D Day today and the sweepstakes are on as to whether we are going to moving to Level 2 or not. Looking at it positively, make sure you are fully aware of what operating at Level 2 means for you and your business .. check out the link to the COVID 19 website. We are still working from home and intending to for the rest of this week at least so email if we can be of assistance.
So today’s email is to update you on:
- today’s announcement from the IRD on the criteria and rules around the Small Business Cash Flow Loan
- paying employees for extra costs for working from home
Small Business Cash Flow Loan Scheme (SBCS)
Today the IRD have released the terms and conditions of the SBCS, 9 pages of legal wording. In essence, this is loan from the government to you for a period of 5 years. No repayments of the loan principal need to be made within the first 2 years. The maximum loan amount that can be applied for is $10,000 per business plus $1,800 for each full-time equivalent employee (capped to $100,000) but you can take a smaller loan amount.
The nitty gritty –
- To be eligible for the SBCS you must have 50 or fewer full-time equivalent employees and be eligible for the Wage Subsidy scheme
- You must have a sound plan to be a viable business and hold information to verify this
- The loan scheme is being administered by the IRD and applications can only be made via myIR
- Applications will open tomorrow (12 May) and remain open until 12 June 2020
- The person applying needs to have authority to do so
- Interest is not payable on the loan if it repaid within the first 12 months. If the loan is not repaid, then interest is charged from the date the loan is advanced
- Voluntary repayments can be made within the first 24 months but after that regular repayments of interest and principal will need to be made to have the loan repaid by the end of year 5.
Things to note –
- we CAN”T apply for this on your behalf .. you have to apply via the business myIR account. You need to ensure that your correct bank account is listed in your myIR account as the loan will only be direct credited
- you are entering into a legal binding loan agreement (just like with a bank). If you are a partnership or trust, then you are personally liable for the debt
- this loan will be taken into account if applying for finance later on
- in your accounting system, you will need a new loan code setup so please contact us if you require this added.
Working from home Payments
The IRD have also released some guidelines on the tax treatment of payments made to employees who have/are working from home.
Basically you are able to pay tax free, an amount up to $15 per week per employee to cover additional home running costs (power etc). In order to qualify the employee must be doing their normal job from home and they must be required to work from home.
There is also some new rules around phones and exemptions for the cost and use of home office furniture and equipment so if you require more details around these sort of payments please contact us before paying.
Remember to check out our blog .. click here to check out previous blog posts
Take care and keep safe.