April 15 2020
The Government has today announced a series of measures to provide relief for small and medium-sized businesses slammed by the coronavirus crisis. Measures include
$3.1 billion in tax savings over two years.
Finance Minister Grant Robertson says while the Government had already committed about $20 billion to support the economy but more was needed for businesses.
The new measures include:
•$3.1b tax loss carry-back scheme (estimated cost over the next two years)
•$60 million estimated annual savings to business each year from changes to the tax loss continuity rules
•$25m in the next 12 months for further business consultancy support
•Greater flexibility for affected businesses to meet their tax obligations
•Measures to support commercial tenants and landlords
Robertson said the country needed businesses to stay solvent to help with the economic recovery as New Zealand emerged from the health crisis.
“Our focus on cashflow and confidence continues through these measures. We have approved a tax loss carry-back scheme that will allow a large number of businesses to access their previous tax payments as cash refunds. Essentially this means a forecast loss in the current financial year can be offset against the tax paid on a profit from last year.”
A temporary mechanism will be included in a bill introduced the week of April 27.
Between now and then Inland Revenue will be undertaking targeted consultation with tax advisors to make the law and administrative guidance as clear as possible.
Changing the tax loss continuity rules would make it easier for firms to raise new capital without losing the benefit of their existing tax losses, Robertson said
New Zealand’s rules were among the most stringent in the world, and the in-principle announcement gives taxpayers raising capital a level of certainty to undertake these transactions, while also giving officials time to work through the detailed design of rules that can be included in a bill in the second half of this year. The new rules will apply for the 2020-21 and later income years.