Its been almost two weeks since our last newsletter and you’re all probably suffering withdrawal symptoms. So just to ease all the tension, here goes…….
Firstly – sorry not to have this out there sooner but it is a busy old time with provisional tax and GST looming on 7 May. It’s also the time to get income tax returns done. Not to mention the move down to Alert 3 and the many tax arrangements that we are negotiating. Thanks for your patience.
COVID 19 Wage Subsidy – Do I need to pay it back ?
Now that many of you are back to work we are getting asked if the wage subsidy will need to be paid back. In general, if you meet the criteria of having a decline in actual or predicted revenue of 30% in one month between Jan 2020 and 9 June 2020 AND you continue to employ the staff you applied for – then the answer is NO.
You need to be able to show that the decline was a result of COVID 19 (shouldn’t be a problem in most cases!). There is also a requirement that you have made the effort to mitigate the impact of COVID 19 – that could include (i) taking internal measures to decrease costs and control revenues, (ii) claiming insurance, (iii) applying for loans and (iv) drawing on cash reserves.
The wage subsidy would need to be paid back in the following circumstances:
- You no longer meet the criteria – for instance if you forecasted a 30% decline in revenue and that didn’t eventuate
- You are not using the subsidy to retain and pay the employees you nominated
- You have received insurance that covers the costs that are covered by the wage subsidy
- You have stopped trading
- You have provided false or misleading information in your application
If you believe any of the above apply to you can contact us or call the MSD helpline on 0800 40 80 40.
You can also provide feedback to MSD by clicking here
If you need to pay any back based on the above you should put the funds aside and email MSD at COVID19subsidy_overpayment@msd.govt.nz. You would need to advise:
- Business name
- IRD number
- New Zealand Business Number (NZBN), if you have one
- Phone number
- Email address
- Postal address
- And advise the amount overpaid and why you need to pay it back
Small Business Cashflow Loan Scheme
It’s a tough time out there to be operating a small business. The wage subsidies have given some assistance but do not cover other fixed costs that you as a business operator need to meet. So, to help out viable operators over the short term, the Government has announced the Small Business Cashflow Loan Scheme (SBSC).
The SBSC will provide assistance of up to $100,000 to small business operators in the form of an interest free loan over a period of 12 months. If the loan cannot be repaid within 12 months then an interest rate of 3% will apply for a term of up to 5 years. The scheme is available to any business with 50 full time equivalent employees. The scheme provides $10,000 up front and then $1800 per employee.
The criteria is the same as for the wage subsidy which per our understanding means that you would need to show a decline of 30% revenue over one month between Jan 2020 and 9 June 2020. You would need to show that the loss was due to COVID and that you had taken steps to mitigate the impact. You also need to demonstrate that you are a viable business.
If you want to know more please let us know.
Latest COVID Assistance From IRD
Please click here to get all the latest IRD announcements in relation to COVID-19.
Legislation has now been passed by IRD regarding:
LOSS CARRY BACK SCHEME
The loss carry back scheme has now been put in place. This means that if you are expecting to make a loss or have made a loss in the 2020 income year or 2021 year, you can offset the losses against profits in the year before. This can lead to refunds of overpaid tax in the previous year or overpaid provisional tax you have paid in 2020. The refunds will be directly paid into your bank accounts – not offset against any tax outstanding for other tax types or tax periods.
You need to elect to participate in the loss carry back scheme and there are a few hooks to negotiate. So if you are expecting losses in the 2020 year or the 2021 year you should contact us to discuss.
NEW DISCRETION TO VARY REQUIREMENT
IRD now have the discretion to extend due dates and deadlines for payment and filing of taxes. They also have the ability to vary some other decisions which we will be notified about shortly. So if you are having trouble meeting filing or payment obligations you should contact IRD or us to arrange extensions. The IRD have been very positive and quick to respond to any arrangements we have made lately. Good on them!
WORKING FROM HOME DETERMINATION
And in continuing with their helpful good bugger direction, IRD have also announced that employees working from home can be paid up to $20 per week tax free to cover expenses, without needing any proof of those expenses.
Also – employees can also be paid up to $400 tax free to cover furniture costs without any proof of actual expenses required. So that could be a helpful bonus to your at home workers for all their hard earned endeavours.
RMA Financial – Managing Costs & Risks
Here at Number Up, we partner with RMA Financial Queenstown for our general and professional insurances. RMA are a locally based insurance brokerage with innovative means to establish cost savings while maximizing insurance protection.
As businesses begin to navigate the transition out of Level 4 and households are redefining the new normal, keeping a close eye on costs will be a key consideration. Revenues and household income have taken a hit, and managing expenses is a necessary exercise to maintain business viability and maximise the household budget.
Insurance is one of those grudge purchases that, even in the best of times, can be hard to stomach. Find out more on how Stuart Thompson from RMA can be of assistance to you and your business in these tough times.
Back To Office
Our team is still currently working from home. The kids love me sitting in my corner and the dogs are loving the walks. But we miss the pig and the donkeys and the alpacas. We are hoping that NZ drops down to Level 2 next week but (assuming we don’t go back to Level 4) our plan is to be back in the office from 18 May. Really looking forward to seeing you all again in the flesh – but no cuddles.
Like many of you we are concerned about the current economic conditions. We were on track for steady growth this financial year. We have now had to consolidate our position until we see how the next 12 months pan out. Unfortunately, that meant we needed to make some tough decisions and therefore Julia will be leaving us. Her last day will be 8 May. Thanks heaps to Julia for all her work and we wish her the best. Sad to see her go.
Thank You For Your Patience
We are still very busy right now and we will be one staff member down. We really appreciate your patience. There is a backlog of communication that we are trying to come back on as soon as we can. If we are taking too long can you please either call 03 409 2042 or email firstname.lastname@example.org . We will escalate our response.
And now for that moment you have all been waiting for……….
Q: Why don’t blind people skydive?
A: Because it scares the crap out of their dogs.
Q: Did you hear about the cheese factory in France that exploded?
A: De brie was splattered everywhere.
Fingers crossed that we drop to Level 2 on Monday. Hope you all get out there and support local business. Peace out.