Keep Updated with LinkedIn, Government Relief Package, 2020 Online Questionnaires, Free webinar with Carole Pedder and the Property Institute Wellington
COVID-19 Relief Package
Thursday 26th March & Friday 27th March: Government Updates
March, 2020
Wage Subsidy & Leave Subsidy
On Thursday 26th March Finance Minister Grant Robertson delivered some clarity around the Government’s expectations of Employers that receive the COVID-19 wage subsidy and a stern warning to those employers abusing their position regarding annual leave. He also closed any further applications on the Leave subsidy to limit double-dipping into both subsidies.
Discussions with many of our clients have ranged from disaster to hopeful, and although appreciative of the wage subsidy, many could not see how they could survive 4 weeks, let alone 3 months while receiving little, to no income, and having the pressure of paying out at least 80% of employee wages.
Thursday’s announcement eased this pressure to a point, whereby it opened the door for employers to pay a minimum amount equivalent to the subsidy. This means that after an employer has used their best endeavours, unfortunately, an undefined term, they can reduce the employee’s salary below the 80% threshold.
It is important not to take the term best endeavours lightly. Consultation with employees regarding any decrease should be done to avoid employment issues either now or later.
Remember everyone has been given the hope and expectation that being paid 80% of a salary is fair, albeit unrealistic for many businesses in those areas worst affected.
There are also additional ways to ensure you have truly used your best endeavours:
Keep a record of discussions with your bank regarding, additional finance, interest-free or payment holidays,
Engage in good faith discussions with Landlords, remembering that they are also potentially suffering,
Prepare cashflows with various alternative scenarios, based on both delaying tax payments and reduced salaries.
Remember to always consult an employment lawyer before significantly altering your employment arrangements.
Tax Relief
Whilst the Government has been busy making announcements law makers have been fine-tuning various areas of the Relief package. One of these areas is the ability to delay tax payments, including Provisional, GST and PAYE for up to 2 years. Currently, the IRD are sticking to their guns and following a prescriptive 3-step test, where you “may” be eligible for Interest and Penalty remission if your business;
has been significantly affected by COVID-19
has had income or revenue reduced by at least 30% compared to the same month 12-months earlier
have explored other options for financial support, such as talking with your bank about additional finance or re-negotiating other loans/overdrafts.
Preparing a cashflow regarding the last point is extremely useful. It is our belief that even if you did receive finance the Government’s intention is for you to pay employees and creditors before Tax. Therefore, if you can show that paying tax will significantly reduce the chances of your business surviving the next 3-months then it is important, although not required, for you to contact us to arrange communication with the IRD, notifying them of a delayed payment.
We are in an ever-changing environment, with the rapid introduction of rules to cope with unforeseen circumstances. As your advisor we will continue to do our best and be there for you and your business. Please do not hesitate to call or email.
31 March 2020 Financial Statements and Tax Returns
We will be sending out the Withers Tsang March 2020 Questionnaire over the coming week, rather than on the 1st April. This delay is to ensure we can focus on assisting those clients who have not yet applied for the COVID relief subsidy and others that are needing to have urgent discussions regarding cash-flow.
Last year we received 2,104 completed online questionnaires. That means we will be donating $4,208 to LegaSea as part of our Go Paperless initiative.
We ask if you haven’t previously used our online questionnaire, please give it a try this year. It will help us greatly in preparing your accounts in this ever so important paperless environment.
Please use the link to see how easy the process is for WT Adobe Questionnaire: How to Online: https://vimeo.com/400060949
Regular Updates with Monthly Email & Join our LinkedIn Group
Like you we’re being inundated with COVID-19 communication as well as all other forms of emails.
We don’t want to be another company filling up your inbox. Therefore we intend to limit our general email correspondence to a monthly email, unless, we believe there is a significant tax issue that requires your urgent attention.
If however, you do want to see our regular updates please either join our LinkedIn Group using the link below - Withers Tsang: NZ Thought Leaders in Tax, Property, Business, Growth & Uncharted Environments or visit our website.
https://www.linkedin.com/groups/13845251/
Free Webinar with Carole Pedder & Property Institute Wellington
In this webinar, Carole will be talking about the Government Economic Relief package that was released on the 17th of March, and all of the changes announced since that relate to business owners and property investors. Areas covered will include the Wage Subsidy and what accepting it means for your business, plus all of the other tax-related changes that were announced to give support, including changes to the rules for Depreciation, low-value asset write off and Use of Money Interest.
Carole will also talk to the Government announcement for Property Investors in relation to rent freezes and tenancy changes.
To Register for the Webinar Wed, 8th April @ 11am - click
https://propertyinstitute.nz/Event?Action=View&Event_id=1422
