Tax Incentives for SMEs and Commercial Leases
The Government has come out today with further incentives for small and medium size businesses worth $3.2 billion of tax and business assistance.
Income Tax
Income tax takes the greatest slice, with the scheme costed at 3.1 billion.
In essence a tax loss carry-back scheme has been approved. This will allow a large number of businesses to access their previous tax payments as cash refunds. In essence, from the detail we can see this means, that if you forecast a loss in the current year (2020 / 2021) it can be offset against the tax paid on a profit from last year (2019 /2020), so it looks like in theory we will have an averaging effect in terms of tax that should have been paid over 2 years.
The continuity rules will change, so that new capital can be raised and it won’t threaten the 49% threshold where at least 49% of the minimum voting interests (shares) in the company, must be maintained in order to carry losses forward. In terms of imputation credits, the loss threshold is 66%.
IRD is to be given more flexibility in dealing with businesses affected by Covid-19. This may mean extending deadlines for filing tax returns and payment of provisional tax for up to 18 months.
Commercial Properties
The Government has opted for an extension o the notice required for the cancellation of leases and for mortgagee sales or repossession of properties. Many of us hoped for something akin to a rent holiday, freeze on rents or rent reductions as typified within domestic rentals.
Commercial landlords will now have to give 30 days’ notice to cancel a lease as opposed to the current 10 days. Mortgaged goods, before they can be seized, will also increase to 20 working days notice as opposed to 10 working days previously.
Business Advice
Over the next 12 months, the government will pour $25 million into free business advice for small to medium size businesses. This could range from business continuity planning to financial management. This scheme will be managed by the Regional Business Partner Networks.
For the official release, please click here.