COVID-19 Resurgence Wage Subsidy Scheme: Everything You Need To Know

COVID-19 Resurgence Wage Subsidy Scheme: Everything You Need To Know

A new Resurgence Wage Subsidy Scheme payment has been announced by the government for employers and self-employed people who have been impacted by the recent resurgence of COVID-19.

 What Is The Eligibility Criteria?

All New Zealand employers who have had or expect to have a drop in their revenues of at least 40% due to the resurgence of COVID-19 may apply for the scheme. Businesses must show a drop of at least 40% in their revenues for a 14 day period between the 12th of August to the 10th  of September, compared to a similar period last year.

You may be eligible if:

  • You are an eligible employer
  • Your business must be operational in New Zealand
  • Your employees must be working legally in New Zealand
  • You must have a 40% decline in revenue for a two week period between the 12th of August and the 10th of September.
  • Your business must mitigate the financial impact.
  • You must retain the employees you’re applying for.

What Are The Payment Rates?

The subsidy aims at supporting business for a payment period of two weeks. The payment rates are as follows:

  • $585.80 for people working 20 hours or more per week (full time rate)
  • $350.00 for people working than 20 hours per week (part-time rate)

As per information released by the government, the MSD is currently aiming to pay the Resurgence Wage Subsidy Scheme within 5 working days of receiving an application. This is conditional to the fact that the details being submitted by the company match the details registered with Inland Revenue. Mismatches in the information being submitted may lead to delays in processing.

When Can You Apply?

Application dates for the scheme are open from 1pm on the 21st of August until the 3rd of September 2020.

Important Note:
You can’t receive the Resurgence Wage Subsidy Scheme if you’re currently receiving payments from previous schemes such as the Wage Subsidy SchemeWage Subsidy Extension Scheme or the Leave Support Scheme for an employee.

What Does This Mean?
If your business has been registered for any of the previous schemes, that is the Wage Subsidy Scheme, The Wage Subsidy Extension Scheme or the Leave Support Scheme, and you’re still within the payment period of any of the previous schemes mentioned here, you might not to be eligible for the Resurgence Scheme.

The previous Wage Subsidy Extension Scheme announced an 8 week payment period for all businesses or self-employed individuals that were approved by the MSD. This means that if you’re still receiving payments from the previous scheme’s 8 week payment period, you won’t be eligible to apply for the Resurgence Scheme.

However if your payment period from the previous schemes has already concluded or will conclude before the 3rd of September, you may still be eligible for the Resurgence Wage Subsidy.

When you apply, you’ll be asked to declare that you meet the criteria and agree to the obligations for the use of this payment. All payments will be subject to audits and reviews.

If you have any questions regarding the Resurgence Wage Subsidy Scheme or how to apply for it, you can get in touch with us on +64-9-972-2236 or email us on info@jzr.co.nz

Written by Rowain Pereira

Related Articles

Your Business Holiday Season Check-up

The Christmas shutdown time can be busy and eventful for most small businesses across New Zealand, who are preparing for the holiday season. To ensure that your Christmas break stress-free and for the best interests of your business, We thought it might be useful to...

How to Use Marketing Effectively to Grow Your Sales

Increasing sales is not only just an important marketing objective, but also an essential means of maintaining business viability, and potentially expanding your growth. There are many efficient and sometimes inexpensive ways of using marketing to drive your sales. In...

Ways To Boost Your Mental Wellbeing at Work

The resurgence of COVID-19 and the strain it has caused on the economy can seem intimidating to a lot of small business owners who are currently struggling to stay afloat. If you’re a business owner or  manager, there’s a lot you can do individually to support your...

Stay Up to Date With The Latest News & Updates

Join Our Newsletter

Stay up to date with all of the latest news and insights related to your business. Sign up below and we promise to only send you content 

What’s New for Property Owners: Airbnb to Boarders

What’s New for Property Owners: Airbnb to Boarders

If you own a property which is being rented out for short stays (up to four weeks) this article will highlight all your necessary tax commitments, as well as all the new property rules which might come into effect this financial year.

