Bulletin #3 – Financial Relief Available to Business

Bulletin #3 Financial relief available to business.

• The government is offering to 80% guarantee loans for New Zealand-based businesses with an annual turnover of $250,000 to $80 million (that have been impacted by Covid-19).
• Eligible business can apply for a loan of up to $500,000.
• The loans will be for up to three years at special variable interest rates from as low as 4.0% p.a., dependent on your individual circumstances. Funds are limited. Businesses impacted by Covid-19 can apply for a loan under the scheme from Monday 6 April with loans drawn down on or before 30 September 2020, or until the scheme funds have been allocated.
• The purpose of the loan must be primarily to support operating expenses while a business deals with the disruption caused by Covid-19.
• The major banks are being very proactive on this – so please don’t hesitate to reach out for more details.

• There is an ability to apply for a deferral of customs charges (import GST and duty) outside of the deferred payment scheme.  There is no specific threshold to permit deferment, other than the recognition from Customs that they will work with importers to reach a mutual agreement to allow continued import of products into New Zealand. Reach out to our team if you want assistance organising this.

• Many taxpayers may find it difficult to complete Income Tax Returns which were due to be filed before 31 March 2020.
• It remains important to furnish the returns as soon as possible. However, any late filing penalties will be waived in these circumstances.

• If you haven’t applied for the wage subsidy yet, let us know if you need help with this. Here’s some more on this (in case you weren’t already clear):
  • The lump sum is excluded income
  • No GST applies to the lump sum receipt
  • When the payment is passed on to employees (either in one lump sum or spaced out so that it is paid as part of the employee’s usual wage payment cycle) no deduction can be claimed
  • All deductions (such as PAYE, KiwiSaver & Child Support) must be deducted as usual.
• While it is time to consider whether or not you can afford to keep staff on, we encourage you to consider if you can afford to lose staff that you will rely on coming out of this. We encourage an honest an open discussion regarding dealing with issues that continued employment gives rise. That might involve reduced pay for the lockdown, or taking up unpaid or annual leave. Legal advice should be sought in any talks involving changes to employment contracts and/or redundancies.
• As you are likely aware, and noted this is not ideal timing – as from 1 April 2020, the minimum hourly rate for an adult worker (i.e. someone who is neither a trainee nor a starting-out worker) is $18.90 per hour.

• There is a clear tension that exists here, with tenants needing rental reductions and landlords looking to preserve their source of income. The best advice we can give here is to take a pragmatic approach and be reasonable to preserve the relationship both ways.

• Now is an opportune time to put an arrangement in place, or do a deal on tax arrears with a view to getting some relief. IRD have reached out and expressed that they are willing to assist.
• The new minimum repayment rates are: Weekly $20 (previously $50). – Fortnightly $40 (previously $100) – Monthly $80 (previously $200). For those of you with large outstanding debts, the payments will clearly need to be higher, but this does provide some guidance as to the level of flexibility now being afforded by the IRD.

• https://cleaverpartners.co.nz/financial-news-bulletin-2/
• https://cleaverpartners.co.nz/strategies-for-adapting-to-challenges-of-covid-19/