400 per full-time employee, capped at 50 FTEs or $24,000, this is the same rate as the most recent Transition Payment.
Applications for the first payment open on February 28, with payments starting from March 1.
The support will be available on a fortnightly basis for six weeks – three payments in total. This reflects the international experience that the peak of the Omicron outbreak should pass after about six weeks. The Government has committed to continue to closely monitor the situation and has the option to extend the support if this if necessary.
A higher threshold in terms of revenue loss than previous support has been introduced in order to target those most affected. Firms must show a 40 percent drop in seven consecutive days within the six weeks prior to the shift to Phase 2 of the Omicron response on February 15.
Please let us know if due to the already depressed trading conditions that it is a challenge for you to demonstrate this and we will provide this feedback and seek change to the criteria.
The Government considered whether to offer sector specific packages but the definition of who is in what sector, and the need for cashflow to be provided quickly meant that was not a feasible option to reach the most affected.
Changes are also being made to the Small Business Cashflow Loans Scheme. A 'top up' loan of $10,000 will be made available with a new repayment period of five years and the first two years being interest free. In addition, all existing borrowers will have the first two years of accrued interest waived. This means interest will only start accruing at the beginning of year three.
Finally, the Government has once again extended the Commissioner of Inland Revenue’s ability to apply flexibility for tax payment dates and terms to assist firms with cashflow pressures.
Any businesses struggling to pay tax because of the impacts of COVID should log on to myIR to see if they can delay starting payments to a later date, or if any part of the tax could be written off. The IRD can help with both GST and provisional tax due.
While we welcome the provision of financial support as a positive initiative, we continue to reinforce the message that business doesn't want handouts, business wants to be in business. Critical to this is a commitment to when public health management restrictions will be eased domestically and at the border. A border with isolation requirements is not open.
The next 4-6 weeks will be, if not the roughest, then certainly close to, for all of us.
Please let us know if there is anything the Chamber team can do to help you and your business.