The Covid-19 pandemic is causing governments around the world to rapidly respond in order to provide economic relief to businesses and individuals.
Our Government has to date, introduced a range of stimulus packages to assist businesses through the crisis, such as, the Wage Subsidy Scheme, the Small Business Cashflow Loan Scheme (SBCS) and a series of tax relief measures for small businesses and individuals.
Tax relief measures play an important role as part of the broad-based initiatives our Government is undertaking to counteract the economic impact of the pandemic. These measures are available broadly to taxpayers meeting specified criteria and are designed to generate cash quickly.
Our team at Gilligan Sheppard is here to help you to understand how these tax changes could impact your business and help your business to navigate through the uncertain times tax efficiently.
Some of the key tax changes to support businesses include:
Temporary loss carry-back scheme
Businesses expecting to make a loss in either the 2020 or the 2021 tax year would be able to estimate the loss and use it to offset profits in the past year, effectively carrying the loss back one year. All or some of the tax already paid in the past year may be refunded.
Temporary extension of statutory tax deadlines
Greater discretionary power given to Inland Revenue in respect of statutory tax deadlines, filing tax returns and paying provisional and terminal tax.
Loosening of the tax loss continuity rules
Changes have been announced to loosen the rules that allow for carry forward of tax losses, by introducing a “same or similar” business test from the 2020/2021 tax year. These new rules are expected to lead to an increase in financial capital.
Provisional tax matters
Effective from the 2020/2021 tax year, provisional tax threshold has increased from NZ$2,500 to NZ$5,000, allowing small taxpayers to delay paying taxes. This permanent increase in threshold may mean that some taxpayers no longer have to pay provisional tax.
Other options are also available to assist you to meet your provisional tax obligations.
Remission of interest and penalties on late paid tax
The Commissioner may remit interest in relation to outstanding tax owed by a taxpayer who has been adversely affected by the pandemic. The interest, however, must relate to tax due on or after 14 February 2020 and you must inform the Commissioner to remit the interest as soon as you practically can.
During the uncertain times, other tax-related matters that we can help include:
- Tax residency assessment and tax planning.
- Employees allowance and Fringe Benefit Tax (FBT) assistance.
- Research and development tax credit assessment and application.