The Government has announced a range of new support measures for small and medium-sized businesses, including a $3.1 billion tax relief package.
The tax scheme is "a loss carry-back mechanism" which enables a firm to offset a loss in a particular tax year against a profit in a previous year, and receive a refund of the tax paid in the previous profitable year.
It is estimated to cost the Crown about $3 billion over two tax years and is the first significant new support measure on top of the $20 billion programme already underway.
Finance Minister Grant Robertson said the Government recognised the need for more support, particularly in the small-to-medium-sized business space.
The announcement comes a day after Treasury released scenarios showing that unemployment could potentially be kept below 10 per cent with additional fiscal stimulus of at least $20 billion.
Other measures announced this morning include changes to the tax loss continuity rules - estimated to cost $60 million and funding for $25 million worth of business consultancy support.
There would also be new rules allowing greater flexibility for affected businesses to meet their tax obligations and measures to support commercial tenants and landlords.
The rent measures involve extending the timeframes required before landlords can cancel leases and mortgagees can exercise their rights to sale or
The changes would still allow landlords to cancel leases and mortgagees to exercise their powers during the period that an epidemic notice is in force, but would allow for more time for breaches or defaults to be remedied.
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"Our focus on cash flow and confidence continues through these measures. We have approved a tax loss carry-back scheme that will allow a large number of businesses to access their previous tax payments as cash refunds," Robertson said.
"Essentially this means a forecast loss in the current financial year can be offset against the tax paid on a profit from last year."
"We are also changing the tax loss continuity rules to make it easier for firms to raise new capital without losing the benefit of their existing tax losses."
Minister for Small Business Hon Stuart Nash said some businesses were struggling to meet their non-wage fixed costs, like interest, rent and insurance, but are not currently in a position to take on additional debt.
"In the absence of further support from the Government, these otherwise viable SMEs may be forced to close down permanently.
"We don't want that to happen, so as well as the tax measures which should provide some cash flow relief, we are going to provide tailored support services to help businesses weather the storm, at no charge to the business."
Changes to commercial rent rules would extend the current 10 working day timeframe that commercial landlords may cancel the lease to 30 working days, said Minister for Justice Andrew Little.
This will be for both the period the tenant is in arrears before the notice is given, and for the period to remedy the breach.
"The Government will also extend the timeframes for lenders from 20 to 40 working days for mortgaged land, and from 10 to 20 working days for mortgaged goods," he said.
"This will apply to commercial mortgages and home loans. However, the already announced mortgage deferrals are likely to be the first port of call for residential borrowers."