COVID-19 cash flow lifeline for small businesses
On 30 April 2020, the Minister of Revenue, the Hon Stuart Nash, announced that a significant package of tax reform will be pushed through all stages in Parliament on 30 April 2020 to throw a cash flow lifeline to small and medium-sized enterprises (SMEs). The Minister said that the COVID-19 Response (Taxation and other Regulatory Urgent Measures) Bill will give businesses more than $3 billion in tax refunds as they deal with the economic impact of the virus.
The omnibus Bill deals with tax and regulatory changes to support businesses and others to get through the economic shock caused by COVID-19. The main measures will:
- introduce a tax loss carry-back regime to provide cash flow quickly to businesses by allowing losses to be carried back one year
- allow Inland Revenue to change due dates, timeframes or other procedural requirements for tax returns for taxpayers affected by COVID-19
- ensure the treatment of benefits and pensions paid to New Zealanders stranded overseas is consistent with the treatment of equivalent payments in New Zealand
- bring forward the commencement date of certain protections relating to high-cost consumer credit contracts
- prevent farmers and other working with animals having to call in vets to undertake minor surgical procedures during the lockdown, and
- extend the timeframe for certain Crown entities to provide planning documents to responsible or shareholding Ministers.
Other tax changes just before lockdown involved a $2.8 billion support package for business. These changes were enacted in the COVID-19 Response(Taxation and Social Assistance Urgent Measures) Act 2020 and included:
- restoring depreciation deductions for non-residential buildings
- increasing the provisional tax threshold from $2,500 to $5,000
- allowing immediate low-value asset write-offs
- bringing forward broader R&D refundability
- allowing use-of-money interest to be waived
- allowing greater information sharing, and
- allowing more access to the in-work tax credit.
The Minister also advised that SMEs can call on government support to pay for professional advice to plan for survival and recovery from the economic shock caused by COVID-19. A $25m business consultancy fund will pay for tailored specialist support such as business continuity planning, finance and cash flow management, HR and staffing issues.
Further information about the Bill will be available after 2 pm at http://taxpolicy.ird.govt.nz/.
Source document: Beehive NZ
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