As the New Zealand Government announced its $12.1 billion economic rescue package in response to COVID-19, the Inland Revenue has also set out guidelines to help individuals and businesses.
Part of the package would give Inland Revenue the ability to not charge interest on unpaid money from businesses or individuals who aren’t able to pay taxes on time due to the impact of COVID-19.
“This could apply for all payments due on or after 14 February 2020 and could be remitted for a maximum of two years past the date of enactment, but the actual length will depend on the circumstances of each business,” the IRD said.
This policy is dependent on legislation being passed and guidelines would be created to test eligibility for individuals or businesses.
If individuals experience a salary or wage loss, those people might also be entitled to a tailored tax code, IRD reported on its website.
“You can also apply for a write-off due to serious hardship when you know you won’t be able to pay the full amount.
“If you’re having difficulty paying outstanding tax, we can help you set up an instalment arrangement. You can apply in myIR.
“If we grant relief from payment due to hardship and you have losses to carry forward, these losses will be reduced in proportion to the amount written off,” their website states.
“Our normal options for re-estimating provisional tax, setting up instalment arrangements, remitting late payment and filing penalties, and severe hardship debt write-offs are available.
“We encourage impacted businesses to take advantage of them,” the IRD says.
An IRD spokesman said they had received 1058 enquiries about COVID-19 tax relief, a 50-50 mix of businesses and individuals.
The Government has also announced tax changes to help businesses impacted by COVID-19 to include:
- 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.
- Removing the hours test from the In-Work Tax Credit from 1 July 2020.
- To increase the provisional tax threshold from $2,500 to $5,000.
Changes to legislation would take effect from the 2020/21 tax year and apply to all businesses, not only those affected by COVID-19.