New business support measures, including a $3.1 billion tax relief package, are a welcome first step but more will be needed, says Employers and Manufacturers Association head of advocacy & strategy Alan McDonald.
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.
"The idea of getting back the tax that you've paid on revenue that you might not get, that's quite helpful," McDonald said.
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"It's another positive step but we've got so many businesses with no cashflow, no idea when they will be able to open their doors and when, they get back to trading, what their revenue is going to look like. So there is room for more."
Businesses also had access to the Governments $6.5b guaranteed finance scheme, he said.
But so far that was proving more difficult to access than some other schemes in place around the world.
In Canada they had one where business could get an interest-free loan of up to $40,000, he said.
Australia had a scheme that offered a direct government loan.
"So there are another couple of tools that the Government could use," McDonald said.
What exactly was required would become clearer as the rules around moving out of lock-down took shape, he said.
The tax relief could be the key to survivability for thousands of local businesses, said accounting software provider MYOB.
"Many smaller local businesses are staring down the barrel of a loss this year, and the Government's scheme could make a vital difference," said MYOB NZ country manager Ingrid Cronin-Knight.
"The majority of small New Zealand businesses expect to have a fall in revenue this year," says Cronin-Knight.
"So the ability to offset a forecast loss in the current year against the previous year's tax will give them more options to reduce cost and free up cash."
According to the latest MYOB Business Monitor - a survey of over 1000 SMEs nationwide in March - revenue growth over the 2019/20 year for the SME sector was already finely balanced, with 26 per cent of SMEs reporting revenue growth and 26 per cent experiencing falling revenue.
However, businesses saw an immediate hit in annual revenue from the coronavirus crisis, with 31 per cent of those businesses that responded later in the month reporting that their annual revenue was down.
Law firm Bell Gully said the lockdown had come at an extremely difficult time for businesses, coinciding with tax year end and causing "considerable uncertainty for future tax periods".
"The Government's 15 April 2020 announcements are welcome in this context and will provide a measure of relief for many taxpayers," the firm's senior partners said a report.
The tourism sector also welcomed the moves.
"We specifically raised the idea of allowing a forecast loss in the current financial year to
be offset against the tax paid on a profit from last year," said Tourism Industry Association chief executive Chris Roberts.
"So the Tax Loss Carry-back Scheme is particularly welcomed. Thousands of tourism businesses will be able to utilise this scheme," Roberts says.
The Scheme is estimated to cost the Crown about $3b over two tax years and is the first significant new support measure on top of the $20b programme already underway.
It was announced today with a range of other measures.
They included include changes to the tax loss continuity rules - estimated to cost $60 million and funding for $25m 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.
"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.
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, he said.