There are 4 main tax changes that have been enacted as part of the COVID-19 relief package.
- Depreciation for commercial and industrial buildings – re-introduced for 2020/21 income year at a rate of 2% DV, applying to both new and existing buildings on a permanent basis. We will need to have discussions whether to claim or not as with all tax you don’t get anything for free;
- Low value asset write-off – available for assets costing up to $5,000 acquired in the 2020/21 income year, then reducing to $1,000 threshold permanently from 2021/22 income year (so this replaces the $500 threshold – same rules apply when purchasing assets on the one invoice);
- Provisional tax threshold – increasing from $2,500 to $5,000 from 2020/21 income year, meaning less businesses and owners will be subject to paying their taxes in advance. So, if you expect that your actual liability (residual tax) for the 2020/21 income year will be less than $5,000, you will not be required to pay 2021 provisional tax. This means that any tax under the $5,000 that is owing will not be payable until 7th April 2022; and,
- UOMI write-off – up until now the IRD had very limited powers to write off interest. This will be available to those adversely impacted by the effects of Covid-19 who can demonstrate an inability to pay their tax by a due date. This is available in respect of all tax types (provisional tax, PAYE, GST etc) due on or after 14th February 2020. Relief rules proposed to remain in place for two years, and IRD will release further details shortly with respect to objective tests to be satisfied prior to relief being granted.
Also myIR, if you haven’t got a myIR account, we would recommend that you get one as soon as possible. Click here to go to the IRD website and then click register in the top right hand corner.