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The Government is bringing in new measures to help small and medium-sized businesses (SMEs) through the COVID-19 pandemic.
New Zealand businesses have been struggling during the crisis. On Tuesday alone, Burger King New Zealand's owner went into receivership, while NZME and 2degrees both announced plans to lay off staff.
Finance Minister Grant Robertson says despite $20 billion already going into supporting New Zealand businesses, more needs to be done to help SMEs survive the pandemic.
The new measures include:
A tax loss carry-back scheme (estimated cost $3.1 billion over the next two years)
Greater flexibility for affected businesses to meet their tax obligations
Changes to the tax loss continuity rules ($60 million estimated annual savings to business each year)
Measures to support commercial tenants and landlords
Further business consultancy support ($25 million in the next 12 months)
Robertson says the new measures are essential to help the economy recover from the health crisis.
Minister for Small Business Stuart Nash says some businesses are struggling to meet costs such as rent, interest and insurance and are not in a position to take on debt to survive the pandemic.
He says the support will help to keep some businesses viable so they won't be shut down permanently.
"We don’t want that to happen, so as well as the tax measures which should provide some cash flow relief, we are going to provide tailored support services to help businesses weather the storm, at no charge to the business."
The tax loss carryback scheme, which is estimated to cost over $3.1 billion, will allow for a business to offset losses in a tax year against profit in a previous year, and receive a refund of the tax paid in the previous profitable year.
This will be implemented from April 27 with help from Inland Revenue.
Flexibility for tax changes will allow for Inland Revenue to modify timeframes for businesses impacted by the virus.
It could include extending deadlines for filing tax returns and paying provisional and terminal tax.
This will be limited to a period of 18 months.
The changes to the tax loss continuity rules will allow businesses to raise additional capital to stay afloat and will be clarified in late 2020.
It is estimated that there will be $60 million in annual savings to business each year as a result of the initiative.
The Government is also extending the timeframe that commercial landlords may cancel a lease from 10 working days to 30.
They are also extending the timeframes for lenders from 20 to 40 working days for mortgaged land, and from 10 to 20 working days for mortgaged goods, which will apply to commercial mortgages and home loans.
But it is expected borrowers will first consider mortgage deferrals.
The Regional Business Partner Network and helplines operated by the Employers and Manufacturers Association and the Canterbury Chamber of Employment and Commerce will be extended for the next 12 months to help businesses in need.