Things are moving fast in this new COVID-19 world. We want to do our bit and help you stay informed, so please bookmark this page where we will be bringing together information relevant to the New Zealand property industry as it happens.
The information in this blog post is current as at 1:30pm on 15 May 2020. Please make sure you stay informed as this event continues to unfold.
[14 May] The Budget has been announced. It contains a number of major spending initiatives includes $4 billion for business ($3 billion of which will cover an extension to the wage subsidy scheme). You can read the Budget here.
[15 April] The Government has announced a new $3.1 billion tax relief package for small and medium-sized businesses. Under it, businesses will be able to offset a loss in a particular tax year against a profit in a previous year, and receive a “cash refund” of the tax paid in that previous profitable year. The first wave of tax relief payments are expected to start flowing by late May.
What the New Zealand aid packages mean for your business
The New Zealand government’s new NZ$12.1 billion economic package includes:
- NZ$5.1 billion in wage subsidies for affected businesses. This measure has been designed to help businesses retain their employees (even if the employee is unable to work any hours). It’s also available to sole traders and the self-employed. Eligibility is based on a projected 30% decline in revenue, as a result of this pandemic.Applications can be madehere, and will be open until New Zealand moves down from COVID-19 Alert Level 4.Payment ratesare:
- for full-time employees, who work 20 hours or more per week: $585.80 (gross) per week
- for part-time employees, who work less than 20 hours per week: $350 (gross) per week
and those businesses who make a successful application will receive one lump sum, covering 12 weeks of pay per employee. The amount required to be passed on to each employee depends on whether their normal rate is above or below the subsidy rate. You can read more about that here.
- NZ$126 million in leave and self-isolation support. All employees, the self-employed and contractors are eligible to apply for the leave payment scheme—so if anyone in your agency has to take time off (because they are sick or caring for dependents) due to the coronavirus, you should explore this option.
- NZ$2.8 billion in business tax changes to free up cash flow, which is made up of:
- a provisional tax threshold lift.The government will increase the threshold for having to pay provisional tax from NZ$2,500 to NZ$5,000, allowing more small taxpayers to delay paying their taxes until 7 February 2022.
- the reinstatement of commercial building depreciation. There is no application process—the increased dedication will become available as part of normal tax filing processes. A Bill will be introduced containing this measure shortly.
- writing off interest on the late payment of tax (including provisional, PAYE and GST) due on or after 14 February 2020.
- immediate deductions for low value assets, reducing compliance costs for business and stimulating business purchases. Businesses can already claim an immediate deduction for costs up to $500, however this threshold will be lifted to NZ$5,000 in the 2020-21 financial year.
In addition to that package, The Government, retail banks and the Reserve Bank will implement a NZ$6.25 billion Business Finance Guarantee Scheme for small and medium-sized businesses.
The specific details are still being hashed out, but here’s what we know so far:
- the Reserve Bank will reduce banks ‘core funding ratios’ from 75 percent to 50 percent, further helping banks to make credit available.
- this scheme will apply to businesses with an annual turnover turnover of NZ$250,000 to NZ$80 million.
- there will be a $500,000 limit per loan, and the loans will be for a maximum of three years at competitive, transparent rates.
- the Government will carry 80% of the credit risk. The banks will carry the other 20%.
Please note that the above only outlines the current relief available for businesses. You, your family and friends may also be entitled to personal and/or household assistance, and we encourage you to check your government’s website.