Stephen+Tsang-+Low+Resolution-2003.jpg — **Level 3 office access.**

During Level 3 our offices will remain closed to the public. All partners and staff will continue to work from home during level 3.
If clients need to drop information off to the office we can arrange for this to happen by appointment.
Please call **09 376 8860** and we will arrange this for you.

Tax+Updates.jpg — We have it on good authority that the IRD policy and strategy team have added the scrapping or delaying of residential loss ringfencing rules to a list of possible COVID 19 relief packages the government will consider.

This does not mean ringfencing will be scrapped. Only that the government will consider it as a further measure.
Meantime, we must continue to plan to complete 2020 property accounts subject to the ring fencing provisions. Under the ringfencing rules an elective decision must be made whether to ring fence property losses on a portfolio basis or on a property by property basis.
Electing ring fencing on a portfolio basis allows a loss on one property to offset a profit on another.
However, in limited circumstances a property by property approach may offer some advantage. Principally, if you are considering the sale of your property portfolio within the five year Brightline date and accepting that tax may be payable as a result, there may be the opportunity to unlock ring fenced losses that would otherwise be perpetually ringfenced under the portfolio basis.
Because the circumstances where a property by property ring fencing will be better than a portfolio ringfencing are so limited we intend to make the assumptive decision that the portfolio basis will be the right elective choice for our clients.
If you do consider that a property by property basis may be better for you we urge you to contact us directly so that we can consider this election more specifically with you.

“Firstly, and most fundamentally, the majority of suggestions are targeted at cashflow, and the need to preserve it, cashflow is king …”

Property Investors

Fight like hell to retain your assets. If you can avoid selling on this market, do.
Focus on your tenants. Do whatever is necessary to keep your property occupied. This will mean offering flexibility of tenants reach out to you for help. Work with them and provide help if you can, help could include rent deferment arrangements or time limited rent reductions.
Keep in contact with your bank. Keep an open line of communication, make sure the bank knows you are in control and are making arrangements as necessary. Expect the bank to want to know if you have been forced to offer concessions, document what you are doing for tenants and what criteria you have placed on the concessions you have offered.
Remember that credit lines are vulnerable, the banks can cut them even if you are not in default. Consider opening a new banking relationship and potentially drawing down on a credit line to create a deposit with another bank. The cost of credit is so small it may be a cheap cost for some peace of mind.
Ask for proof that tenants incomes have been impacted before making concessions. Unfortunately, some tenants are looking for concessions before they have been personally impacted and it is not unreasonable to expect them to prove their claims of hardship before you agree to add to your own.
Review your mortgages. Could P & I table mortgages be switched to interest only?
Be cautious of mortgage holidays. A mortgage holiday simply suspends repayments, the bank is still charging the interest so you are going deeper into debt and paying more in the long run if you accept a holiday. But if you need the holiday, take it.
Review fixed terms and fixed interest rates. Breaking a fixed rate and taking a penalty is generally not beneficial, but these are unique circumstances. The penalty is tax deductible and the lower repayments if interest rates you could move to are materially lower may mean taking the penalty rate hit is an option. Find out what the break costs are ask the bank for a concession on the penalties. If you don’t ask you won’t get.
If you are exiting fixed rates, consider staying floating. Floating rates may well be lower now than fixed rates and there is currently no upward pressure on interest rates. Every day you can ride a lower variable rate than a fixed rate is another day with a lower interest cost than you might have had otherwise.
If you have good equity, you have retained your job and your tenants are paying, consider asking the bank for a new line of credit, this will give you a further buffer. It will be easier to get when you don’t need it than when you do.
Review your maintenance and capex budget. If you are tight, put off expenditure that can be delayed, but if your cashflow is robust, consider doing some of the work on your properties that you have been putting off, you will be able to buy the work more cheaply than before, you will be helping someone else by keeping the money flowing and you will be enhancing your asset.
Review your insurances, property cover needs to remain but does the wealth you now hold through your portfolio and the fact that the kids are off your hands still mean you need that life cover that costs you cash every month ? Think, review and make change where circumstance dictates it.
Review all your investments. Can you consolidate by liquidating things that were not core to your strategy and reducing debt instead, especially if you have the ability to redraw on credit lines.
If your income is stable and you have borrowing power consider buying. Now more than ever, it will be a buyers market. Fortunes will be made by those that remain calm and seek out opportunities to acquire distressed properties at bargain prices. It is certain that yields will rise now as property prices fall and it is certain that yields now will be achievable at levels well above interest rates. To bag a bargain, you have to be willing to make an offer. Stay engaged with what is coming up. Ring the agents you work with and make sure they know you are looking.
If need be, ask for rating relief rather than missing a mortgage payment. Councils will generally defer rates and the consequences of doing so are likely to be far less serious than missing a mortgage payment. 16. If you have short term rentals that are now vacant consider a permanent tenant but check GST consequences.
Work on your own well-being, your fitness and your relationship. During recessions anxiety and depression increases. Get help to cope, and make sure you support your partner. Communicate with your loved one. A problem shared is a problem halved. Now is not the time to trigger separation or divorce if there were options to avoid it.
Ask for accounting advice, we have been at this a long time and have pretty much seen it all, we are here to help you and are only too willing to share what we know and help you through.

