The government has spoken to the major banks in NZ and asked them to provide businesses with temporary interest only periods or mortgage holidays. Businesses are encouraged to contact their bank where they have loans and discuss this with them.
For rent relief all businesses are encouraged to contact their landlord and discuss this individually. Some businesses are asking for a rent holiday for the period of the shutdown where they are unable to access their business premises. However this will depend on the lease and also their ability to negotiate with the landlord. The Auckland District Law Society lease template, which is in common usage, has contained such a clause (clause 27.5 – denial of access clauses) since 2012. We recommend that legal advice is sought in this area.
From a tax point of view the following has been announced which is aimed more at smaller businesses:
- An increase in the small asset depreciation threshold from $500 to $1,000 – and to $5,000 for the 2020/21 tax year.
- The introduction of depreciation for commercial and industrial buildings. The depreciation rate is 2% declining value or 1.5% straight line.
- Removal of the hours test from the In-Work Tax Credit from 1 July 2020.
- An increase in the provisional tax threshold from $2,500 to $5,000.
- Bringing forward the application date for the broader refundability rules for R&D tax credits.
The Tax administration measures include:
- Enabling Inland Revenue to remit use of money interest for taxpayers affected by COVID-19; and
- Allowing Inland Revenue to share information with other Government agencies to assist those agencies in their response to COVID-19.
Use of money interest remission
The amendment allows the Inland Revenue to remit interest on a late payment if the taxpayer’s ability to make the payment on time was significantly adversely affected by the COVID-19 outbreak.
This power to remit interest only applies to interest that has accrued on tax payments due on or after 14 February 2020 (so it has limited retrospectivity). The Commissioner must be satisfied that the taxpayer has asked for the relief as soon as practicable and made the payment of tax as soon as practicable. Interest will not be remitted until the core tax debt has been paid.
How Can We Help?
To assist you with accessing this scheme, we have developed a Checklist to help you understand the application requirements and the undertakings required.