Prime Minister Ardern announced that New Zealand has stopped the “widespread, undetected community transmission” of Covid-19 in the country. The government slowly lifted tough lockdown restrictions starting April 27. When the country imposed its so-called Level 4 lockdown four weeks ago, almost all New Zealand businesses stopped operating.
To soften the economic effect on small businesses, New Zealand’s Parliament passed COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020. The response relief includes amendments that:
- Reinstate depreciation deductions for commercial and industrial buildings.
- Increase the threshold for first-year low-value asset write offs.
- Increase the threshold for paying provisional tax.
- Bring forward broader R&D refundability rules.
- Increase Inland Revenue’s powers to remit interest on late paid tax.
Tax Returns
NZ’s Inland Revenue will also treat certain late 2018–19 income tax returns as having been filed on time. This is applicable only for certain taxpayers. And this also applies if tax returns are filed before 31 May 2020. The Inland Revenue will also waive any late filing penalties. This effectively extends the filing deadline for qualifying 2018–19 income tax returns.
$25 Mil Funding for RBPN
The NZ government also increased business support by creating a $25 million in funding for the Regional Business Partner Network (RBPN). Approximately $4 million will be used to bolster call centres to ensure more people can access the service quickly. About $20 million will be invested in the direct business consultancy services. This is to ensure that a wider range of businesses can get the support they need.
Leave Support Scheme
In addition to these, the NZ government also made changes to COVID-19 essential workers leave support scheme. The NZ government also made available support for employers who meet the eligibility criteria to pay workers when they need to stay away from work and can’t work from home. As further support, the government is working to put in place some temporary law changes to support commercial tenants and landlords impacted by COVID-19. These changes aim to make it easier to retain lease arrangements and get back to business as usual.
The NZ government has lowered the lockdown level to 3 and will allow several businesses to return. The government published guidance on workplace activities at different alert levels here.
With the relief package, the government aims to lessen and limit the effects of the pandemic to New Zealand’s SMEs. However, experts warn that the relief package cannot save businesses. Thus, business experts suggest that SMEs should focus on fundamentals. Among these are attending to contracts and agreements, streamlining systems, and ensuring the business has good cash flow.
Business experts also warn that, despite allowing certain businesses to resume operations, the next few months will remain economically unstable. They advise SMEs to be flexible and adapt to the rapid changes especially in the area of technology. Despite the challenges the pandemic brought, New Zealand SMEs should continue to meet customer demand. Adaptability and innovation, at any time, with a crisis or without, always prove to be important for SMEs to continue to survive.
Slater Byrne Recoveries offers obligation-free chat for New Zealand SMEs who need advice as to what to do to effectively collect debts during this pandemic.