IRD - COVID-19 Resurgence Support Payment (RSP)

Due to the alert level increase announced on 17 August, your business may be eligible for the COVID-19 Resurgence Support Payment (RSP). Receiving any other Government COVID-19 support does not affect eligibility for the RSP.

You will have to meet the criteria below in order to apply:

• Business or organisation have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to the increased COVID-19 alert level. This decrease in revenue or capital-raising ability is compared with a typical 7-day revenue period in the 6 weeks prior to the increase from alert level 1.

• Businesses and organisations (including sole traders) must have been in business for at least 6 months.

• The business or organisation must be considered viable and ongoing.

• Income that is received passively – such as interest and dividends, and all forms of residential and commercial rent – is excluded from the measurement of revenue.

• The business must be physically present in New Zealand.

• Businesses and organisations (including sole traders) must have a New Zealand Business Number.

Applications for the alert level increase announced on 17 August will open at 8am on 24 August.

For more information, please refer to: https://www.ird.govt.nz/covid-19/business-and-organisations/employing-staff/financial-support/resurgence-support-payment

We are also able to apply RSP on your behalf,. If you are interested in applying RSP, please don’t hesitate to contact us via celia@strong.co.nz.

Be well and stay safe.

MSD - COVID-19 Wage Subsidy August #1

From today, the MSD COVID-19 Wage Subsidy will be available to apply here: https://www.workandincome.govt.nz/online-services/covid-19/apply-checklist-wage-subsidy-august-2021-employers.html

Before starting the application, please ensure that the business have met the criteria below:

1. Prepare the revenue-drop test - The business is being or will be affected by the move to Alert Level 4 on 17 August 2021, and your business has had, or you predict will have at least a 40% decline over the period between 17 August 2021 and 30 August 2021 inclusive (this is the revenue test period), compared to a typical 14-day consecutive period of revenue in the six weeks immediately before the move to Alert Level 4 on 17 August 2021 (this is the default comparator period).

2. Have taken active steps to mitigate the impact of the move to Alert Level 4 on 17 August 2021 on your business activities.

3. At the time of making your application, you are not receiving a payment under this COVID-19 Wage Subsidy August 2021 scheme, the COVID-19 Short-term Absence Payment, COVID-19 Leave Support schemes or COVID-19 Essential Workers Support Scheme in respect of any of the named employees.

4. Each of the employees named in your application (named employee/s) is legally employed by your business, is employed in New Zealand and has not been given notice of redundancy, at the date of your application.

5. You are a registered business, sole trader or self-employed person (who may or may not employ other employees)

Your business may be eligible for the COVID-19 Resurgence Support Payment (RSP) provided by IRD as well. Receiving any other Government COVID-19 support does not affect eligibility for the RSP, which means you may could receive both MSD COVID-19 Wage Subsidy & RSP from IRD.

For more information, please refer to: https://www.workandincome.govt.nz/online-services/covid-19/declaration-wage-subsidy.html

We are also able to apply wage subsidy on your behalf,. If you are interested in applying wage subsidy, please don’t hesitate to contact us via celia@strong.co.nz.

Be well and stay safe.

Low-value asset threshold for depreciation

The Government has passed legislation that increases the low-value asset threshold for depreciation (previously the threshold was $500). This change will allow business to deduct the full cost of business assets instead of having to depreciate the cost over the life of the asset, details as below:

For business assets purchased on or after 17 March 2020 until 16 March 2021, assets cost less than $5,000 are allowed to claim whole amount as expense.

For business assets purchased on or after 17 March 2021, assets cost less than $1,000 are allowed to claim whole amount as expense.

Changes to Small Business Cashflow (Loan) Scheme

You may be aware that the Inland Revenue Department has announced some changes to the Small Business Cashflow (Loan) Scheme. If you have applied for the SBCS Loan, below changes could affect your business.

Main changes included:

• No interest will be charged if the loan is repaid within 2 years. (Currently, it is 1 year.)

