Covid assistance for business owners (updated 28 February 2022)

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On 21 February 2022, the government announced further financial support for businesses that can prove they have a 40% decline in revenue.

There’s also a new top-up loan available for those who have taken out a Small Business Cashflow Loan – we’ve covered this as well.

The main points
Application dates
What you need to prove
How you prove it
Accounting for the Covid Support Payment
Small Business Cashflow Loan (SBCS) – UPDATE
Other Covid assistance available

The main points

  • Applications can be made from 28 February 2022 – this link takes you to the relevant IRD page for applications.
  • Payments will be every two weeks, starting 1 March 2022.
  • The amount is $4,000 per business, plus $400 for each full-time employee – this is for each payment, not for a six-week total.
  • Your business should show a 40% decrease in revenue in any 7 consecutive days within the six weeks prior to the shift to Phase 2 of the Omicron response on February 15 or the same 7-day period from  2021*, against a 7-day period after 15 February 2022 – yes, it’s a mouthful! See the next section for the plain English version.

* This was announced on 28 February 2022 and has yet to become law, although it is expected to in the near future.

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Application dates

This link takes you to the relevant IRD page for applications.

Applications for the first payment are open for the period beginning 16 February 2022 and ending 4 April 2022.

Applications for the second payment are open from 8am on 14 March 2022 for the period beginning 7 March 2022 and ending 4 April 2022.

Applications for the third payment are open from 8am on 28 March 2022 for the period beginning 21 March 2022 and ending 4 April 2022.

Applications for all 3 CSPs will close on 5 May 2022.

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What you need to prove

  • Take your revenue from any 7 consecutive days between 4 January 2022 and 15 February 2022
    • or your revenue from any 7 consecutive day period between 4 January 2021 and 15 February 2021*
  • Take your revenue in 7 consecutive days after 15 February 2022
  • If there is a decrease of at least 40%, you will probably be eligible for the fortnightly payments

* This is different from what was announced on 21 February 2022 – the previous requirement was to compare a 7-day period before 15 February 2022 with a 7-day period after 15 February 2022. You can now choose to compare to a 7-day period from 2021.

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How you prove it (in Xero)*

* Other accounting systems should have similar functionality

A. Revenue from any 7-day period in the 6 weeks prior to 15 February 2022 or Revenue from any 7-day period in the 6 weeks prior to 15 February 2021

These are your base periods against which you compare later revenue.

  • Go to your Profit and Loss report
  • In the date range, select 8 February to 15 February 2022
    • Or from 8 February 2021 to 15 February 2021
  • In the “Compare with” box – select 5 periods, so you’ll end up with six weeks/columns in total
  • Click “Update” top-right

This will show your total revenue for each week within the six-week period required for comparison.

B (2). Revenue from a 7-day period after 15 February 2022

Perform the same procedure as above, but change the dates to show weekly revenue after 15 February 2022.

C. 40% decrease

To calculate the percentage decrease, take the revenue from any week in A. Multiply it by 60% (yes, 60% as we’re doing this the easy way!).**

If your figure from B is lower than C, your revenue has decreased by at least 40%.

** The alternative is to do the following:

  • Multiply your figure in A by 40%
  • Subtract this 40% from A, to get C
  • If your figure from B is lower than C, your revenue has decreased by at least 40%

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Accounting for the Covid Support Payment (CSP)

The money received is taxable income for the business. The expenses paid using the CSP are tax-deductible.

If you’re registered for GST, the CSP must be declared as income in the GST return.

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Small Business Cashflow Scheme (SBCS) – update

Update to SBCS

If your business has already taken out a loan under this scheme, you can apply for (up to) an additional $10,000. The new repayment period is 5 years, with the first 2 years being interest free.

The interest-free period applies only to the top-up loan, not the original loan scheme.

Original loan scheme

You can apply for the loans until 31 December 2023 via myIR. On your myIR home screen, you’ll see ‘I want to…”. Click on that, and then ‘Apply for a Small Business Loan’.

The maximum loan amount is $10,000 plus $1,800 for every FTE (Full-time Equivalent Employee). The limit for sole traders is $11,800.

The repayment due date is within five years of your application being approved.

  • If the loan is repaid within 24 months, you won’t be charged interest
  • If the loan is not repaid within 24 months, you’ll be charged interest at 3% of the outstanding amount from the date the loan is approved

There is no distinction between Red, Orange, or Green.

Repaying your loan
Here’s the IRD link showing how to pay and the tax code needed. Repaying the Small Business Loan.
We’ve also had some questions about tax on loans. The loan drawdown and repayments will never be taxable. Amounts unpaid after two years will be charged interest. The interest expense is tax deductible.

Other Covid assistance available

Please refer to our separate blog detailing the types of assistance still available to business owners, and how to apply.

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Please get in touch if you have any further questions.

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