Our team are working hard to assist clients to manage their businesses during this time and are offering free cash flow planning advice. Contact our team to request a time to discuss this support further.
COVID 19 will have a both a short term and potential long term impacts on our clients businesses. There is a significant amount of information available. Below is a highlight of a couple of relief packages the Government have put in place to assist with the impact of COVID 19
Employers, including sole traders and self-employed may be eligible for a wage subsidy.
The intention of the wage subsidy is to keep people employed during this time of uncertainty
A business can demonstrate a 30% decline in revenue attributable to COVID-19.
The business has taken steps to mitigate the impact of COVID-19
You remain responsible for paying your employees ordinary wages and salary for the employees named in the application. You will for the period you received the subsidy use your best endeavours to pay at least 80% of the employee’s ordinary wages or salary.
You agree to repay the subsidy or any part of it you: Fail to meet any of the obligations about how you must just the subsidy, were not or stop being eligible for the subsidy or any part, provide false or misleading information in your application or received insurance such as business interruption for any costs covered by the subsidy.
(there are some variations depending on the date you applied for the subsidy)
Key Business Tax Changes
The Government has announced several tax changes to help increase business cash flows and stimulate investment. The changes include:
- The reinstatement of depreciation deductions for commercial and industrial buildings at a 2% diminishing value applying from the 2020-21 tax year (generally beginning next month);
- Increasing the threshold for provisional tax from $2,500 to $5,000 applying from the 2020-21 tax year (generally beginning next month);
- Increasing the threshold for writing off low value assets to $5,000 for the next tax year, before reverting to $1,000 in the longer term;
- Giving a time-limited discretion to Inland Revenue to remit use of money interest (the interest on tax debt) if a taxpayer is unable to pay on time due to the impacts of COVID-19.
Temporary loss carry-back scheme
This temporary change should be introduced in a bill in the week beginning 27 April.
Businesses expecting to make a loss in either the 2019/20 year or the 2020/21 year would be able to estimate the loss and use it to offset profits in the past year. In other words, they could carry the loss back one year.
This change means IRD could refund some or all the tax already paid for the year they were in profit. It means firms could cash out all or some of their losses in 2019/20 or 2020/21. Without this change, firms would have to carry forward any loss to a year when they make a profit.
There is a significant amount of information and details in relation to these packages. If you would like to know more information, please do not hesitate to contact us to discuss further.