Government support for Omicron outbreak
Some of you may already be feeling the effects of Omicron on your business – we, for example, have nearly one third of our team isolating for ten days (under the amended close contacts definition – it would have been worse under the old definition).
Acknowledging the crippling impact this Covid variant can have for New Zealand business owners, a new targeted support scheme was announced last week, with applications able to be made from the 28th February and the payments commencing March 1st (note that if you wish to use the second of the two time periods below, myIR is unlikely to allow you to do so until system changes have been made by the expected date of March 14th).
Each payment will be $4,000 per business, plus $400 per full-time employee (FTE), capped at 50 FTEs or $24,000. Note that this is the same rate as the most recent Transition Payment which the Government rolled out in December.
To be eligible to receive the payment, businesses will have to show a 40% or greater revenue drop in seven consecutive days since 16th February 2022, compared with a typical seven days within one of the following two six-week periods:
- 5th January 2022 to 15th February 2022; or,
- 5th January 2021 to 15th February 2021.
An applicant must have been operating the business or organisation in relation to which the revenue is received for a period of at least one month before 16 February 2022 (or acquired it from another person who has done so), have taken reasonably practicable steps to minimise revenue losses, and have been operating in compliance with the CVC requirements (whether the CVC or non-CVC rules), if applicable.
The payments will be available on a fortnightly basis for six weeks. So three payments in total, international experience reflecting that the peak of the Omicron outbreak should pass after about six weeks, however, there will be the option to extend the payment if this is considered necessary.
Also announced along with the support package, were changes to the ‘Small Business Cashflow Loans Scheme’, with the introduction of a ‘top up’ loan. The ‘top up’ loan will allow those firms that have already accessed a loan to draw down an additional $10,000, with a new repayment period of five years and with the first two years being interest free.
The amendments to the loan scheme also will see the removal of the first two years of accrued base interest from all borrowers who have, or will, take out a loan under the scheme. This change will mean interest will only start accruing at the beginning of year three.
Finally, IR’s ability to apply flexibility for tax payment dates and terms to assist firms with cashflow pressures will also be extended. In this regard, any businesses struggling to pay tax because of the impacts of Covid-19 should log on to myIR to see if they can delay starting payments to a later date, or if any part of the tax can be written off. IR can help with both GST and provisional tax due.
Cyclone Dovi farmers and growers relief
A medium-scale adverse event has been declared for the West Coast and top of the South Island regions on 13th February 2022, extended on 22nd February 2022 to also include the Wairarapa and Taranaki regions, and the Waitomo district.
To assist affected farmers and growers, IR is exercising discretion to allow late deposits for the 2021 year and early withdrawals from the income equalisation scheme.
In case you were not aware, the income equalisation scheme allows farmers, fishermen, growers, and foresters to even out fluctuations in their income by spreading their gross incomes from year to year.
IR has a range of support in place for affected taxpayers, both businesses, individuals and families affected by the floods, so check out their website should you require any assistance.
This article from the ‘A Week in Review’ newsletter was originally published Monday 28th February 2021. If you have any questions or would like a second opinion on any national or international tax issues, please contact me firstname.lastname@example.org.
If you would like to receive these updates directly to your mail inbox, you can subscribe by clicking here.