Highlights:

  • If your tax due at the end of the year is $2500, you will have to pay provisional tax instalments from the following year.
  • If you’re earned income is more than $60,000 per year, from taxable activities, it is mandatory for you to register for GST.

It would be wise here, given the choice, for you to consider whether registering for GST is the best option for you. Once you’ve registered for GST, there are on-going requirements like record keeping, invoicing and filing returns which must be maintained. Once you’ve registered for GST, it also means that the sale of that property, or even the discontinuation of services, will still be liable to GST. For more insight to help you make the right decision, you can call us for advice.

If you own a property where you host boarders, you need to choose between the standard-cost method and the actual cost method to work out the income you make from boarders so you know how much tax to pay.

The standard-cost method keeps things simple, because when your income from a boarder is equal to or below the standard costs, it’s exempted from tax. You can also claim standard costs instead of claiming on actual expenses. The weekly standard cost per boarder has been changed to $186 per week for the 2019/20 tax year. The standard cost includes everything from food, household bills, gifts, and entertainment and activities that you provide for the boarder. You’ll also need to calculate your annual hosting and transport costs.

In case you’re hosting five or more boarders at your property, the actual-cost method must be used. If you’re hosting up to four boarders you can then choose to claim actual costs instead of standard costs. When using the actual cost method, all the income generated from the rental is considered to be assessable income and must be declared. While using the actual cost method to calculate your income you will have to:

  • Keep full records of your actual income
  • Keep full records of your expenses
  • Fill out an IR3 annual tax return to return income and claim actual expenditure incurred.

In case your return hasn’t been completed before the due date for filing, the IRD will assume that you have picked the standard-cost method.

It is however recommended to keep and maintain your records, because it might be heard to ascertain until the end of the tax year whether you want to use the standard cost or actual cost method. You can jot down the number of weeks you had boarders, the total income generated from these boarders, cost of capital improvements or rent paid, kilometres you’ve travelled transporting them, and any other related expenses.

If you need assistance with selecting the right method to calculate the income made from boarders the applicable taxes on it, feel free to get in touch with us by mailing info@jzr.co.nz or call us on +64-9-972-2236.

Written by Rowain Pereira

Related Articles

Your Business Holiday Season Check-up

The Christmas shutdown time can be busy and eventful for most small businesses across New Zealand, who are preparing for the holiday season. To ensure that your Christmas break stress-free and for the best interests of your business, We thought it might be useful to...

How to Use Marketing Effectively to Grow Your Sales

Increasing sales is not only just an important marketing objective, but also an essential means of maintaining business viability, and potentially expanding your growth. There are many efficient and sometimes inexpensive ways of using marketing to drive your sales. In...

Ways To Boost Your Mental Wellbeing at Work

The resurgence of COVID-19 and the strain it has caused on the economy can seem intimidating to a lot of small business owners who are currently struggling to stay afloat. If you’re a business owner or  manager, there’s a lot you can do individually to support your...

Stay Up to Date With The Latest News & Updates

Join Our Newsletter

Stay up to date with all of the latest news and insights related to your business. Sign up below and we promise to only send you content 

Are You a Landlord? Keep-up with the Changes

Are You a Landlord? Keep-up with the Changes

With one third of Kiwi’s renting their homes (some even for a lifetime), it’s important to have clear and fair rules for tenancies. This article will highlight some of the recent changes that have been made to rental property rules.

The government’s tenancy law reforms announced towards the end of 2019 are aimed at mainly protecting security and stability of tenancies for tenants. The Residential Tenancies Amendment Bill is making its way through Parliament and is currently with the Select Committee before moving on the to the next stage, the Second Reading.

