Over the past few months, Covid 19 has brought a lot of uncertainty to our lives, and the government have released multiple policies and support packages to help us recover financially, both personally and commercially. However, with so many different support packages released at different times, it is hard to keep on top of what they all are and how they can help you.
The wage subsidy scheme was the main package released by the government to help businesses retain their employees across lockdown and the recovery phase. This was then extended until September and is no longer available.
Small Business cash flow loan, the application period has recently been extended until the 31 December 2023. This is for businesses who have 50 employees or less and are viable on an ongoing basis (can pay their debts on time in the next 18 months). The loan is for $10K plus $1,800 per full time employee, up to a max of $100,000. Sole traders can receive up to $11,800. The interest rate will be 3% and there will be no interest charged if the loan is paid back within 24 months. The government has also eased restrictions on what the loan can be used for, giving people more freedom.
Business Finance Guarantee scheme loans mean that the government will be a guarantor for your business to allow the bank to provide term loans and revolving credit facilities in situations where normal lending requirements would not be met. There are multiple caveats in place, but more information can be found on the Treasury.govt.nz website.
Consultancy support helps businesses understand and manage their Covid19 impacts and plan for recovery. Small businesses may qualify for vouchers to help pay for services such as training workshops, courses and coaching that build the management capabilities of their owners, operators and key managers. Management Capability Development Vouchers are only available through the Regional Business Partner Network (RBP) Growth Advisors. Vouchers may be provided to a business where the Growth Advisors have identified a need for management training as part of an action plan to support the business owner to grow and innovate their business. For more information on the Management Capability Development Voucher Fund or to find your local Growth Advisor go to www.regionalbusinesspartners.co.nz
Depreciation Tax Deductions mean eligible businesses can claim depreciation on commercial and industrial buildings in the 2021 tax year.
The low value assets threshold has also been lifted meaning you can now claim the cost of your business assets purchased after 16 March 2020 and under the value of $5000 in the year you purchased instead of spreading across the lifetime of the asset. This will only apply until 16 March 2021 where the threshold will reduce to $1,000.
Remission of Penalties and Interest on late tax repayments, as long as the payment was due after 14 February and your inability to make the payment on time is due to Covid 19 challenges. The outstanding tax must be paid as soon as practicable.
Temporary tax loss carry back allows businesses who have made a loss, or are expecting to in the 2020 and 2021 tax year, to carry back that loss into the preceding income year. To be eligible you need to have made a profit the year before the loss.
Business Debt Hibernation allows businesses who have been affected by Covid 19 to place their debt on hold for up to 7 months to help them start trading normally again, rather than starting the process of liquidation.
Temporary changes to Commercial Property law aimed at giving relief to businesses struggling to pay rent or commercial landlords’ ability to make mortgage repayments include: 30 days’ notice to cancel a lease, 40 working days’ notice before lenders can take possession of a property and the obligation to negotiate payment options.
R&D Tax incentive means that qualifying businesses can claim tax credit on their R&D costs of up to 15%, helping with cash flow and incentivising continued investment into research and design.
Other Changes: We have seen an amendment to the Tax Administration Act which effectively allows the IRD to modify tax timeframes and procedural requirements for businesses impacted by Covid 19.
Provisional Tax Threshold has increased to $5,000 from $2,500. This means if a taxpayer’s residual income tax is under $5,000 they are not required to pay provisional tax. This measure is a permanent change moving forward.
If you would like any more information on any of the support initiatives, please get in touch.
