Small- and medium-sized businesses (SMBs) in the local channel can look forward to a potential tax reprieve to help them deal with the ongoing pandemic, as the government pushes a package of tax reforms through all stages of Parliament.
Revenue Minister Stuart Nash said on 30 April that the government’s COVID-19 Response (Taxation and other Regulatory Urgent Measures) Bill, gives businesses more than $3 billion in tax refunds as they deal with the economic impact of the virus.
“This response delivers the single biggest government support package to businesses via the tax system in modern New Zealand history, and more is yet to come,” Nash said in a statement.
“As the Prime Minister and Finance Minister have said we are constantly monitoring the situation for business and adjusting our support as required. Just yesterday we indicated additional support will be coming for commercial leases.
“We will keep supporting business and jobs where we can to cushion the blow of the virus and ensure New Zealand is well positioned for recovery,” he added.
The legislative changes, being pushed through Parliament today, mean that cash could start flowing to businesses via the tax system as early as next week.
The omnibus bill, first flagged two weeks ago, deals specifically with tax and regulatory changes aimed at supporting businesses and others get through the economic shock caused by COVID.
The main measures outlined in the bill, will, among other things, introduce a tax loss carry-back regime to provide cash flow quickly to businesses, by allowing losses to be carried back one year.
Additionally, the changes in the bill will allow Inland Revenue (IR) to change due dates, timeframes or other procedural requirements for tax returns for taxpayers affected by COVID-19.
The latest legislation comes off the back of other tax changes involving a $2.8 billion support package for business, which came in just before the lockdown, and other measures outside of the tax system, including up to $12 billion in wage subsidies.
As reported by Reseller News in mid-April, a growing cohort of New Zealand's leading IT services companies have been making use of the government's wage subsidy scheme.
To qualify for the subsidy, companies need to show they have experienced a minimum 30 per cent decline in actual or predicted revenue over the period of a month, when compared with the same month last year, and that decline is related to Covid-19.
The subsidy aims to lessen the economic carnage of Covid-19 by keeping employees in place, attached to their employers and ready to recommence business once the lockdown ends.