If you’re a landlord:

  • Rent can only be increased once in twelve months, as opposed to six.
  • Tenants cannot be evicted without reason. Currently, periodic tenancy agreements can be terminated without reason, if you give your tenant 90 days’ notice. However, now you must select a reason from a list by the Residential Tenancies Act, stating a reason for the termination of the agreement.
  • Tenants will now be able to add minor fittings such as brackets to secure furniture against earthquakes, baby-proofing the property, installation of visual fire alarms or doorbells, or hang pictures.
  • Rental “bidding wars” will be banned.
  • The Tenancy Tribunal will be able to award compensation or order work to be done up to a value of $100,000 (instead of $50,000).
  • New tools will be available to help you take direct action against any tenants breaking the rules.

In context to damages, methamphetamine, and unlawful rental premises, the following changes will now be applicable:

  • If tenants (or their guests) damage your rental property as a result of careless behaviour, they will directly be liable. They can be charged up to a maximum of four weeks of rent or your insurance excess (whichever is lower).
  • If you have insurance, you must include this (and the excess) in any new tenancy agreement. A copy of the policy agreement should also be made available to the tenant on request.
  • You can also now test for methamphetamine while your tenants are living there. They must however be given at least 48 hours’ notice (but not more than 14 days’ notice). Boarding house tenants must be given at least 24 hours’ notice.
  • All legal requirements relating to the buildings, health, and safety apply to your rental property as well. It is the duty of the landlord to ensure that the property can legally be lived in at the start of the tenancy.

If you would like advice on how to manage the income being generated from your rental properties, or if you have any queries relatives to the new amendments being made to the Residential Tenancies Bill, please feel free to reach out to us on info@jzr.co.nz or call us on +64-9-972-2236.

Written by Rowain Pereira

Related Articles

Your Business Holiday Season Check-up

The Christmas shutdown time can be busy and eventful for most small businesses across New Zealand, who are preparing for the holiday season. To ensure that your Christmas break stress-free and for the best interests of your business, We thought it might be useful to...

How to Use Marketing Effectively to Grow Your Sales

Increasing sales is not only just an important marketing objective, but also an essential means of maintaining business viability, and potentially expanding your growth. There are many efficient and sometimes inexpensive ways of using marketing to drive your sales. In...

Ways To Boost Your Mental Wellbeing at Work

The resurgence of COVID-19 and the strain it has caused on the economy can seem intimidating to a lot of small business owners who are currently struggling to stay afloat. If you’re a business owner or  manager, there’s a lot you can do individually to support your...

Stay Up to Date With The Latest News & Updates

Join Our Newsletter

Stay up to date with all of the latest news and insights related to your business. Sign up below and we promise to only send you content 

Accounting: A Digital Transformation

Accounting: A Digital Transformation

It’s 2020 and the accounting industry is experiencing a digital transformation, one which is changing the way we function. The shift from traditional accounting to implement technology has changed the way accountants’ function on a day-to-day basis in the industry. The shift has now moved to include advisory and consultancy services. Technology has helped in automating accounting procedures to an extent where accountants can now spend more time focussing on what is and isn’t working for their clients, and provide them with valuable changes to do so.

The increase in the roles and responsibilities of a modern-day accountant requires key skills, like critical thinking, analysis and decision making. Traditionally basic accounting training consisted of auditing and tax preparation.  Technology coupled with data analysis has bought about the ability for accountants to now perform forecasting analysis to help guide business owners to make better decisions.

We’re outlining some of the major technological advancements that have been made through the introduction of new digital tools and applications, over the years which have changed the way the accounting industry functions. Some of these are tools that we use at JZR to ensure more efficiency and higher productivity levels. This lets us complete our core accounting tasks, and let us provide our clients with valuable insights and recommendations.

