1. NEW RULES TO KEEP CASH FLOWING
If money is a bit tight, here are some tax measures focused on providing and enabling cashflow that you might like to consider:
• The tax loss carry-back rule, which means if you’re expecting a tax loss for the year ended 31 March 2021, you might be eligible for a refund of provisional tax previously paid for the 2020 year. We have done this for a client and have incidentally been able to save them $25,000 in tax.
• If your cashflow has been significantly impacted by the economic effects of COVID-19, you may be able to apply for relief from use of money interest and penalties, or enter into an instalment arrangement for payments due to Inland Revenue. Inland Revenue’s ability to remit use of money interest in such circumstances applies to tax payments due up until 25 March 2022.
• If you haven’t already, consider the Small Business Cashflow (Loan) Scheme being offered by the Government through Inland Revenue where certain conditions are met. This provides loans of up to $10,000 (dependent on the number of employees) with an interest rate of 3%, with no interest applying if the loan is repaid within 2 years. You can read more about this here.
• You could be eligible for The Business Finance Guarantee Scheme – This loan needs to be fully documented and drawn down by 30th of June 2021 and your business must have been affected by COVID-19 within the past 18 months to qualify.
The maximum amount that your business can borrow varies between $500,000 up to $5 Million (depending on the lender) up to a maximum term of 5 years. Majority of the banks are letting their existing customers refinance up to 20% of their existing debts onto the scheme and sometimes up to 100% for a new customer.
The scheme is super beneficial as it doesn’t affect your equity and normally comes at an interest rate below 3%. You can read more about this here.
Applications for the scheme close shortly, so if you would like to discuss if your business should refinance or apply for new funding, please feel free to contact us on 03 374 9393 or you can discuss this directly with your lender.
BNZ have currently exhausted all their allocation for this scheme but they have a new Good to Grow loan that may be able to help you which you can read about here.
2. STAFF REIMBURSEMENTS AND ALLOWANCES
Make sure you have a good record of any reimbursements and allowances paid to employees for expenditures – generally and in account of new COVID-19 related Working from Home (WFH) tax changes. Remember:
• For telecommunications devices/plans, staff reimbursements are exempt up to $5 per week.
If reimbursement is above this amount, the exempt amount is 25% if the device/plan is used partly, 75% if used mainly, or 100% if used exclusively for employment purposes.
• WFH payments claimed between 17 March and 17 September 2021 – allow an additional $15 per week, per employee, to be exempt income for other WFH expenditure.
• A tax-exempt payment for use of furniture or equipment when WFH to reimburse the depreciation of the item.
The payment will typically be for the cost of the asset and the payment will still be deductible to the employer. Note the low-value asset threshold of $5,000 applying between 17 March 2020 to 17 March 2021 will apply here.
3. R&D LOSS TAX CREDITS
Start-up companies are able to cash-out their tax losses arising from eligible research and development (R&D) expenditure, and avoid carrying the losses through to the next income year. The credit can only be for:
• eligible R&D business expenditure
• up to 28% of your tax losses from R&D activity
• companies that are tax residents in New Zealand.
• dates on or after 1 April 2015.
The rules around R&D expenditure are detailed and eligible R&D expenditure will require approval from the IRD. So if you’re looking to claim under these rules, you will need to start looking at this sooner rather than later, and keeping records of such expenditure as it occurs.
XERO HAS ADDED ADDITIONAL SECURITY TO YOUR LOGINS – MFA
From 4 May 2021, you have been able to set up Multi-Factor Authentication (MFA) when you log in to your Xero Account. This has been introduced to help keep your data secure by adding another layer of security to your account.
You can find out more about what MFA is and how to set this up here. There is also a troubleshooting article in case you have any issues when you go to set this up.
Initially there was an opt-in phase where you would see a ‘not now’ button to skip the setup of MFA, but now it’s becoming mandatory and you won’t be able to skip this after 1 June 2021. Users who don’t need to log in to Xero, like payroll employees and those who use the Xero portal and Ask portal, are the only ones that won’t need to set up MFA.
REGIONAL BUSINESS PARTNERS TOURISM TRANSITIONS FUNDING
Funding is still currently available for Canterbury Tourism Businesses to help them access expert advice and Support. This funding has been provided by the Government and it is available through the Regional Business Partners Network.
You can view more details about this funding here.
COVID-19 VACCINATIONS – INFORMATION FOR EMPLOYERS
Here are some helpful links that may answer some questions you may have around COVID-19 Vaccinations for you and your employees:
If you would like to discuss how this could impact your business directly you can call the COVID-19 Business Helpline on 0800 50 50 96