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Covid-19 News 27th August 2021
FROM THE MINISTRY OF SOCIAL DEVELOPMENT
Te Manatu Whakahiato Ora
FREQUENTLY ASKED QUESTIONS & ANSWERS COVID-19 SUBSIDY AUGUST 2021
Note: if there is any difference between the answers below and the declaration, the declaration prevails.
Is the Wage Subsidy open for applications?
Yes, applications opened on Friday morning and are open for two weeks.
Go to the Work and Income website for more information and to apply. https://www.workandincome.govt.nz/covid-19/wage-subsidy/index.html
Who can apply?
Business needs to meet the eligibility criteria and agree to meet the obligations in the declaration to be able to get a COVID-19 Wage Subsidy August 2021. It's available to all New Zealand businesses and self-employed people that meet eligibility criteria. This includes charities, incorporated societies and NGOs (non Government organisations)
Do businesses have to have been impacted by the change in Alert Levels?
Yes, there is a ‘revenue test’.
This means the businesses need to have had (or expect to have) a minimum 40% decline in revenue in the 14-days since the Alert Level escalation (ie between 17 – 30 August 2021), when compared with their revenue during a typical 14-day period in the six weeks. immediately before the Alert Level escalation. There’s an option for businesses with highly seasonal revenue as well. The decline in revenue must be caused the move to Alert Level 4 on 17 August 2021 has had on their businesses.
Are there other criteria?
Yes there are, and there are also obligations you have to agree to. It’s really important that you read the declaration that is part of the application. This is what you are agreeing to when you submit an application.
How much is the subsidy?
The subsidy is for two weeks, and the payment rate is:
$600 a week (full time – typically works 20 hours or more a week) and
$359.00 a week (part-time - typically works less than 20 hours a week).
Can I apply if I work for myself and don’t have any employees?
Yes, if you’re self-employed (which means you pay your own tax) you can apply as long as you meet the drop in revenue test and other eligibility criteria.
We help New Zealanders to be safe, strong and independent Manaaki tangata, manaaki whānau
What information do I need?
The information you need is clearly spelt out on the Work and Income website.
It’s things like your business name, IR number, bank account number and contact details. If you’re applying for employees you’ll need their name, date of birth, IR number and whether they typically work less than 20 hours, or 20 hours or more.
To ensure applications get processed as quickly as possible, it’s important the information provided matches what is held by Inland Revenue. If it’s different, applications will be held up.
Employees need to agree to you providing their information.
How long will it take to be paid?
We’ll process it as quickly as possible. We need to check the information you've given us is the same as what's held by Inland Revenue. If it isn't, there could be a delay.
We can‘t give you information about the status of your application over the phone. We'll be in touch as soon as we can.
If your application is not approved we’ll email you to let you know.
Detailed questions about Wage Subsidy
Do I need to provide evidence of the impact on my business?
You will need to prepare and keep evidence to support your declaration (but you don’t need to provide this on application). You may be asked for this later, so it is important to keep it.
What about paying employees?
If you are receiving the COVID-19 Wage Subsidy August 2021, you must keep employing the employees named in your application and pay your employees in accordance with employment law. The wage subsidy is a contribution towards paying the employees named in your application. There’s a section on the website that goes into more detail about paying people.
What happens after the two weeks of the Wage Subsidy?
If the Government decides to extend the wage subsidy, businesses will need to
make another application. At this stage the wage subsidy is only for two weeks.
Other COVID payments
What is the resurgence payment?
As well as the COVID-19 Wage Subsidy, there’s also the Resurgence Support Payment, available through Inland Revenue. This can help with costs like rent or fixed costs for businesses who have experienced at least a 30% drop in revenue. Eligible businesses can get this and the Wage Subsidy at the same time.
Applications through Inland Revenue will open at 8am on Tuesday, 24 August.
What about Leave Support payment and Short Term Absence Payment?
The Leave Support Scheme is available for employers, including self-employed people, to help pay their employees who need to self-isolate and can't work from home because they are in one of the affected groups and have been told to self- isolate. The Short-Term Absence Payment is available for businesses, including self- employed people, to help pay their workers who cannot work from home while they wait for a COVID-19 test result.
You can only get one of the payments from MSD (Wage Subsidy, Leave Support or Short Term Absence Payment) for the same employees at a time.
