The Government is pushing through various changes in order to support businesses over the coming two years. Below is a summary of some of the proposals to help business. The changes at present are very short on detail, however, – in brief:
1. Depreciation on Commercial Buildings
Depreciation is being re-introduced for commercial buildings (1.5% or 2.0%) from the 20/21 tax year onwards. It only applies to commercial buildings (Airbnb, baches etc. excluded).
2. Provisional Tax Threshold Increased
The provisional tax threshold will increase from $2,500 to $5,000 from the 20/21 year onwards.
3. Low Value Asset Write Off
Asset purchases under $500 can currently be expensed. This threshold increases to $5,000 from 17 March 2020 until 17 March 2021. After this date it drops down to $1,000.
4. UOMI Remission
The Commissioner will have new powers to remit Use Of Money Interest on late payments where the delay was due to the impact of Covid-19.
5. Winter Energy Payment for National Superannuants
Normally $450 for singles and $700 for couples, this will double for the 2020 year to $900 for singles and $1,400 for couples. It then reverts back to the old rates in 2021.
6. Loss Carry Back
This proposed new rule allows businesses that make a loss in the 19/20 or 20/21 tax years to carry a loss back one year to offset against a profit year. The benefit of this is it allows you to utilise a current year loss now i.e. get a refund of tax previously paid in the profit year. Although temporary, it is proposed to make this a permanent change at a later date.
7. Loss Continuity
Company losses are currently forfeited if there is a change in shareholding of greater than 51%. A new proposal from the 20/21 year will mean forfeiture will not occur provided the business continues in the same/similar vein as before the change. This is designed to allow companies to raise capital by way of share issue.
8. Delay in Foreclosures
The time frames for landlords to cancel leases and mortgagees to exercise their right of sale or repossession has been extended. Commercial landlords now must wait 30 working days before cancelling a lease (up from 10) and mortgagees must wait 40 working days to exercise their right of repossession (up from 20).
Many of the above changes (along with others) are yet to be enshrined in legislation. As usual, the devil will be in the detail but we will keep you posted as to what is happening.