In this session, we’ll take a ‘plain English’ look at the latest changes to the tax system, and how SMEs can access the support they need to keep trading.
Despite the biggest single tax support package in modern New Zealand history, Tauranga business leaders say there is still a long way to go.
Priority One chief executive Nigel Tutt welcomed the package but said there was still a long way to go. Photo / File
"The overall package is good, playing an important part in the overall support for businesses from Government – but there's a long way to go.
"To be even more helpful for our at-risk businesses in the Western Bay, the Government need to extend the wage subsidy scheme, provide assistance for landlords, and get at least $500m of infrastructure spending to the Western Bay in the short term."
Tutt said the most significant part of the scheme would be the carry back mechanism, which would allow a business to offset a loss this year against tax paid on a profit last year.
Prime Minister Jacinda Ardern and Revenue Minister Stuart Nash. Photo / File
The Government's "recovery Budget" is just over two weeks away, and Minister of Revenue Stuart Nash says there is more support to come.
Finance Minister Grant Robertson has previously stated that the Budget will contain "significant" new measures to help businesses recover from Covid-19.
But at the moment, it's a game of wait-and-see. Prime Minister Jacinda Ardern would not go into detail about her Government's Budget plans when asked on Thursday.
Tauranga BDO managing director Fraser Lellman said the tax relief package would provide greater flexibility for the IRD to work with taxpayers in meeting their tax obligations and ease some of the cashflow strain.
Lellman believed the tax relief package would be well received by the local business community, but there were still some fishhooks to consider.
"Many small and medium-sized enterprises (SMEs) will struggle with their cashflow in the short to medium term.
"Business owners would be wise to prepare a conservative forecast to establish cashflow requirements for the next 12 months and it will be critical that they have accurate and timely financial reporting systems to monitor their results and respond quickly."
Accounting firm BDO managing director Fraser Lellman (left) said quite a number of SMEs were already struggling prior to Covid-19. Photo / File
Lellman said the economy was already softening before the outbreak of Covid-19 and quite a number of SMEs were already struggling.
Tauranga Chamber of Commerce chief executive Matt Cowley said local businesses had a fighting spirit and would do whatever it took to stay operating.
But the wage subsidy ends on June 30 and many businesses are operating at reduced capacity because of health and safety restrictions, so business owners were anxious Cowley said.
"They will need to make decisions in May about their staffing levels, noting the standard four-week redundancy notice period for most staff, to prepare for July 1 when the wage subsidy scheme is over.
"The tax relief package is great for companies who can carry forward last year's profits. A lot of small businesses, particularly new businesses, are marginally profitable at the best of times."
Tauranga Chamber of Commerce chief executive Matt Cowley said there were many anxious business owners in the Bay. Photo / File
Cowley said businesses were constantly re-investing to grow or were paying off debt used to buy stock.
Any additional support for rent relief for commercial tenants would also be supported, Cowley said.
"Most hospitality and retailers on the main streets are small business owners.
"These businesses pay the highest rental leases in the region per square metre. It is critical that we keep our main streets alive as they reflect the heart and soul of our communities."
