COVID-19 Support & Office Relocation
August 28, 2020
The COVID-19 pandemic continues to pervade all aspects of life, and there continues to be disruptions and adjustments to how we live and work. Although New Zealand’s experience is better than many other countries in the world, the country has not returned to normal or even to Level 1 yet. We know many businesses continue to struggle and opportunities are constantly changing. The move to PAYE based employment for contract workers is one such change, but the additional security of an employment role may be appropriate while the virus is only controlled through isolation and contact management.
With our having moved back from Level 1 to Level 2 where we currently remain, it is appropriate to recap the current support measures in place for COVID-19.
Support Measures For COVID-19
Wages subsidy extension and Resurgence wages subsidy
The original subsidy ended, while the extension ends 1 September 2020. Both the extension and the resurgence subsidy requires the employer (including self-employed) to demonstrate a minimum 40% decline in revenue for a continuous 30 day period. The extension provides the same payment but for eight weeks, not 12, while the resurgence provides for two weeks. At this point the Government has declined any further extension, even for Auckland. Note that you are not able to obtain the resurgence subsidy, while you are still in the period covered by the extension.
Business Finance Guarantee Scheme
The scheme originally provided for the Government to guarantee certain borrowings of loans from the business applicant’s bank. Because of the requirements of banks, the take up of the scheme was low. The Government has now extended the value of loans available under the scheme from $500,000 to $5 million. Borrowers can also now use the loan for "capital assets and projects related to responding to, or recovering from, the impacts of COVID-19". They can also re-finance up to 20% of their existing debt. The term of the loan increases from three years to five years. While it is still up to the bank to lend, these changes may make applying more useful. We can help you with your application and discuss its merits. This scheme ends 31 December 2020. The Small business cashflow loan, administered by IRD, also ends on this date.
Loss Carry-back Scheme
The ability to carry back a loss incurred in 2020 to profits of 2019, or expected losses in 2021 back to profits in 2020 is in place. As your tax returns are being done, we will be investigating your options. Expectations of results in 2021 will be important to consider for 2020, so therefore we will need to be liaising with you on this.
The other measures previously advised, including IRD’s additional scope to remit penalties and interest, the increase in the threshold for expensing asset purchases, conversion of an AirBNB to residential rental, and other items remain in effect. If your situation is significantly different than it has previously been and is affected by COVID-19, ensure you contact us so we can review your situation with these measures.
Cash Flow and Business Valuation
Although having a handle on your cash situation has always been an important business metric, it is even more acute while business recovery is on-going. If you need help determining your situation or want to develop regular information and reporting of your situation, we can assist. For instance, there are reports in Xero that work to this and there are other sources to provide this information.
Whether you’re planning on selling your business, borrowing for the business, looking to bring in investors or partners, knowing the value of your business is a necessity. If this situation applies to you, or you’re looking at other business opportunities, we can help, and in some circumstances, provide a formal valuation for you. This applies even more to businesses where we don’t already provide accounting services. Please contact us to discuss your requirements.
MTM Office Relocation
Last month we moved out of our Tory Street office, and it is currently vacant for its next tenant. Our office at Floor 3, 191 Thorndon Quay has been fitted out and some of our new furniture in the office has been built and delivered. We plan to be in place and working in the office from Tuesday 1 September next week. We look forward to welcoming you there. We will be in the office while we remain at Level 2 or drop to Level 1 but would be working from home again if we move up to Level 3. We don’t expect to wear masks in the office, but if you feel more comfortable wearing one while visiting please do so (and we will wear one while meeting with you.) Other measures required, such as contact tracing and hand washing facilities are also in place as we comply with Government requirements.
Contact us today for your no-obligation consultation.