This subject has been the main topic for the 2019/2020 year and will be for years to come. For many this has been a year they wish to forget but the effects may last for quite some time. The effect on income and businesses has hit some harder than others. Tax relief and income assistance has been available to people affected by the downturn in business. Some would say that maybe not enough help has been given. It is hard to ensure that help goes to the right places and at the right time. I have to say I am proud of how some businesses have changed how they operate. Many are now online for the first time and were ready for the second lock down. I have also seen a surge of creative people getting out there and starting their own businesses. People have not been afraid to ask for work and post on social media while others have decided maybe this was the time to start on the idea, they had years ago.
Here are some of the changes the Government has put in place to help taxpayers:
Depreciation on Commercial Buildings has been reintroduced from 1 April 2020. This is to help support businesses with cashflow in the short term and to encourage investment in new and existing commercial buildings.
There has been an increase in the provisional tax threshold from RIT of $2,500 to RIT of $5,000. This takes effect for the current 2020/2021 income year. This allows small taxpayers to delay paying their 2020/2021 tax until 2022. This change is intended to be a permanent change.
The threshold for expensing low value assets has been increased from $500 to $5,000 from the 17th of March 2020 until 16th March 2021. The threshold will then permanently increase to $1,000 from the 17th of March 2021. This means that businesses can now deduct the full cost of more low value assets in the year they purchased them and in effect pay less tax. This will hopefully encourage further investment by businesses.
The IRD can remit interest on late payment if the customers ability to make tax payments was significantly affected by the Covid-19 outbreak. To be eligible for remittance of penalties and UOMI, customers must meet the following criteria:
1. They have tax that is due on or after 14 February 2020
2. Their ability to pay by the due date, either physically or financially, has been significantly affected by COVID-19
3. They will be expected to contact the Commissioner as soon as practicable to request relief and will also be required to pay the outstanding tax as soon as practicable
4. It is the Commissioner’s view that a customer has been significantly adversely affected by COVID-19 financially where their income or revenue has reduced as a consequence of COVID-19 and, as a result of that reduction in income or revenue, is unable to pay their taxes in full and on time.