As outlined by the Government this afternoon, Level 3 may be on the horizon but it will not be a return to normal. We are a long way off that yet.
The good news is that the number of cases continue to decline. Also there are some fresh measures being put in place to support the business community. With many businesses under pressure, this will be a welcome update.
Fresh suite of COVID-19 measures to assist the Business community
The comments below are based on announced policy. The legislative detail will need to be considered as it becomes available.
Highlights include a proposed tax loss carry-back scheme. A tax bill will be introduced later this month (April) to enable this.
Other measures include:
- changes to the tax loss continuity rules
- greater flexibility for taxpayers in respect of statutory tax deadlines
- measures to support commercial tenants and landlords, and
- further business consultancy support
These measures support the existing tax relief package published earlier. What we can tell you today:
Tax loss carry-back scheme
The proposed loss carry-back mechanism will enable a business entity to offset a loss in a particular tax year against a profit in a previous year, resulting in a refund of the tax paid in the previous profitable year.
This will give cash assistance to businesses that are, or anticipate, being in loss. 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. By the end of the month we expect to have provisional measures in place so our team can start to assess how this can be applied to those affected by COVID-19.
The permanent version of the scheme will be included in a later tax bill after public consultation has been carried out.
The IRD have stated that taxpayers “do not need to rush to re-estimate their provisional tax before 7th May. Part of the proposed law change would make it possible for them to re-estimate it after the date of the final installment. This will give them more time to work out any estimated loss for the 2020/21 income year.” In line with this, they have softened the rules around UOMI (interest charged on late paid tax) and penalties with non-payment of tax.
Upcoming Tax payments due
Tax notices are being sent out for 7th May now. If you are concerned about your cash-flow due to COVID-19 and you are worried about your upcoming taxes, IRD have some options available.
Please contact us to discuss so that we can assist with lodging an application with the IRD and discuss what may work for you.
These options may include:
- Tax Deferral – make no payments now, specify a future date when you believe you may be in a position to pay
- OR
- Tax Payment plan – advise us the amount that is affordable for you right now, and when you could start the plan
Please contact our tax team to discuss, tax@grahambrown.co.nz or follow the link for more information from the IRD:
https://www.ird.govt.nz/Updates/News-Folder/covid-19-novel-coronavirus—tax-matters
https://www.ird.govt.nz/Updates/News-Folder/covid19-business-changes
Greater flexibility for taxpayers in respect of statutory tax deadlines
In line with this, the IRD will be given greater discretionary power to provide an extension to due dates and time frames. This could include, for example, extending deadlines for filing tax returns and paying provisional and terminal tax. At this stage, the power will be time limited for a period of 18 months and will apply to businesses affected by COVID-19.
Measures to support commercial tenants and landlords
The Government is extending the current time frame that commercial landlords can cancel a lease from 10 to 30 working days. This is for both (i) the period the tenant is in arrears before the notice is given, and (ii) the period required to remedy the breach before the landlord can cancel the lease and the mortgagee can exercise their rights to sale or repossession. The changes allow for more time for breaches or defaults to be remedied.
The Government is also extending the time frames for lenders from 20 to 40 working days for mortgaged land and from 10 to 20 working days for mortgaged goods. This will apply to commercial mortgages and home loans.
Legislation on these changes will be introduced on 27th April and will apply retrospectively once the bill is passed. We will be following this closely, and will report back when we have more detail.
Loosening of the tax loss continuity rules
The tax loss continuity rules will be relaxed with the expectation that this will lead to an increase in physical/financial capital. The details of the changes will be included in a tax bill introduced in the second half of 2020. The new rules will apply for 2020/21 and later income years and will be modelled on the Australian rules with the introduction of a “same or similar business” test, meaning the business must continue in the same or a similar way it did before the ownership changed.
If you need any ongoing help, with the above or anything else right now, we are all online, and at the end of a phone.
Contact details should you need us:
RECEPTION: Emily: 07 885 1022, Ext. 740
DIRECTORS:
Debbie: Email. debbieg@grahambrown.co.nz, Mobile. 021 447 297
Brendon: Email. brendon@grahambrown.co.nz, Mobile. 027 270 3699
Phillip: Email. phillip@grahambrown.co.nz, Mobile. 027 249 6354
Jasmine: Email. jasminevdh@grahambrown.co.nz, Mobile. 027 254 3930
CEO: 07 885 1022, Ext. 735
Richard: Email. richardr@grahambrown.co.nz, Mobile. 027 276 8552
PUTARURU MANAGERS: 07 885 1022
Kimberley: Email. kimc@grahambrown.co.nz, Ext. 746
Linda: Email. lindaj@grahambrown.co.nz, Ext. 747
Julie G: Email. julieg@grahambrown.co.nz, Ext. 742
Timatanga: Email. timatanga@grahambrown.co.nz, Ext. 737
Shannon: Email. shannond@grahambrown.co.nz, Ext. 714
Ella: Email. ellak@grahambrown.co.nz, Ext. 713
Ashleigh: Email. ashleighh@grahambrown.co.nz, Ext. 741
Cameron: Email. camerons@grahambrown.co.nz, Ext. 728
TOKOROA MANAGERS: 07 886 7098
Arnel: Email. arnelr@grahambrown.co.nz, Ext. 220
Carol: Email. carolb@grahambrown.co.nz, Ext. 221
Richard W: Email. richardw@grahambrown.co.nz, Ext. 212
Kyla: Email. kylam@grahambrown.co.nz, Ext. 211
PAYROLL TEAM: 07 885 1022
Rina: Email. rinat@grahambrown.co.nz, Ext. 708
Christina: Email. christinam@grahambrown.co.nz, Ext 734
Julie Still is on leave over the lockdown period and Linda is looking after her clients.
From the Graham Brown & Co Team
Kia kaha, stay safe