The Government has announced further tax relief and measures to assist small and medium sized businesses in the fight to weather the COVID-19 storm. Here is a snapshot of the changes that were announced. Over the coming weeks the Government will work with IRD and other parties to draft legislation and bring the temporary changes into law.
As the Government and IRD rolls out the draft legislation the Villa team will ensure that we are well versed on the guidelines as they’re made available.
Tax loss carry-back scheme
At an estimated total cost of $3.1billion, this was the largest of the announcements. A tax loss carry-back is rolling a loss from one financial year back to a previous financial year when the business was profitable (and paid tax). A portion of the tax already paid for the year the business was in profit could be refunded to the business in cash, as they have essentially rolled the current year’s loss back to be counted in the previous financial year. Without this temporary change a business would need to carry their loss forward to a financial year when they make a profit.
The change is expected to be introduced in a bill week commencing 27 April and Villa will keep you updated on the details as they come to hand.
Tax payment deadline flexibility
IRD is to be given more flexibility to alter deadlines for taxpayers impacted by COVID-19. For many businesses this may mean extending deadlines for filing tax returns and for paying provisional and terminal tax. The IRD has advised taxpayers not to rush to re-estimate their provisional tax payments for FY20 before the current payment deadline of 7 May as part of the proposed law change is to allow for re-estimation after the final provisional tax installment.
Business consultancy support
$25million has been earmarked to help with business consultancy and advisory support over the next year. The Regional Business Partner Network will increase their existing services so more businesses impacted by COVID-19 can access vital support. Villa offers Business Continuity Planning sessions that could be free when funded by the Regional Business Partner Network, get in touch to find out more.
The finer details on the updated Government support and temporary legislation changes will come through over the coming weeks. Villa will keep you updated via email and social media wherever we can.
If you have questions on the latest announcements please get in touch, we are always happy to help.