Source: Inland Revenue Department –
The COVID-19 Response (Taxation and Social Assistance Urgent Measures) Bill passed through all stages in Parliament yesterday, and also received Royal assent.
For more information see the Minister of Revenue’s media statement and the Act.
Hon Stuart Nash
Minister of Revenue
25 March 2020
Urgent tax measures for economic recovery
Urgent legislation has been passed to support the package of economic and social measures needed to recover from the impact of the coronavirus outbreak.
“The COVID-19 Response (Taxation and Social Assistance Urgent Measures) Bill will cushion New Zealanders from the worst economic impacts of the COVID-19 outbreak,” said Revenue Minister Stuart Nash.
“It is important to act fast to ensure businesses and individuals get the support they need now. For example, businesses can immediately claim tax deductions for low value assets like computers, mobile phones, cameras, microphones, headphones and other equipment required to work from home.
“Penalties for late tax payments will be written off, tax planning and certainty is restored through the ability to depreciate some buildings, and a higher threshold for provisional tax obligations will also give relief.
“Our first priority is to prevent and mitigate the health risks and to protect the vulnerable. But we are also keenly aware of the need to prevent and mitigate risks to our economy. This Bill is one part of the Government’s response.
“It includes targeted measures to provide relief to people and businesses economically affected by the COVID-19 outbreak. It also includes measures aimed at addressing the broader economic impacts of the outbreak,” Mr Nash said.
The main measures contained in this Bill are:
- Restoring building depreciation. This would support businesses and encourage investment in new and existing building by reinstating depreciation deductions for non-residential buildings. It provides business support by improving cashflow in the near-term, and assists with the broader economic recovery by stimulating business investment in new and existing buildings.
- Increasing the provisional tax threshold from $2,500 to $5,000. This relieves the compliance burden for small businesses as well as freeing up cashflow. It allows people to delay paying their provisional tax. They can wait until 7 February in the year following the year they file their return before they have to pay, instead of having to pay in instalments throughout the year. It allows them to retain cash for longer. It will benefit an estimated 95,000 people.
- Allowing immediate low-value asset write offs. To encourage spending, the change will temporarily increase the threshold of the value of assets which can be deducted in the year the asset was purchased. The threshold will increase from $500 to $5,000 for assets purchased in the 12 months from 17 March 2020 (reducing to $1,000 from 17 March 2021.
- Bringing forward broader R&D refundability. The proposed amendment would bring planned refundability measures forward by one year, to the 2019–20 income year. This would help relieve cashflow problems, encourage businesses to retain their R&D staff, and (where possible) support these firms to continue their R&D in the current environment.
- Allowing use of money interest to be waived. The Bill proposes to allow Inland Revenue to cancel interest on a late tax payment if the taxpayer’s ability to make a payment due on or after 14 February 2020 was significantly adversely affected by the COVID-19 outbreak.
- Allowing greater information sharing. This would allow Inland Revenue to share information with a wider group of government agencies to assist the efficient and effective delivery of the Government’s COVID-19 response.
- Allowing more access to the in-work tax credit. This would ensure that working families whose working hours are reduced as a result of COVID-19 would not lose their eligibility for the tax credit. Around 19,000 families will benefit.