Venkat Raman
Auckland, February 21, 2022
A new targeted Covid Support Payment will be made available for businesses struggling with revenue during the Omicron outbreak.
Finance Minister Grant Robertson said that the government has been the impact of the Covid Protection Framework on businesses and the economy.
“With the settings of the framework, most businesses can open and operate relatively normally, even at Red. We can see that a majority of the economy is operating close to normal, but in some sectors like hospitality and events, there has been a significant drop in business. There is a range of reasons for this, but it is clear that the impact is putting a number of viable businesses at risk of not being able to operate,” he said.
Eligibility for businesses
The government has announced three Covid Support Payments each of $4000 per business plus $400 per full-time employee, capped at 50 Full-Time Employees (FTEs) or $24,000.
This is the same rate as the Transition Payment made recently.
Applications will open on February 28, with payments starting from March 1.
The payment will be available on a fortnightly basis for six weeks.
According to Mr Robertson, the payment reflects the international experience that the peak of the Omicron outbreak should pass after about six weeks.
“We will continue to closely monitor the situation and have the option to extend the payment if this is necessary. We have set a higher threshold in terms of revenue loss than previous support in order to target those most affected. Firms must show a 40% drop in seven consecutive days within the six weeks prior to the shift to Phase 2 of the Omicron response on February 15, compared to seven days after that date.
“We looked closely at whether we could offer sector-specific packages but the definition of who is in what sector, and the need for cash flow to be provided quickly meant that was not a feasible option to reach the most affected,” Mr Robertson said.
Top Up Loans for SMEs
Revenue Minister David Parker said that changes were also being made to the Small Business Cashflow Loans Scheme to increase the amount of funding available to eligible businesses through 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 the first two years being interest-free. The Cabinet has also agreed to remove 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,” he said.
Mr Parker said that the government is also extending the ability of the Commissioner of Inland Revenue 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. IR can help with both GST and provisional tax due,” he said.
