Government announces more measures! A $3,100,000,000 tax relief package! Changes to landlord and tenant rights! Free business advice!

The Government has announced further measures to help small and medium-sized businesses during the COVID-19 pandemic. 

Finance Minister Grant Robertson said that although the Government had responded swiftly to the crisis and already announced around NZ$20,000,000,000 in support, he recognised that more was needed.

The new measures include:

• A NZ$3,100,000,000 tax loss carry-back scheme, representing its estimated cost over the next two years
• Changes to tax loss continuity rules, expected to save businesses NZ$60,000,000 annually
• NZ$25,000,000 in further business advisory support over the next 12 months
• Greater flexibility to help affected businesses meet their tax obligations
• Longer notice periods for cancelling leases and disposing of commercial property

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Tax changes

Robertson said the latest measures would soften the impact of the coronavirus pandemic by improving cash flow and business confidence.

‘We need businesses to remain solvent during this health crisis to help the economy recover.

‘We have approved a tax loss carry-back scheme that will allow many businesses to access previously paid tax as cash refunds. Essentially, this means expected losses in the current financial year can be offset against tax paid previously.

Robertson said the tax loss carry-back scheme would save businesses around US$60,000,000 annually.

Inland Revenue will also be given greater flexibility when dealing with businesses affected by COVID-19, potentially including extending deadlines for filing tax returns and paying tax by up to 18 months.

 

Commercial property

Businesses unable to trade during lockdown are increasingly concerned about their ability to pay rent on commercial premises, with some hoping for a six-month rent freeze like that for residential property.

In response, the Government has announced new measures to support stability in commercial dealings by extending the timeframes before landlords can cancel leases and mortgage holders can exercise rights to sell or take possession of property.

Justice Minister Andrew Little said that if many businesses could not pay rent, they would no longer be able to occupy their premises. On the other hand, landlords who did not receive rent might be unable to meet their mortgage obligations.

The Government is therefore extending the period before a commercial lease can be cancelled from 10 days to 30 days. This covers both the period for which a tenant must be in rent arrears before notice is issued and the period allowed to remedy the breach.

‘The Government will also extend the timeframes for lenders to act on mortgaged land from 20 days to 40 days, and on mortgaged goods from 10 days to 20 days.

This will apply to both commercial mortgages and home loans. However, the mortgage repayment deferrals already announced may be borrowers’ first choice.

Little said: ‘These measures will ensure that commercial lease disputes arising from COVID-19 are dealt with in an orderly manner.’

Professional advice

Over the next 12 months, NZ$25,000,000 will be provided for further business advisory support.

Small Business Minister Stuart Nash said some businesses were struggling to pay fixed costs other than wages, such as interest, rent and insurance, but could not currently afford to take on additional debt.

‘Without further government support, these otherwise viable small and medium-sized businesses could be forced to close.

‘We do not want that to happen, so alongside tax measures to ease cash-flow pressures, we will provide tailored support services to help businesses through this difficult period. These could range from human resources advice to business management planning and financial management.’ 

Legislation for the changes announced on Tuesday will take effect from 27 April, with implementation following the bill’s passage.

Link to the policy documents: https://www.beehive.govt.nz/sites/default/files/2020-04/15%20April%20SME%20factsheet_0.pdf