Tax Talk | Financial support for businesses most affected by Omicron

Time to read: 4 mins

Note: this article was updated on 3 March 2022

The government is extending assistance to businesses and organisations that have been heavily affected by New Zealand’s heightened COVID-19 protection measures in recent months. This includes:

  • COVID-19 support payments
  • Top-up loans via the Small Business Cashflow Scheme
  • Further flexibility on tax payments

COVID-19 support payments

Your business may be able to claim these payments if your revenue has been affected by the Omicron response. Here are the facts:

  • Three fortnightly payments will be available
  • Each payment has an affected revenue period
  • The business must be viable and ongoing and have taken all reasonable steps to limit revenue loss
  • Applications are now open for the first payment, which covers the period starting February 16 and will be open for six weeks. The next revenue periods are yet to be confirmed
  • At this stage there are three payments only. Each will offer $4,000 per business plus $400 per full-time worker, capped at 50 full-time employees and dependant on revenue. Therefore the maximum for a single payment is $24,000
  • Sole traders without employees can receive a payment of up to $4,400
  • To qualify for the first payment under the current criteria, you must show a 40% drop in revenue for seven days in a row after February 15 compared with a typical seven-day period between 5 January 2022 and 15 February 2022
  • Businesses with highly seasonal revenue may select a seven-day period prior to 5 January 2022. It needs to reflect typical revenue and can be from a previous year
  • The government also plans to allow a comparison period from 5 January 2021 to 15 February 2021, when New Zealand was at Alert Level 1. Inland Review will update its website when this option becomes available
  • Click here for more details and to see whether you meet the criteria

This payment is governed by the same legislation as the previous resurgence support payment and therefore has the same income tax and GST treatment.

Contact your local Baker Tilly Staples Rodway advisor if you need assistance with calculating entitlement to assistance, and assembling support to avoid any issues further down the road.

Small Business Cashflow Scheme top-up

As you’ll likely know, the government’s Small Business Cashflow Scheme provides loans to support the cash flow needs of small businesses (including sole traders and the self-employed) that have been affected by COVID-19.

This assistance has now been extended:

  • Businesses that have already accessed a loan will be able to draw down an extra $10,000, with a repayment period of five years. The first two years will be interest-free if the loan is not in default.
  • Those who have already borrowed under the scheme will also have the first two years’ interest waived on that initial loan
  • If your business hasn’t yet accessed a loan under this scheme, the base loan has extended to $20,000, plus $1,800 per full-time equivalent fulltime employee. Applications are open until 31 December 2023. If you are eligible, your loan will be interest-free for the first two years
  • See here for more details

Further flexibility on tax payments

Inland Revenue continues to offer flexibility regarding tax payment dates where an otherwise viable business is impacted by the pandemic.

It can help with GST and provisional tax due if your business is struggling due to the impacts of the COVID-19 response. Log on to myIR to see:

  • If you can delay starting payments to a later date
  • If any part of your tax could be written off

In addition, Inland Revenue has the ability to write off penalties and interest charged for late returns and payments if the only reason for the lateness is pandemic related. This can include cash flow impacts resulting from government restrictions.

Other tax relief possibilities include instalment payments for businesses struggling to pay outstanding tax, and certificates of exemption for contractors involved in work where schedular payments are to be deducted.

Please contact your Baker Tilly Staples Rodway advisor if you want more details about what assistance is available.

Comment

While we are pleased that the government has recognised the significant effect of stop-start COVID-19 response measures on the ability of many businesses to operate, we understand it’s mere window-dressing for some of you.

The laser-like focus on first-payment eligibility relying on a revenue drop between different periods will make determining and proving eligibility difficult for some, including those who have been struggling well before Phase 2 of the Traffic Light system was introduced.

DISCLAIMER: Our team is dedicated to helping you continue with business as usual, as much as you can. Information on government help is changing constantly and within hours of articles being added, the specifics may be out of date or only partially accurate. While we endeavour to keep this website accurate and current, our top priority is providing our clients with dedicated and relevant personal advice. If you need specific and up-to-date information, please seek help from your usual advisor directly.

No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.

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Tags COVID-19 Tax