The payment rates for Leave Support and Short Term Absence Payment will be increased from 24 August 2021 (tomorrow) in line with the Wage Subsidy now being paid.
Note: Number to call for specific enquiries is 0800 40 80 40.
We don’t want people to call to just check on application status etc.
General information about access to food, services etc
If people need financial help to buy food, contact Work and Income.
If they need help to access food or get it delivered because they can’t get out, family, whānau, friends and neighbours may be able to help.
If they need food urgently, a local foodbank may be able to help.
Check the COVID-19 website for more information. There’s a section about services and support at the bottom of the home page. https://covid19.govt.nz/
20th August 2021
Keep safe – follow health guidelines and only have staff at work if it fits the Essential business guidelines - see https://covid19.govt.nz/business-and-money/businesses/doing-business-at-alert-level-4/#alert-level-4-businesses-and-services
Govt Support & Advice
For a good overall summary and links to key support, this business.govt.nz site is easy to use: https://www.business.govt.nz/covid-19/financial-support-for-businesses/
If you are going to change any working arrangements with staff and any changes to what you pay them, make sure it is in accordance with your employment agreements or that you get your employees’ agreement in writing (email and text is OK if you can be sure it is from them).
In terms of the Wage Subsidy, here are some general guidelines:
The Wage Subsidy is able to be applied for now – and will be open for two weeks. So, you do need to consider quite urgently, whether or not you qualify.
To access the Subsidy there are a number of eligibility criteria you must meet, including:
You must be able to show or estimate (and subsequently be able to show) that your revenue for the fortnight 17-30 August is at least 40% lower than your revenue for a typical fortnight in the period 6 July – 16 August. Do not assume – you will need to work the figures. (And previous periods cannot include income from other subsidies)
You must be able to demonstrate you have tried other avenues to obtain $ - including your bank, any insurance coverage or spare cash reserves.
You must have agreement in writing from your employees to you sharing their information and a few other things – I attach a copy of a letter that they can sign here.
To apply follow the guidelines on this page https://www.workandincome.govt.nz/covid-19/wage-subsidy/how-to-apply.html#null
This can be applied for if you are self-employed – you would need to identify what you normally pay yourself per week.
In terms of paying staff, your prime responsibility is to pay as normal. To move away from that you need to use provisions in your employment agreements or have negotiated with your employees. If you do receive a subsidy you are expected to use best endeavours to pay at least at 80% - but it does not mean you only have to pay 80%. It all depends on your situation.
Business Resurgence Support:
You may also qualify for the Business Resurgence Support. Follow this link and see if you qualify: https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/apply
Take Care & Stay Safe
Geoff & The Team at Hornby Accounting
We would also like to thank Mike at Essential HR for providing us with the relevant information.
17th August 2021
Lockdown Level 4
The Government has just announced lockdown Level 4 to take effect today and for the next three days at least.
For our valued Hornby Accounting Clients this means that you cannot come into the office to see us - we won't be there. However you can still reach us by phone ( messages will be picked up and calls returned), texts and emails.
Any issues you may have can still be handled by us remotely. So no worries there.
Remember Geoff can be contacted on his cellphone number (021-2639439) if the matter is urgent.
Please stay isolated and safe and we will all be back on deck as soon as possible.
Geoff & The Team at Hornby Accounting
23RD MARCH 2021
CHANGES TO BRIGHTLINE TEST AND
INTEREST DEDUCTIBILITY FOR RESIDENTIAL PROPERTY INVESTMENTS
The Government has just announced new changes that will effect Residential Property Investors. Once we know all
the details we will put out a newsletter with the relevant details but for now the main points are:
INTEREST WILL NOT BE DEDUCTIBLE AGAINST RENTAL INCOME FROM 1 OCTOBER 2021 FOR INVESTMENT PROPERTY PURCHASED AFTER 27TH MARCH 2021.
PROPERTY PURCHASED BEFORE 27TH MARCH 2021 WILL BE ALLOWED SOME INTEREST DEDUCTIONS AT A REDUCING RATE (75%, 50%, 25%, 0%) UNTIL IT REACHES $NIL BY 2025.
THE 5 YEAR BRIGHTLINE TEST HAS BEEN EXTENDED TO 10 YEARS
THERE ARE SOME EXEMPTONS FOR NEW BUILDS
On the information available at this point, the main impact will be that taxable rental income will increase for landlords who are paying off mortgages on their rental properties. This will be in addition to the ring-fencing of losses that currently applies.
