COVID-19 Proposed Tax Changes
This post is by Sheral Reddy, an chartered accountant and tax specialist at GECA Chartered Accountants. Call Sheral now for tax advice on your circumstances.
As you may all be aware, the continuing spread of COVID-19 which has been classified as a pandemic has seen the government taking action and making various announcements this week.
The Finance Minister announced on 17 March 2020 a $12.1 billion support for New Zealanders and businesses which includes a business package containing proposed tax measures to support businesses being affected by this outbreak.
Proposed Tax Changes:
The proposed tax-related measures include:
- Reintroduction of depreciation on buildings for commercial and industrial buildings to encourage investment.
- Increasing the provisional tax threshold, from $2,500 to $5,000 for the 2020/2021 financial year only, to relieve small business owners.
- Cancellation of use of money interest (UOMI) on underpayment of tax for taxpayers who are unable to pay the tax on time due to the outbreak.
- Sharing of information between Inland Revenue and government departments to help these agencies to assist with the outbreak.
- Allowing deductions for low-value assets by increasing the threshold, for low-value asset purchases, from $500 to $5,000 for the 2020/2021 financial year. Also, having a threshold of $1,000 going forward from 2021/2022 financial year.
The proposed tax changes will be included in the Bill to be introduced. For further details on the proposals, please refer to the link below:
https://www.beehive.govt.nz/release/121-billion-support-new-zealanders-and-business
Wage Subsidy Scheme
The announcement also includes support for workers and businesses who have to be on leave or self-isolate to prevent the spread of the COVID-19. This will be part of the wage subsidy scheme available for all employers that are significantly affected by COVID-19.
The payments will be $585.80 per week for full-time workers (20 hours or more) and $350 per week for part-time (less than 20 hours) workers. These payments will cover a period of 12 weeks and a maximum amount any one employer can receive is $150K.
The wage subsidies will be especially beneficial for businesses in the Forestry and Tourism industry who have been impacted the most due to the outbreak.
There are certain eligibility criteria for the wage subsidy. Businesses will be required to take active steps to mitigate the impact of COVID-19 and have a signed declaration form to that effect.
