It is great to see so many businesses adapt to the sudden Level 3 situation we found ourselves in, and find ways to continue trading under those restrictions.
From a tax point of view, the Inland Revenue department (IRD) implemented a number of initiatives to offer relief to business and individuals back in March.
With the first provisional tax installment date only a couple of weeks away, the increase in the provisional tax threshold from $2500 to $5000 per annum will see a large number of individuals no longer required to make this payment. For those of you that have a payment due on August 28, please get in touch with the IRD if you are having trouble making the payment, as there are options available to pay this off.
Note that with provisional tax, it is important to pay by the due date as further penalties may be chargeable if your income increases in the year you are paying provisional tax for.
By paying late you will lose the ‘safe harbour’ status, which means you will be charged ‘use of money’ interest on any increase in income for that year.
The IRD has made changes to the ‘use of money’ interest remission that was implemented as a form of relief. The remission is available to anyone who has been adversely affected by Covid-19, whether it be physically or financially, and is unable to make a payment. It is available once the core tax (initial debt) has been paid in full.
Changes have also been made to the eligibility for In Work Tax Credits. Where families previously had to work a minimum of 20 hours (for individuals) and 30 hours (for couples) to qualify – minimum hours have been removed to allow for families that have seen hours of work reduced due to Covid-19.
The IRD has increased the threshold for writing off tax due from $50 to $200 as an attempt to help ease the financial stress caused by Covid-19. This applies to automatically calculated clients only and not clients filing IR3s. The IRD will revert back to the $50 threshold for the 2021 year.
Businesses that have not yet applied for, but may find they could benefit from the Small Business Loan offered by the Government, now have until December 31 to apply. This loan is available to viable businesses with less than 50 staff. The loan can be taken over a five-year period with no interest charged if paid off within the first year and an interest rate of three percent from the beginning of the loan, if paid off after 12 months. Repayments are voluntary in the first 24 months.
Remember to support local. There are a number of amazing local businesses and your support may be the difference between them surviving the Covid crisis, or not.