More details when we know them....
As an Employer.....
There is a lot of confusion around the employer's obligations with regards to statutory holidays as well as employee rights & entitlements. Hopefully we can explain it simply.....
This year Waitangi Day falls on a Saturday (6th February)-
Any employee who normally works a Saturday then Waitangi Day is treated as a Public Holiday as normal.
Basics - the day is a paid holiday
if the employee works that day then they get paid time-and-a-half with a paid day-in-lieu to be taken a later date.
Because Waitangi Day has been Mondaydized then....
For any employee who would normally work on Monday (8th February), Monday would be treated as the Public Holiday instead.
Basics - the day is a paid holiday
if the employee works that day then they get paid time-and-a-half with a paid day-in-lieu to be taken a later date.
who don't normally work Saturday but work Waitangi Day Saturday get paid time-and-a-half. No day in lieu.
who don't normally work Monday (8th February) but work that Monday also get paid time-and-a-half. No day in lieu
who don't normally work either Monday or Saturday and don't work those days, miss out entirely. No pay and no day-in lieu. For them things are just as normal.
Additional Things to Note:
An employee cannot be made to work on a Public Holiday unless their employment contract has a clause requiring them to be avail to work on Public/Statutory Holidays.
If an Employer closes both Saturday and Monday they still have to pay employees their entitlements for the public holiday and they cannot make their employees take annual leave on one of those days unless 14 days written notice has been provided.
New Tax Rates and Minimum Wage Rate
The minimum wage rate goes up to $20.00 from the 1st April 2021.
Note that is applies on a pay-period by pay-period basis. So if your employees are on a salary you need to be aware that if their equivalent hourly rate for the hours actually worked is less than $20.00 per hour - you are in breach of the legislation. It doesn't matter that the following pay-period their hourly rate might be $25 per hour.
Please talk to us if you have any questions.
Personal Tax Increase
Another increase this time to the personal tax rate. If your income is over $180,000 then your new tax rate on amounts over $180,000 is 39% - this is an increase of 6%. It takes effect from 1st April 2021. In keeping with this from 1st October 2021 there will be a new Resident Withholding Tax rate of 39%. This is effective six months later to allow updates to the various systems used by the Banks etc.
Provisional Tax, Terminal Tax and Loss-Carry-Backs
Provisional tax is charged when your terminal tax for the prior year is over $2,500. For example in 2020 you filed a tax return on 31 July 2020, showing $3,567,89 is payable by 7th April 2021 ( without a tax agent this would be February not April). This would make you a provisional tax payer for 2021 - with instalments due August 2020 , January and May 2021.
Under the standard option the amount would be $3567.89+ 5% uplift ( $3,746) divided by three ( eg $1,249 per instalment).
Due to Covid-19, the Government has passed legislation increasing this $2,500 limit to $5,000. In the above example, as your terminal tax is under $5,000 you would not be deemed a provisional tax for 2021 and therefore would have no payments to make in August, January or May on that basis.
This is the position of most taxpayers, however there are other options available for paying provisional tax that may be more suited to your particular requirements. Please see us or your Tax Agent if you have any questions about provisional tax.
Terminal tax is due on 7th April 2021 for those taxpayers with Tax Agents and standard 31 March 2020 balance dates. If you do not have a tax agent then payment is due 7th February 2021.
If due to Covid-19 you are unable to make full payment by the due date, please contact us or your Tax Agent who can advise you of your options. Inland Revenue are able to reduce any late payment penalties or set up payment instalment arrangements if you inability to pay is due to Covid-19. The key here to is to get something place well before the due date for payment and not well after the due date for payment.
Temporary Loss Carry Back Scheme
Businesses expecting to make a loss in 2020 or 2021 now have the ability to off-set that loss to the preceding year instead of carrying it forward into future tax years. Now the key here is that the preceding year had a profit and the business paid tax. So if you have a loss in 2020 and a profit in 2019, you can offset 2020's loss against 2019's profit and Inland Revenue will refund any overpaid tax.
Carrying back a loss can effect other taxes but will not change any shareholder salaries, dividends or subvention payments that may have already been made for that preceding year.
