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provisional tax,  tax payments

Current Times Update 8

Hi to you all .. hope you had a good Easter staycation.

So this morning there was another announcement from the government with further measures to try and ease the lock down for businesses. Again no in depth details around the measures and won’t be any likely until it is enacted come 27 April.

The new measures include:

  • $3.1 billion tax loss carry-back scheme (estimated cost over the next two years)
  • $60 million estimated annual savings to business each year from changes to the tax loss continuity rules
  • $25 million in the next 12 months for further business consultancy support
  • Greater flexibility for affected businesses affected to meet their tax obligations
  • Measures to support commercial tenants and landlords

The one clarification from this is that landlords and tenants will not have any financial support coming in the form of cash payouts.

The other interesting component, with no detail, was that the IRD are going to have greater flexibility to change expected filing dates. We were quick to get an update email from IRD saying that they cannot provide any details on any of the proposed measures. So from that we need to accept that the IRD’s approach hasn’t changed – need to file all returns on time and make payments if able and if not then to contact them.

So this is important with a number of tax payments coming up. So below we outline the options for each:

1. Due date 20 April. The major taxes due this date are PAYE and DWT. So again the returns should be filed and payment made on time. The only alternative is to contact the IRD before the due date and enter into a payment arrangement.

2. Due date 7 May. This is for GST and provisional tax. Dealing with GST, the same rules apply as PAYE – return should be filed and payment made on time. Alternatively if you are unable to pay then you will need to contact the IRD before the due date and enter into a payment arrangement.
For provisional tax, we will be emailing the payment reminder notices out over the next couple of days. Again if you can pay, then need to pay BUT with income tax we do have an alternative and that is tax financing. Simply, this is pre-purchasing the tax for a small upfront fee and then paying the tax at a later date in time – up to May 2021. Basically it gives flexibility at a time when cash needs to be put to productive uses.
Here is a table comparing the 2 options:

  Paying direct to IRD Tax Finance
Information to be provided Depending on the amount, IRD will require financial
information to ascertain ability to pay. They have also
stated that they expect that all other available funds
(ie bank) have been exhausted		 none ..we just apply
Repayments regular repayments will be expected to be made no regular repayments required but you can if you wish.
Payment of the tax is made at the agreed date of the contract.
IRD Penalties & Interest At the IRD’s discretion and only written off if you meet
their criteria and stick to the instalment plan		 there won’t be any

So if you need to/would like to take up tax finance, please contact us at the earliest you can so we can put it in place. If you would like to discuss the options please email either myself or Julie and we will make a time to touch base.

REMINDERS
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Take care and keep safe.

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