The Government has announced a new targeted COVID-19 Support Payment is to be made available for businesses facing revenue challenges during the Omicron outbreak. Alongside this, updates to the existing Small Business Cashflow Loans Scheme have also been confirmed.
How the COVID-19 Support Payment will work
Applications for the first COVID-19 Support Payment will open 28 February 2022, with payments starting from 1 March 2022. The new payment recognises that some sectors, including hospitality and events, have experienced a significant decline in business activity – putting some businesses at risk of being unable to operate.
Each COVID Support Payment will be $4,000 per business plus $400 per full-time employee, capped at 50 FTEs or $24,000 (the same rate as the most recent Transition Payment).
In line with the anticipated peak for the Omicron outbreak in 6 weeks’ time (based on international experience), there will be 3 payments in total, available fortnightly. The Government will continue to closely monitor the outbreak’s impact on businesses and may choose to extend the payment if necessary.
In order to be eligible for the COVID-19 Support Payment, businesses must demonstrate at least a 40% revenue decline when comparing 7 consecutive days from the forward period beginning 16 February 2022 (the “affected revenue period”) with 7 consecutive days from 5 January to 15 February (the “comparator period”). The Government has set a higher revenue loss threshold than previous support packages in order to target those businesses that are most affected.
Changes to the Small Business Cashflow Loans Scheme
A ‘top up’ loan is also being introduced as part of planned changes to the Small Business Cashflow Loans Scheme – increasing the funding available to eligible businesses. Through this ‘top up’, businesses that have previously accessed a loan under the Scheme will now be able to draw down an additional $10,000. The top up is to be repaid within 5 years, with the first 2 years being interest free. This change means interest will only start accruing at the beginning of year 3, benefitting all borrowers who have, or will, take out a loan under the scheme.
The Commissioner of Inland Revenue’s ability to apply flexibility for tax payment dates and terms to assist firms with cashflow pressures is also being extended.
Businesses that are challenged in paying tax because of the impacts of COVID-19 should log on to myIR to determine if they can delay starting payments to a later date, or if any tax component can be written off. Inland Revenue can help with both GST and provisional tax due.
For more, contact your local BDO adviser.