The Inland Revenue will provide all New Zealand-based businesses struggling to pay their taxes due to COVID-19 with various forms of tax relief. Here’s a breakdown of the key relief strategies applicable to your business during these tough times.
Penalties and interest write-off:
Businesses unable to pay their taxes on time due to financial strain caused by COVID-19 will have their penalties and interest written off by the Inland Revenue. Commissioners now have the ability to remit use of money interest charged if a taxpayer’s ability to pay their tax on time has been adversely affected by the coronavirus. This discretion applies to tax payments due on or after 14 February 2020 and Commissioners will retain the ability to remit interest until 25 March 2022.
Businesses will be assessed by Commissioners on their ability to pay tax and whether or not their financial circumstances indicate that they are eligible to have their penalties and interest written off. To qualify for the write off, businesses must also agree to pay their outstanding tax at the earliest opportunity or “as soon as practicable”.
Instalment arrangements:
The Inland Revenue will also be providing businesses with a number of payment options, including more flexibility as well as a lower threshold for instalment arrangements set up in myIR. The new minimum repayment rates are $20/week, $40/fortnight and $80/month and payments can be made with internet banking and through myIR.
Wage subsidies:
Employers who are relying on the Government’s wage subsidies to pay their employees will not have to worry about income tax or GST (goods and services tax) on the subsidy received from MSD. Employers are deemed not liable for usual income tax and GST duties if their employees’ wages are paid through Government subsidies. They will also not be entitled to an income tax deduction for wages paid out of wage subsidy.
Time extension:
Another small but important tax relief strategy available to businesses is the extended timeframe for filing Basic Compliance Packages (BCPs). The date has now been extended to 30 June 2020.