  1. Cloud Based Accounting: Cloud accounting is the use of the internet to permanently store data and use of business applications through a remote server. At JZR we achieve this by using Xero as an accounting software tool. It’s easy to use, and lets you access data remotely, and at any time. Data is permanently stored in huge data centres, versus the traditional system of using paper, and filing. Cloud based accounting is also extremely economical and convenient, since our clients can also access the same data to stay updated, and you only pay for what you use. Xero accounting services also lets you transform data seamlessly across its different platforms, like Xero Practice Manager for example which stores every client’s data separately can be exported to Xero’s Accounting software with just the click of a button. The software lets you invoice a particular client, therefore cutting drown preparation time massively.

 

  1. Payroll Technology: Payroll technology is another sector of accounting which has changed immensely over the last decade. Innovative tools like ‘SmartPayroll’ help in massively cutting down you would spend over manually entering and registering the data. Software’s like Smart Payroll is designed to work out payroll calculations and tax deductions automatically, saving time in payroll processing and to automatically generate payslips. It also files the payroll returns mandated by the IRD electronically so that you never miss a deadline.

 

  1. File Sharing: File sharing tools like ‘Dropbox’ and ‘Google Drive’ make sharing information and documentation easy and accessible. Common work folders can be shared by team-mates and colleagues to make sure communication lines are maintained. It also makes the possibility of working remotely much more convenient since most of the data and client files are already backed up to cloud-based platform on the internet.

 

  1. Video Communication: Video communication has also enabled accountants and their clients to converse from the convenience of their own work spaces, thus making accountants more accessible to their clients and vice versa. Tools like ‘Skype’ and ‘Zoom’ enable options like screen sharing which enables users to share their desktop screens in real time, which could be really useful while analysing statistical data or for the purpose of making presentations. It also saves time by cutting down on the hassle of travel, and thus ensures accountants get more time to be productive.

 

 

  1. Other Software Tools & Applications: There are a bunch of other software applications which further contribute to simplifying the role and job of an accountant today. ‘Docusign’ is another good example of a tool that enables it users to send, sign and approve documents from anywhere and at any time. It helps significantly in reducing the amount of paperwork and clutter. Another great tool for accountants is ‘HubSpot’. ‘HubSpot’ gives accountants and its users a chance to manage marketing campaigns from a simple dashboard that is designed to be simple to use and efficient. Tools like HubSpot now allow accountants the ability to market their businesses to prospective clients by showcasing their skillset and business propositions.

 

All in all, the industry has evolved substantially over the last decade. The industry has a strong growth potential for the future, and tremendous opportunities.

To know more about how we can use the right tools to help your business grow, get in touch with by mailing us at info@jzr.co.nz or call us at +66-9-972-2236.

Written by Rowain Pereira

Related Articles

Your Business Holiday Season Check-up

The Christmas shutdown time can be busy and eventful for most small businesses across New Zealand, who are preparing for the holiday season. To ensure that your Christmas break stress-free and for the best interests of your business, We thought it might be useful to...

How to Use Marketing Effectively to Grow Your Sales

Increasing sales is not only just an important marketing objective, but also an essential means of maintaining business viability, and potentially expanding your growth. There are many efficient and sometimes inexpensive ways of using marketing to drive your sales. In...

Ways To Boost Your Mental Wellbeing at Work

The resurgence of COVID-19 and the strain it has caused on the economy can seem intimidating to a lot of small business owners who are currently struggling to stay afloat. If you’re a business owner or  manager, there’s a lot you can do individually to support your...

Stay Up to Date With The Latest News & Updates

Join Our Newsletter

Stay up to date with all of the latest news and insights related to your business. Sign up below and we promise to only send you content 

Tax Changes to Support Businesses: The Temporary Loss Carry-back Scheme

Tax Changes to Support Businesses: The Temporary Loss Carry-back Scheme

What is the scheme?

Businesses that are expecting to make a loss in 2019/20 or the 2020/21 financial year will be able to estimate the loss and use it offset profits in the past year. The scheme introduces the concept of offset years, which are the pair of years affected by the carry-back. The first year is named as the taxable income year and the second as the net loss year.

Simply put, this means that they can carry their losses back a year. This will allow the IRD to refund some or all of the tax paid for the year in which the business was in profit.

