Coronavirus and New Zealand Business
Be Mindful, Don’t Panic.
As you know we are living with unrest all around us. Governments, businesses, and communities all around the world are facing unprecedented challenges.
However, it is imperative not to panic. It is important to maintain stability and minimise disruption, for you, your family, children, and employees. If you’re panicked, the people around you panic. This brings to mind the endless Memes & GIFs spreading across social media platforms around the panic to buy toilet paper!
The minute the word ‘recession’ is mentioned, people close the purse strings and are scared to spend, hence having a knock-on effect for those in the retail, hospitality, accommodation and entertainment industries.
Instead, just be mindful of health and safety practices, calculate your cash flow and be considered in your approach to your discretionary spending.
We are very lucky here in New Zealand, as we are a young, progressive country that is still going through its growth stage. We still have a shortage of skilled labour, so there are still people (granted after they’ve self-isolated for 14 days) immigrating to our shores and into our communities, needing housing and everything that comes with living day-to-day.
Also, remember our NZ Government back in 2008-2009 virtually got us through the last recession unscathed. One measure taken was to create job opportunities in roading. Both National and Labour have the completion of the State Highway 1 Expressway firmly in their election promises for the upcoming election.
Another reason not to panic is our NZ Government and Banks are also taking care of us. They are prepared to tailor options to meet your needs and work side‑by‑side through this challenge.
Your Bank is Willing To Help. Your Banking provider does not want to see you go through hardship. Talk to them sooner rather than later if you foresee that you may need help and support. They are all prepared to tailor options to meet your needs and work with you including discussing offering:
Extensions of term lending periods, including Home Loans. You can ask for a 90 day mortgage holiday with all principal suspended and interest accrued.
Short Term and Hardship loans
Extending Overdraft facilities.
Sadly We Have Scammers. Watch out for scams and phishing attempts. Sadly, there are people that may try and take advantage of the current situation. Remember that your bank will never text or email you with a link to log in to your internet banking. If you receive anything of this nature, report it. Our Government is Helping
Tuesday 17 March, the New Zealand Government announced its $12.1 Billion Business Support Package. (This is huge in comparison to the rest of the world!)
The package includes:
Initial $500 million boost for health
$5.1 billion in wage subsidies for affected businesses in all sectors and regions, available now. Businesses need to show a 30 percent decline in revenue for any month between January and June 2020 and applications can be made here.
$126 million in COVID-19 leave and self-isolation support
$2.8 billion income support package for our most vulnerable
$100 million redeployment package
$2.8 billion in business tax changes to free up cash flow
$600 million initial aviation support package
For more detail on the business support package and Government factsheets, see here. IRD & TAX Help One part of the Business Support Package proposes to give Inland Revenue the ability to stop interest charges for late payments for businesses or individuals who are unable to make their payments on time due to the impact of COVID-19.
In summary, this could apply for all payments that were due on or after 14 February 2020, and could be remitted for a maximum of two years past the date of enactment. (The actual length will depend on the circumstances of each business.) This legislation is yet to be passed, but is foreseeable and once approved the IRD will create guidelines to help you establish whether a business or individual might be eligible. You can find out more about it at https://www.ird.govt.nz/roles/tax-agents/covid-19
At Tag we can assist with the normal options for aid available in re-estimating provisional tax, setting up instalment arrangements, remitting late payment and filing penalties, and in severe hardship debt write-offs. If you need advice or help, please don’t hesitate to get in touch.
The Government has also announced it will introduce legislation for four more tax changes to help businesses given the impact of COVID-19. They are:
to increase the provisional tax threshold from $2,500 to $5,000.
to increase the small asset depreciation threshold from $500 to $1,000 – and to $5,000 for the 2020/21 tax year
to allow depreciation on commercial and industrial buildings. This was stopped in 2012.
Removing the hours’ test from the In-Work Tax Credit from 1 July 2020.
These four changes are proposed to start from the 2020/21 tax year, and apply to all businesses – not just those affected by COVID-19. You can find out more about them at https://www.ird.govt.nz/covid19 Help Yourself, Help Others. Review your Health & Safety procedures, both in your business and at home too. Our Government and the Ministries of Health, Education, and Business, Innovation and Employment are prioritising and focusing on flattening the epidemic curve / stopping the spread. Guidelines for you and those around you: Social distancing
Reminder no handshakes or physical contact. Recommendations maintain leaving a 2-metre distance between people.
Avoid large gatherings
Communicate travel policy to your team so everyone understands
Avoid non-essential business meetings
Promote good hygiene practices
Hand wash frequently throughout the day, for at least 20 seconds each time, with soap and water or an alcohol-based solution.
Extra cleaning of kitchen and bathrooms
Have tissues, hand sanitiser, etc. available
Extra cleaning of vehicles
Have gloves and sanitiser in vehicles
Avoid touching eyes, nose and mouth.
Ask that they self-isolate if they are unwell
Send them home if they are unwell
Advise them to seek medical attention. Request medical certificates before returning.
Advise team members who have had contact with possible people who have the virus to self-isolate and get tested.
Customers (if applicable)
Let them know they need to follow your Health & Safety Guidelines too.
Have they travelled overseas recently?
Identify high-risk customers and plan the safest way of continuing to engage
Can you visit customers at their premises rather than yours? Is this safe for them / your employees? Check prior to the visit of any risk
Clean hands prior to visiting and afterward
No physical contact if possible
We are all living in a period of unrest, unfortunately with media who thrive on reporting any minor changes almost hourly, turning a small drop of rain into a storm.
Stay mindful of your family, children and employees’ anxiety and stress. As a leader, lead by example. If you panic, those around you panic.
And remember, our Government, Banks and the Team at TAG are here to help you weather the storm, that hopefully the meteorologists and media can downgrade to a drizzle.
Team TAG. Amy, Joel & Claire NEED HELP OR HAVE A QUESTION? CONTACT US