The loss carry back is only available for 2020 ( carry back into 2019) and 2021 ( carry back in to 2020)
This Loss Carry Back does not apply to individuals where the Inland Revenue issue an automatic assessment ( what used to be called PTS or IR5) and does not apply to Companies who have not maintained 49% common ownership or Groups who have not maintained 66% common ownership throughout both the loss year and the preceding year. With regards to companies, the Inland Revenue will not refund any taxes where there are insufficient imputation credits available to cover the refund.
Application must be made to the Inland Revenue before your tax return is filed and can be done through your Tax Agent or myIR online service account.
Please let us (or your Tax Agent) know if you want to take advantage of this Scheme.
Covid-19 IR Initiatives
Automatic Income Tax Write-Off Threshold
For 2020 only, Inland Revenue will be writing off terminal tax amounts of $200 or under. This write off applies ONLY to individuals, who receive an automatically calculated assessment. (What used to be called an IR5 but is now commonly known as a PTS (Personal Tax Summary).
Filing Returns & Making Payments
The Inland Revenue still expect to you to file all relevant tax returns on time ( eg. GST, PAYE, FBT, Income Tax etc). However, the Inland Revenue do have initiatives to help with making the payments.
Payments may be made via:
Westpac - the Bank will be open one day a week at least even under Lockdown.
Credit Card or Debt Card
Direct Debit Payments
Internet online Banking
Acceptable Payment Arrangement( monthly instalments)
If you are having difficulty making payments, the Inland Revenue have the discretion to write-off any penalties ( including Use of Money interest (UOMI)) if your inability to pay is directly related to Covid-19. There must be a request for remission of the interest & penalties charged to the Inland Revenue with an explanation as to how the Covid-19 pandemic has impacted on your ability to make your payments on time.
Covid-19 Cashflow Loan Scheme
Just a reminder that you have until 31 December 2020 to apply for the Inland Revenue Cashflow Loan. The maximum amount available is $10,000 plus $1,800 per full-time equivalent employee. You apply for it on the Inland Revenue website. The conditions are:
It’s a one-off loan
Term is 5 years
Interest free ONLY if repaid within 1 year
Less than 50 or fewer full time employees
Repayments are not required for the first 2 years
Interest will be charged at 3%
NB: the interest will be charged from the start of the loan.
If a default event ( Clause 9.1) occurs then the loan plus any interest becomes repayable IMMEDIATELY
A default event is defined as
You do not make your payments as due
You cease to carry on the business for which the Loan was made
You sell the business or substantially all of the business assets
You go into liquidation/administration/receivership or similar
You breach or do not comply with any information made on your behalf in order to qualify for either the cashflow loan or the wage subsidy scheme ( for example if you received the Wage Subsidy and the DSW discover that you did not qualify for it then the cashflow loan will become immediately repayment with any interest that may have been charged).
5th October - Employer deductions for large Employers (ie more than $500,000 PAYE + ESCT per annum)
20th October - Employer deductions payment due for both large and small Employers
28th October - GST Return and Payment due for the period ended 30 September
28th October - Provisional Tax due if have a March balance date and use the ratio method.
5th November - Employer deductions for large Employers (ie more than $500,000 PAYE + ESCT per annum)
20th November - Employer deductions payment due for both large and small Employers
28th November - GST Return and Payment due for the period ended 31 October
5th December - Employer deductions for large Employers (ie more than $500,000 PAYE + ESCT per annum)
20th December - Employer deductions payment due for both large and small Employers
15th January - GST Return and Payment due for the period ended 30 November
15th January - Provisional Tax due if have a March balance date and have a provisional tax to pay.
15th January - Employer deductions for large Employers (ie more than $500,000 PAYE + ESCT per annum)
20th January - Employer deductions payment due for both large and small Employers
20th January - FBT for the quarter ended 31 December
28th January - GST Return and Payment due for the period ended 31 December
5th February - Employer deductions payment due for large Employers
7th February - Student Loan Year End Payment due if you have one
7th February - Terminal Tax and Working For Families Payments due if you have no extension of time (EOT)
7th February - FBT Income Year Return and Payment due if you have March Balance date and no EOT
20th February - Employer deductions payment due for both large and small Employers
28th February - GST Return and Payment due for the period ended 31 January
28th February - Provisional tax if March balance date and use the Ratio Option
Some Advice From Your Friendly Accountant
If you are going to buy a business, purchase or sell land, invite an employee to become a shareholder or partner in your business, or make any substantial changes to your financial situation
PLEASE talk to your Accountant first.
What may seem like a great idea could cause you serious problems if it is not done right.