The Inland Revenue has released further detail on the changes announced on the 21st of February that we discussed earlier in the week.

Covid Support Payment

Starting from 8 am on Monday the 28th of February, eligible businesses will be able to apply for a COVID-19 Support Payment of CSP.  These fortnightly payments are $4,000 per business, plus $400 per FTE employee.

CSP – Eligibility criteria

Per the Inland Revenue, the eligibility for a covid support payment is:

“Eligibility criteria

  • To be eligible for the CSP a business or organisation must: have experienced a revenue decline of 40% or more as a result of 1 or more COVID-19 circumstances (as detailed above)
  • have been operating the business or organisation for a period of at least 1 month before 16 February 2022 – if you have acquired a business or organisation after 16 January 2022, you may still be eligible for the CSP
  • have taken all reasonably practicable steps (if any) to minimise revenue losses
  • been operating in compliance with the COVID-19 Vaccine Certificate requirements (pursuant to COVID-19 Public Health Response (Protection Framework) Order 2021), for both the comparator period and the affected revenue period
  • not have received, have an application pending for, or apply for or receive in future, a grant under the Cultural Sector Emergency Relief Fund: Grant for Self- Employed Individuals administered by Manatū Taonga – Ministry for Culture and Heritage (further details on this will be provided soon)
  • be living, or (if a non-natural person) registered or otherwise established in New Zealand.”

Points to note:

With the exception of the requirements around compliance with the vaccine mandates and receiving the listed grants, the above criteria are all pretty consistent with prior support schemes.

CSP – Revenue drop

There has been a lot of comment in the media in the past week about how the revenue drop would be measured.  This is because the Minister’s speech on Monday described the revenue drop in a very unusual way and his speech was used in the press releases.  The Minister’s speech seemed to suggest that the revenue drop was measured before 15 February against revenue in the period from 16 February, which would have been absurd.  We assumed the Minister misspoke, and that it must be the other way around and this has turned out to be correct, as discussed below.

Per Inland Revenue, the requisite revenue drop is measured as follows:

Drop-in revenue  

Businesses and organisations need to measure their revenue over a period of 7 consecutive days in the affected revenue period where the business or organisation has had a drop in revenue due to the COVID-19 circumstances detailed above.

To get the first payment you will need to show income is 40% lower in a 7-day period any time from February 16, compared to a typical 7-day period between 5 January 2022 and 15 February 2022.

The dates of the affected revenue period for the second and third payments are still to be decided.

The affected revenue period and the comparison period must be calculated based on what has happened, not a forecast of what might happen. If the revenue drop you have calculated is 40% or more you may be eligible for CSP.

If your business or organisation is part of a commonly owned group, the 40% revenue drop needs to be satisfied by you and by the group as a whole.

Businesses or organisations with highly seasonal revenue may still be able apply for the CSP. Further details for businesses with seasonal revenue will be provided soon.

CSP – detailed information

Aspects of the CSP scheme are still under design, so for the most up to date information please see:

https://www.ird.govt.nz/covid-19/business-and-organisations/covid-19-support-payment-information

CSP – Application process

At the time of writing, there is still no information about how to get a CSP, but we assume that applications will be made through IRD.

Small Business Cashflow Scheme (SBCS) Loan

The Inland Revenue has announced that the changes we mentioned on Tuesday will be made before the end of March.  That is:

  • the interest free period will be extended another year; and 
  • existing borrowers will be able to borrow another $10,000 plus any undrawn amount from last time on or before; and
  • Borrowers who have repaid their SBCS loan can redraw.

Applications are made through the Taxpayer or Tax Agent’s MyIR account.

For the latest information please refer to:

https://www.ird.govt.nz/covid-19/business-and-organisations/sbcs

IRD flexibility

IRD has announced that their powers to write-off penalties and interest will be extended to 1 April 2024.

IRD are asking that taxpayers who cannot pay (due to covid) on time make contact as soon as possible.