Business people . . . Think Cashflow, Cashflow, Cashflow

Review your March 2020 result to determine whether you can reduce the 3rd provisional tax payment due on 7 May
If you can forecast a loss in 2020 or 2021 apply the loss carry back provisions to get tax paid in 2019 or 2020 refunded
Monitor your eligibility for the wage subsidy be assessing whether revenue is reduced by 30% on the same months last year.
Don’t pay tax as a priority over other costs necessarily, IRD acknowledge that other costs may be more pressing.
If you can’t pay tax, any tax, let us advise IRD where this is a result of the virus. They will require a repayment plan you can stick to but will remit interest and penalties where you can honour the repayment plan.
Forecast your cashflow weekly
Cut all non-essential expenditure.
Talk to your creditors and ask for payment flexibility. Where they give it, stick to your promises then to pay.
Ask creditors to take back stock you can’t sell if you can’t meet their payment terms. Many may offer you flexibility rather than do this.
Work on collecting debtors, offer to write off some of what is owning if it helps get cash in.
Discount old stock even to below cost if necessary.
Reduce stock levels generally
Review insurance covers ... did your business interruption cover serve you well? Are you still paying for it?
Check your lease for clause 27.5 that requires your landlord to offer a negotiated concession for restricted access. Even if the clause isn’t in the lease, ask anyway.
If you need to go to your bank, go early. Be prepared, the bank will not lend if you can’t demonstrate a plan to get through. Tell them what the problem is, what you are going to do to fix it, how they can best help and how you will repay them. In short, don’t give them any reason to decline you. If you need help with loan applications, we can help.
If you do need to cut staff, do it as soon as you forecast the need, not when you have burned through your reserves but follow proper process and honour your commitment to the subsidy.
If you can see a way through by reducing staff pay or moving to 4 day weeks to retain your team, ask them to support you and in return be open, fair and honest with them.
Take advice from anyone qualified to give it and nobody who isn’t.
Focus advertising and marketing only on initiatives where you can measure the result. If they work, carry on, if they don’t, stop the spend.
Monitor your competitors, if they are struggling perhaps you can buy them out.
Focus on dealing with the things you can control.
Stop listening to endless negative media and don’t waste time with the conspiracy theories.
Ask suppliers to reduce their pricing and try to build your margins. They will want to keep your business more than ever, use this leverage to your advantage.
Sell any assets that are not being used. Even if you only get peanuts for them the loss on disposal will save you tax.
Consider selling capital assets you can lease back.
Act decisively and take action but don’t worry if not every decision is the right one. The ability to act is more important than being paralysed by fear.
Look for opportunities and believe that there are more in recession than boom.
If you can reduce fixed costs and replace them with variable ones, do so. A variable cost allows you to operate relative to your revenue. E.g. can you reduce a salary cost in favor of contracted labor as need dictates.
Can you use technology to outsource tasks that can be done offshore
Try to enact as many cost cutting measures as you can at one time, rolling things out in dribs and drabs is tough and your morale and your peoples.
If all options run out, and you realise there is no way through. Face this as soon as possible. There is no shame in it. Trading on while you are insolvent will expose you to personal liability and only make matters worse. We can provide advice on the processes.