A message from Mark and the team at Bizdom
To our extended network of clients, family and friends.
We will remember these times in March 2020 as the month when the world changed. We are experiencing unprecedented disruption and change all around us.
Our message to you is stay strong.
As a business owner and leader, our people look to us for signs of confidence and certainty. With health and income streams uncertain, this can be difficult. Decisive decision making and action will see confidence rise. We know the two most important things in business is cashflow and confidence.
Here at Bizdom we are ready, willing and available to help.
There are practical, tangible actions we can take to smooth cashflow. If you need a few ideas, please jump on the phone. If you are in need of support to create your business continuity plan, please reach out. We will be in contact next week with some content we are hoping to ship to you next week to help. Stay tuned.
In the meantime, stay safe, look after your peers and keep fit.
Below is a summary of yesterdays announcements from the government.
We are encouraged by the wage subsidy announced and even more thankful for the lack of red tape regarding the application process. If you think your business qualifies and you need a hand with the form, please reach out.
Government announces $12.1b support package in response to Coronavirus (COVID-19)
The Labour-led government has outlined a ‘once-in-a-lifetime’
support and economic stimulus package to address the unrivalled impacts of
COVID-19 on New Zealand.
This is an evolving situation that will undoubtedly change the world as we know it. The $12.1b package – representing 4.1% of this country’s GDP – aims to alleviate some of the pain New Zealand’s businesses and individuals are feeling.
Support for businesses
1) Wage subsidies
The package includes $5.1b to assist businesses or sectors that can demonstrate a decline (or forecasted decline) in monthly revenue of 30% when comparing any month between January and June 2020 to 2019.
Employers can access the subsidy by an online application to the Ministry of Social Development (MSD). Payments will be $585.80 per week for a full-time employee (20hrs or more) or $350.00 per week for a part-time employee (less than 20hrs) paid as a lump sum for a maximum of 12 weeks. The maximum any employer can receive is $150,000.
To qualify, employers will be required to declare they
intend to employ affected employees at a minimum of 80% of their usual pay for
the subsidy period and take active steps to mitigate the impact of COVID-19.
2) Leave and self-isolation support
This payment will be available to employees and self-employed in self-isolation, or otherwise unable to work due to COVID-19. Payments will be $585.80 per week for full time and $350 per week for part-time workers and does not affect any paid leave entitlements. The payments may be backdated to 17 March 2020. Again, employers will be required to complete an online application.
3) Tax changes
The government has announced measures aimed at improving cashflow and stimulating investment:
- Depreciation on industrial and commercial buildings (including motels and hotels) will be re-introduced from the start of the 2020-21 tax year. The diminishing value rate will be 2% – a separate straight-line rate will be announced later.
- Low-value assets can be deducted immediately and are not required to be deducted over time under the depreciation rules. The current limit of $500 to immediately write off Low-value assets will be temporarily increased to $5000 from the start of the 2020-21 income year. The threshold will eventually be reduced to $1000 from the 2021-22 income year.
- The provisional tax threshold for the 2020-21 income year will rise to $5000, up from $2500.
- For the next two years, use of money interest (UOMI) on late payment of tax will be waived for businesses affected by the COVID-19 outbreak. The relief will apply to interest on all tax payments (including provisional, PAYE, and GST) due on or after 14 February 2020. Affected taxpayers will be required to demonstrate their inability to pay tax is a result of COVID-19. Details on how this will operate will be released in a subsequent announcement.
While these announcements are a good start, there are
further obvious opportunities to make a more meaningful impact to small-medium
businesses and we hope that these are addressed in future announcements, such
as the Budget, due 14 May. Cash flow will be the immediate concern for many
Support for individuals
The Government also announced increases to some social entitlements, including a permanent increase of $25 a week for all main benefits (effective 1 April 2020) and an increase to the Winter Energy Payment. The increases will be applied universally to those eligible.
Changes to the In-Work Tax Credit (ITC) will apply from 1 July 2020, removing the existing requirement to work at least 20 hours a week – for sole parents – or 30 hours a week – for couples.
The past few months have seen devastating natural disasters in New Zealand and Australia, now followed by the global outbreak of COVID-19. Governments, businesses, and communities all around the world are facing unprecedented challenges. The importance of maintaining stability, minimising disruption, and ensuring cash keeps flowing effectively through economies cannot be overlooked.
We are committed to leading the way in these difficult times so please do not hesitate to contact us to discuss how we may be able to help or simply to have a chat about how you are feeling.
Mark and the team at Bizdom