Newsletter – Update On COVID Support For Business

Update on New COVID Support Payment (CSP) available from today:
Last week we sent you details of the new COVID Support Payment.  It was apparent that many if not most Auckland businesses would not be eligible to make a claim under this scheme, as the benchmark period was 7 days within the 6 weeks from 5 January this year.

The government has now announced that an alternative period may be used – running from 5 January 2021 to 15 February 2021, when the country was in Level One.

While still not ideal, as January-February is often a very low trading month for many businesses, it will open up a better option for many clients.

Unfortunately, applications under this widened criteria are not expected to be available until 14 March.  But once opened, a business can apply for the first payment – getting the funds two weeks later.  Not ideal, but we will take it.

Details again: 

  • Three fortnightly payments of $4,000 per business plus $400 per full time employee or equivalent (e.g. two half-time employees equals one full time employee) 
  • Capped at 50 full-time employees
  • A 40% drop in income over any consecutive 7 day period from 15 February onwards.
  • Compared to a benchmark of any consecutive 7 days between either:
    • 5 January 2022 to 15 February 2022 OR
    • 5 January 2021 to 15 February 2021 
  • Three fortnightly payments
  • Payments start 1 March, except as above when using 2021 data
  • Each of the three payments stand alone – a business which is not eligible for the first payment may be eligible for others depending on turnover.
How do you calculate  this?
  • Make a list of sales from 5 January to 15 February inclusive for 2021 and 2022
  • Determine the highest sales figure for 7 consecutive days – this is your benchmark.  (We note for your information that the actual wording is: “a typical seven-day period” – however in our experience it is almost impossible to determine a typical 7-day period in any business in New Zealand, even in non-pandemic times, between New Year and the week after Waitangi Day).
  • Make a list of sales from 16 February 2022 up to the date of application
  • Determine the lowest 7 days consecutive sales
  • If the lowest 7 days is 40% less than the benchmark, your business is eligible
Please contact our office if you need help with this calculation, or if you require any other information.

And repeated for your information:

Small Business Cashflow Loan Scheme changes:
The Government are introducing a “top-up” loan of $10,000.

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.  This change means interest will only start accruing at the beginning of year 3, for this loan.     

Flexibility with payment dates:
The Government is also extending the Commissioner of Inland Revenue’s ability to apply flexibility for tax payment dates and terms to assist firms with cashflow pressures.  Details are still to be advised.       

Any businesses struggling to pay tax because of the impacts of COVID should contact us, to see if they can delay starting payments to a later date.  IR can help with both GST and provisional tax due.  

 And a note about our office:

Our office is currently open between 9am and 3pm on Business days.  We are happy to have face-to-face meetings with clients who are vaccinated.  We ask that you still call our office in advance, and wear a mask.  We are still of course available for phone and Zoom meetings, as we are working remotely as well.