News & Events
On Friday, 1 May 2020, the Government announced changes to the operation of the Business Finance Guarantee Scheme (BFGS). As readers might recall, the BFGS was introduced as part of its initial economic approach to the COVID-19 response. The specific change announced was that it would no longer be a Government requirement that a bank which was making a loan of more than $50,000 under the scheme would have to take security against the debtor’s default by way of a General Security Agreement (security over all of the assets of a debtor in the event of a loan default) – although a bank is still entitled to ask for security if it wishes to do so.
Property owners and builders alike will have welcomed the Government announcement this week that the country will move to Alert Level 3 on 28 April, meaning that most on-site construction work can begin again from that date. The initial joy (and relief) of this news, however, will be quickly tempered by the realisation that it is not going to be business as usual for some time yet.
The Government has announced that most, but not all, businesses can start to open when we shift to Alert Level 3. The businesses that do open must take health measures to keep their workers safe and workers must work from home if they can. Retail and hospitality businesses can only open for delivery and contactless pre-ordered pick up. Businesses cannot offer services which involve face to face contact or sustained close contact (e.g. hair-dressing).
On Friday, 3 April 2020, the Government announced significant insolvency law changes in response to the likely economic impact of COVID-19 and the current lockdown (https://www.beehive.govt.nz/release/further-measures-support-businesses ). The Government will amend the Companies Act 1993 to provide additional comfort to directors of companies during the next six months, and will also introduce “Covid-19 Business Debt Hibernation” as an option to help businesses survive the deterioration in the business environment (https://www.companiesoffice.govt.nz/about-us/what-we-do/insolvency-relief-for-businesses-impacted-by-covid-19/ ). Parliament will have to pass legislation to give effect to the proposed changes, although the proposed legislation has not been made public.
If, as an employer I am receiving the wage subsidy on behalf of an employee, do I have to pay GST on the subsidy?
No – it will be treated as exempt from GST.
As an employer, do I have to pay tax on the wage subsidy I receive for an employee?
No, you don’t have to pay tax on a wage subsidy as it’s classified as excluded income.
The latest business restrictions announced by the Government will impact a number of commercial contracts and leasing arrangements. We have been receiving a number of enquiries regarding the impact of these events on commercial contracts and leases and, in particular: Whether contractual rights are suspended under force majeure clauses? Whether there is any rent relief available under commercial leases? We set out below a general overview on each of these topics but it is important to note that each contract or lease needs to be carefully reviewed in order to properly assess your position.
With the nation now in lock-down phase as a result of the Covid-19 crisis, many employers are considering how they can look after their businesses as well as their employees. For some, government subsidies will allow a degree of continuity in staffing whilst others will need to make changes that will adversely affect their employees. We touch upon some key topics below.
New Zealand government has offered some tax relief due to the COVID-19 (novel coronavirus). In regards to provisional tax, you may be able to make an estimate or re-estimate your provisional tax using the estimation option of calculating provisional tax and refunds will be arranged by Inland Revenue if the tax is overpaid. Provisional Tax threshold will be increased from $2,500 to $5,000 from the 2020/21 tax year.
The 2020 Workplace Wellness Business Forum is to be held on 13 May 2020 at The Lula Inn, Viaduct, Auckland. The Engine & Business Strategy NZ with main sponsor Scottish Pacific Business Finance have brought together experts Tony Alexander (Economist), Charlotte Lockhart, CEO 4 Day Week Global & John Shackleton (Resilience & Mindfulness Coach, Trainer & Speaker) on this topic. As well as practical information for your business you will walk away with 20+ new business connections.
IRD have just advised that this year they are specifically targeting the Hospitality industry and will be contacting clients in this industry and thanking them for keeping their books in order and also encouraging owners to put their records right if they’ve left anything off their past tax returns.