• Restrictions on how the loan can be used have eased. As a business owner, you can not only spend the loan on core operating costs, but also able to consider to use the loan to invest in the business.

• Applications for the loan can now be made until 31 December 2023, which has an extension of 3 years.

If you had already applied for SBCS Loan, the changes mentioned above will be updated in the terms and conditions of existing loan contracts. Inland Revenue Department will notify you once they made the changes by 31 December 2020.

If you are interested in applying SBCS Loan, please contact us via info@stong.co.nz. We are pleased to assist your business to adapt to the impact of COVID-19.

For more relevant details, please refer to IRD website link: https://www.ird.govt.nz/updates/news-folder/covid-19-small-business-cashflow-loan-changes

Update re COVID-19

You will be aware that our Government has placed the country at Level 4 as part of the response to COVID-19 . In response to this, Strong and Co staff is working remotely from Tuesday, 24th March.

Working remotely will not affect our work - we will be available via phone and emails (all of our contact details are at the bottom of this message), however, there could be delays from Inland Revenue and other third parties we deal with on a day-to-day basis. Also, there will be no face-to-face meetings at our offices. We will be holding meetings via Skype or Zoom, when required.

As we are also approaching financial year-end, you may expect some delays. But rest assured, we are working for you and with you to help & assist you during these tough times.

Government's COVID-19 response package now includes all organisations:
1) Wage subsidies - these will support your business if you are impacted by COVID-19 and face laying off staff or have to reduce their hours because of COVID-19.  If you are an employer, contractor, sole trader or
self-employed you may qualify for this.

2) All rent increases are now frozen to ease the pressure of restrictions.

3) Cash flow issues - please contact your bank and they will be able to assist you in lending, mortgage support etc.

If you and your business is/will be getting affected by COVID-19 (mostly all businesses will be affected by this), please contact us at the earliest. Also, please do not hesitate to contact us for more details re any of the above matters. We would file the application for you at cost.

Please stay safe; take this self-isolation a way to slow down and spend some good time with the family (maybe time to be creative to invent some new games and pick up some hobbies we all are putting aside due to time constraints). 

Kind Regards from all of us at Strong and Co.

Ph.: 09 520 1104; Mob.: 0297 799 799

Email: info@strong.co.nz

Bright-line Test - 2 and 5 year rules

You may be aware that there is currently a 2-year and 5-year Bright-line test that the Inland Revenue Department has introduced.

The 2-year rule applied from October 2015. This was extended to a 5 year rule for any property purchase from 29 March 2018. The Bright-line test taxes any residential land or residential investment property that is sold within 2 years or 5 years of purchase that is not the family home.

• Exemptions

  • You cannot have more than 1 family home for the purposes of applying a family home exemption. So, if you own a holiday home that is sold within 2 years of purchase you will be caught by this tax.

  • Care has to be taken where you have a rental property that you have subsequently moved into such that the property becomes eligible for the family home exemption. In that instance you need to have lived in the house for at least the same amount of time as it was rented for it to change its status to your family home.

  • So this rule is to stop you moving into a rental for a very short period of time and then selling the property in an attempt to avoid the rules.

• Example

  • You purchase a rental property in January 2017. The property is rented for 9 months and you then move into the property. The property is sold 6 months later. Although the property at the time of sale was your family home as you had only lived in the property for 6 months but rented it for 9 months, you would taxable on any gain you make on the property sale.

• Change to a 5 year rule

  • Under the latest rules, for recent purchases you must own the rental property for at least 5 years before you can sell if wish to avoid paying a capital gains tax on any profits.

• Transfer of property

  • Care must also be taken when you transfer property to another entity. So if for example you purchase a property in your own name and decide to transfer this property to a Trust, if this is done within these timelines you could trigger a tax liability on transfer (as a transfer is a deemed sale).

  • It is also important to be aware of issues that can occur when you transfer a property that has been held for a long time. This can bring those properties into the new rules. So again, care needs to be taken with any re-structure and we suggest that you contact us should this be going to take place.

IRD Website Link: https://www.ird.govt.nz/news-updates/brightline-extension.html