A significant package of tax reforms was enacted yesterday to throw a cash flow lifeline to small businesses.
Revenue Minister Stuart Nash says the 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,” Mr Nash said.
“Today’s changes mean cash could start flowing to businesses via the tax system as early as next week. Many small and medium enterprises (SMEs) are feeling the pain now. We are moving urgently to get cash into their hands as quickly as possible, by taking current losses back to a prior year.“ My strong advice to businesses is to talk to their accountant, bookkeeper or tax agent, or log onto the MyIR portal as quickly as possible to ensure they take advantage of the government support as soon as changes come into effect this week.
“The changes were signalled two weeks ago and design features have now been finalised after discussions between Inland Revenue and external tax practitioners. I am grateful to the accounting and legal profession and IR officials for their rapid work on this legislation.
The omnibus bill deals with tax and regulatory changes to support businesses and others get through the economic shock caused by COVID. The main measures will:
- introduce a tax loss carry-back regime to provide cash flow quickly to businesses, by allowing losses to be carried back one year;
- allow IR to change due dates, timeframes or other procedural requirements for tax returns for taxpayers affected by COVID-19;
- ensure the treatment of benefits and pensions paid to New Zealanders stranded overseas is consistent with the treatment of equivalent payments in New Zealand;
- Bring forward the commencement date of certain protections relating to high-cost consumer credit contracts;
- Prevent famers and others working with animals having to call in vets to undertake minor surgical procedures during the lockdown; and
- extend the timeframe for certain Crown entities to provide planning documents to responsible or shareholding Ministers.
Inland Revenue have provided detailed Q&A document to help interpret changes.
To view the Ministerial Press Release, click here.