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Inland Revenue

Tax Policy

Overview of the Bill

This Bill proposes amendments which support the proposed COVID-19 resurgence support payments (CRSP) scheme, as well as an amendment increasing the minimum family tax credit (MFTC) threshold.

COVID-19 resurgence support payments

The proposed CRSP scheme, to be administered by Inland Revenue, supports the Government’s economic response to COVID-19. By providing financial support to businesses in the event of alert level escalations, the CRSP scheme aims to limit the economic and social impact of public health restrictions at higher alert levels.

The proposed scheme may be activated in the event of an increase in alert levels from alert level 1 to alert level 2 or higher, and after remaining at an alert level higher than 1 for seven days or more. The scheme would be available to all businesses in New Zealand each time it activates. The scheme would not be restricted to a particular region even in the event of a regional increase in alert levels as even a regional public health restriction may impact businesses across New Zealand.

To be eligible for the grant, applicants must have suffered a decline in revenue of 30% or more. This is calculated by comparing a seven-day period at alert level 2 or higher with the typical weekly revenue in the six weeks preceding the move from alert level 1. In addition, applicants must have been in business for at least six months.

The proposed CRSP scheme proposes a one-off support payment to businesses in the form of a grant. The proposed payment will comprise a base amount of $1,500 per applicant plus $400 per full-time equivalent[1] (FTE) up to a cap of 50 FTEs. Although the payment is capped at 50 FTEs, businesses with more than 50 FTEs may still apply.

The payment is further capped by four times the amount the applicant declares their revenue has declined by. The amount an applicant may receive under the scheme is the lower of the amount calculated using the formula above ($1,500 plus $400 per FTE), and four times the amount their revenue has declined by as declared by the applicant as part of their application.

The policies proposed in this Bill authorises Inland Revenue to make grant payments under the scheme, and other legislative amendments to support Inland Revenue’s administration of the scheme.

Minimum family tax credit threshold

The MFTC is one of the Working for Families tax credits. Its purpose is to incentivise families with children to move off the benefit and into “full-time” work.[2] The MFTC achieves this by “topping up” the incomes of working families to an amount that is more than what they could potentially receive on a benefit. When benefit rates and thresholds are increased, the MFTC must also be adjusted to ensure working families continue to be better off in work and receiving the MFTC, rather than remaining on the benefit.

From 1 April 2021, the benefit abatement thresholds will increase, allowing beneficiaries to earn a greater amount of additional income before their benefits start to reduce. As a consequence of the increase in benefit abatement thresholds, this Bill increases the MFTC threshold from 1 April 2021 meaning sole parent families remain financially better off in full-time work and receiving the MFTC, rather than remaining on the benefit.


[1] For the purposes of the CRSP scheme, employees who work 20 hours or more per week counts as 1.0 FTE, while employees who work less than 20 hours per week count as 0.6 FTE.  

[2] For the purposes of the MFTC, “full-time” work is defined as 20 hours or more per week for sole parent families, and 30 hours or more per week for two-parent families.