Tax relief and income assistance are available to people affected by the downturn in business due to the COVID-19. IRD has a range of ways to help depending on your circumstances. As your tax agent, talk to us and see how we able to help.
Below is a quick summary on the list of tax relief provided by IRD so far;
Certificate of exemption
For contractors who receive payment after withholding tax deduction, this tax relief could help free up more cash for you in the short term while we under lockdown.
New Zealand tax residents can apply for a certificate of exemption if they:
· are in business
· have a good record of filing tax returns and paying tax
· get schedular payments from a payer other than a labour hire business under a labour hire arrangement.
If you’re a New Zealand tax resident and you get schedular payments from a labour hire business under a labour hire arrangement, you’ll need to apply for a 0% special tax rate instead.
If you’re a non-resident contractor and you get schedular payments from a labour hire business under a labour hire arrangement, you can apply for a certificate of exemption.
Depreciation and adjusted tax value on buildings
From the 2020/2021 year, commercial and industrial buildings will be able to be depreciated for tax. And the small asset depreciation threshold has also increased from $500 to $1,000 — and to $5,000 for the 2020/21 tax year.
Difficulty paying tax
If you’re having trouble making tax payments by the due date. Potentially you have the two options below. However we are aware your situation might be unique, please talk to us before you make those decisions.
- setting up an instalment arrangement to repay an agreed amount over time.
- a write off of an agreed amount if we decide that full payment will cause you serious hardship (if you’re an individual).
KiwiSaver
You may be able to reduce or suspend your KiwiSaver contributions. it might not make any huge difference, but every bit helps.
Leave subsidies
The Ministry of Social Development may be able to help subsidise self-isolation leave for businesses, contractors, and self-employed workers. refer to this post for more details.
Provisional tax
Current and proposed relief options for payers of provisional tax. increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021. If your taxable income lay within the threshold, you will not need to made provisional tax payment during the financial year.
Student loans
Assistance for student loan hardship and a delayed return to New Zealand because of COVID-19.
Support for Families
Tax relief information for child support, paid parental leave and Working for Families.
The Government has recently passed legislation to remove the hours test eligibility requirement for the in-work tax credit (IWTC). This makes the IWTC available to all families who are not receiving a main benefit and who have some level of employment income each week. We anticipate that this will help around 19,000 families currently experiencing difficulty due to reduced or variable hours because of COVID-19.
This is a permanent change taking effect from 1 July 2020.
Tailored tax codesTax relief if you’re receiving salary or wages and have a loss to carry forward. Tailored tax codes help you pay the right amount of tax if your circumstances mean you often have a large tax bill or refund.
You can get a tailored tax code if your income comes from:
- salary or wage
- New Zealand Superannuation
- Veteran’s Pension
- a second job or other income over and above your main job
- a benefit or ACC while you are working at the same time
- an overseas pension that is taxable in New Zealand
- business losses from previous years when you now earn salary or wages.
A tailored tax code lasts for up to one tax year. If you get a tailored tax code during the tax year it will start on the date we approve it and end on 31 March.
Use-of-money interest
You may be eligible for a UOMI write-off if you or your business:
· has been significantly affected by COVID-19
· has had income or revenue reduced by at least 30% compared to the same month 12 months earlier
· have explored other options for financial support, such as talking with your bank about additional finance or re-negotiating other loans/overdrafts.
UOMI could be remitted for a maximum of two years past the date of enactment, but the actual length will depend on the circumstances of each business or individual.
Wage subsidies
The Ministry of Social Development may be able to help subsidise wages affected by COVID-19. The latest update today by removing the 80% requirement on the wage payment. refer to this post for more details.
If you need to discuss any of the above further, we are more than happy to help. Drop me an email.
Kind regards
Philip Zhao
ITO Accounting
26b Williamson Ave, Ponsonby
PO Box 518, Silverdale, Auckland
D: 09 5570340 | Skype: philipzhao110
philip@itoaccounting.co.nz | itoaccounting.co.nz
