COVID-19 response for small business cashflow scheme amendments
The COVID-19 Response (Further Management Measures Legislation Act 2020 (No 13 of 2020) received the Royal assent on 15 May 2020.
Introduced on 5 May 2020, the COVID-19 Response (Further Management Measures) Legislation Bill (244-1) was referred to the Epidemic Response Committee and was reported back by the Committee on 12 May 2020.
On 12 May 2020, the Government released Supplementary Order Paper (SOP) No 488 to the Bill. The SOP included enabling amendments to ensure that the Small Business Cashflow (Loan) Scheme (SBCS) launched by the Government on 12 May 2020 worked as intended. The SOP also contained some minor technical amendments to the loss carry-back rules. Amendments to the Tax Administration Act 1994 and the Income Tax Act 2007 by the enactment of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act (No 10 of 2020) on 30 April 2020 authorised the Commissioner of Inland Revenue on behalf of the Crown to lend money under the SBCS.
On 13 May 2020, the Bill was divided by the committee of the whole House into the COVID-19 Response (Further Management Measures) Legislation Bill and the COVID-19 Response (Requirements for Entities – Modifications and Exemptions) Bill. Both Bills were passed under urgency on 13 May 2020.
The COVID-19 Response (Further Management Measures) Legislation Act 2020 contains amendments to Acts as set out by ministerial portfolio in Schedules 1 to 19.
Schedule 18, Part 1 contains amendments to the Income Tax Act 2007 and inserts minor cross-reference corrections and corrections to faults of expression in the temporary loss carry-back regime in s IZ 8. Part 1 also contains amendments to s MB 13 and the definitions of “exempt interest” and “small business cashflow scheme” in s YA 1. Part 2 of sch 18 contains amendments to the Tax Administration Act 1994 to ensure the SBCS works as intended. The amendments are to ss 3(1), 7AA,120KBB, 157(10) and sch 7.
Schedule 18, pt 1, cl 2 and sch 18 pt 2, cl 8 came into force on 15 April 2020. Schedule 18, pt 1, cls 3 and 4, and sch 18, pt 2, clauses, 6, 7, 9, and 10 came into force on 30 April 2020.
COVID-19 response for companies and other business entities
The COVID-19 Response (Requirements For Entities—Modifications and Exemptions) Act 2020 (No 14 of 2020) was passed on 13 May 2020 under urgency and received Royal Assent on 15 May 2020.
Previously part of the omnibus COVID-19 Response (Further Management Measures) Legislation Bill before being split off, the Act contains significant changes to enable businesses and local government to more effectively manage the immediate impacts of the response to COVID-19 pandemic.
The changes to insolvency and corporate law are designed to increase the prospects of businesses surviving the COVID-19 response. These amendments include—
- adding a “business debt hibernation” regime to allow companies and other business entities affected by the pandemic to place existing debts into hibernation for up to 7 months to enter into agreements with their creditors in relation to existing debt;
- adding a temporary safe harbour from ss 135 and 136 of the Companies Act 1993 to provide relief to company directors facing insolvency because of COVID-19;
- extending statutory deadlines;
- enabling Registrars to issue exemption notices in relation to compliance with statutory obligations (such as calling or holding meetings and auditing, assurance, or financial reporting or review requirements); and
- enabling the use of electronic means (including electronic voting and the use of electronic signatures) when an entity’s constitution or rules do not permit this.
The provisions apply to building societies, charitable trust boards, companies, credit unions, firms, friendly societies, incorporated societies, industrial and provident societies, limited partnerships, and certain Māori governance entities.
This Act came into force on 16 May 2020.
Source document: New Zealand Legislation
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