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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. 

If the COVID-19 outbreak has had an impact on your business and you are facing financial difficulties and require our assistance or advice, please contact Giles now on 0800 758 766.

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Inland Revenue has made some updates that we thought you might like to know about, these Tax Tips have been outlined below:

Interest rates

Effective 29 August 2019, IRD has changed the use of money interest rates as follows:

• An increase for taxpayer’s paying rate of interest on the unpaid tax from 8.22% to 8.35% per annum, and
• A decrease of the Commissioner’s paying rate of interest on the overpaid tax from 1.02% to 0.81% per annum.

IRD Payment Changes

From 1 March 2020, IRD will no longer accept cheques if customers have alternative payment options available (this includes any post-dated cheques after 1 March 2020). Suggested ways to pay are as follows:

• myIR: You can pay by direct debit and make debit card and credit card payments securely through myIR online services.
• Online banking: You may be able to make payments using online banking.
• Credit or debit card via IRD website: Use your credit or debit card to make online payments through the IRD website. Visit ird.govt.nz/pay.
• In person at Westpac: Pay by EFTPOS or cash at a Westpac branch or Smart ATM.
• Money transfer: If you are overseas you can pay us using a money transfer service. Search for “make a payment” on the IRD website for more information.

GST Changes

New GST rules on low-value goods being imported will come into effect from 1 December 2019. Non-resident suppliers (including electronic marketplaces) need to register for and charge GST if the turnover from those supplies exceeds $60,000 in a 12-month period and if they are:

• resupplying any goods that are supplied by a non-resident,
• are outside of NZ at the time of supply or are delivered to a place in NZ by the supplier and has entry value of $1,000 or less.

The rules are not intended to apply to supplies made to GST registered businesses, or to supplies valued over $1,000, but to reduce compliance costs and subject to certain thresholds. The non-resident supplier can be permitted to also charge GST on those supplies.

The $1,000 threshold applies per item instead of per invoice/transaction. High-value items will continue to be taxed at the border as they come into New Zealand except for fine metal, alcohol and tobacco products.

Resident Withholding Tax (RWT) Changes

From April 2020, the new non-declaration rate for RWT on interest income will be 45%. If you will be receiving interest income we recommend your correct tax rate is provided to your investment provider or organisation.

If you have any queries about the above rate changes, please contact Sheral Reddy or your GECA advisor.

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