Taxpayers won’t have to rush to re-estimate their provisional tax before the 7th of May. The law change makes it possible for taxpayers to re-estimate it after the date of the final instalment. This gives them more time to work out any estimated losses for the income year 2020/21

All types of taxpayers – companies, trusts and even individuals will be able to carry-back losses. The majority of individuals who are taxed through the PAYE system do not have losses, so would be unaffected by this measure, but those what operate businesses through partnerships, limited partnerships, and look through companies would be able to benefit.

Standard late payment use of money interest would apply if the loss carry-back is overestimated. Ownership continuity, grouping, and imputation rules would also apply.

The proposed measure is intended to be temporary with the government planning to develop a permanent loss carry-back which will be applicable from FY22.

We’ve outlined the scheme through some examples below to further help you understand how it works. 

Example 1

ABC Architects is an architectural firm based in Christchurch. The business has been performing well in the last two years, but because most of its current projects are on-going (under construction), its work has dropped off due to restrictions being imposed on account of the COVID-19 pandemic. For the 2019/20 year the business is predicting its taxable income to be $5.6 million. However due to the losses that the business will incur on account of the restrictions being imposed and having no future projects in the pipeline, the business anticipates that for the 2020/21 year it will make a loss of $3.2 million.

ABC decides to carry back the anticipated loss to the 2019/20 year where the business paid a provisional tax of $1.2 million over the first two instalment dates for the 2019/20 income year and would be due to pay another $368,000 on May 7th, 2020. The firm re-estimates its provisional tax for the year, to take account for the carry-back loss which means its taxable income will be only $2.4 million ($5.6 million – $3.2 million), with the tax liability on that only being $672,000 ($2.4 million x 28%). The refund that ABC architects will receive is $528,000 ($1.2 million – $672,000) which will help provide it with funds to meet its ongoing costs.

Example 2

Jack & Austin own Model Figures Limited (MFL), a company that makes model spacecraft. They’ve had a good year up until 31st March 2020 overall, however performed really poorly in March since their customer base mainly comprises of overseas visitors. Given the current travel restrictions imposed on account of the COVID-19 pandemic, Jack and Austin do not see their businesses’ financial position recovering unless they get their online sales running or travel restrictions get lifted.

They estimate that in spite of cost cutting MFL will still make a probable loss to 31st March 2020 of at least $120,000. In the 2019/20 income year MFL used the standard method to pay provisional tax. Two instalments of $24,000 were paid on the 28th of August 2019, and the 15th of January, 2020. Jack and Austin have calculated that pre-COVID, MFL was estimated to make taxable income of $267,000, with tax payable on that amounting to $74,460, and hence they final instalment of provisional tax which amounted to $26,760 would be payable on the 7th of May, 2020.

The decide to carry-back the anticipated loss from the 2020/21 income year to the 2019/20 income year. This will give them a revised taxable income of $147,000 ($267,000 – $120,000) with a tax liability of $41,160. At the third instalment they decide to estimates MFL’s tax liability at $41,160 via myIR. This means that they would be no payment required for the third instalment, and Inland Revenue will refund MFL for an amount of $6,480 ($48,000 – $41,160).

However, by October 2020 Jack and Austin realise that the business is doing far worse than they anticipated and the expected loss is now calculated to be $170,000. While preparing MFL’s 2019/20 income tax return they reflect an increased loss in the return and hence receive an additional refund of $14,000 while filing.

When completing the 2020/21 tax return for MFL, Jack and Austin realise that the loss for the 2020/21 year will only be $110,000 given the quick recovery of the tourist industry in the first quarter of the 2021 calendar year. They complete the filing process for 2020/21, and amend the 2019/20 return for MFL. The reduce loss will now mean that the MFL has a taxable income of $157,000 ($267,000 – $110,000) and a tax liability of $43,960 in 2019/20. Since MFL has only paid a tax of $27,160, they will have a tax payable of $16,800 (which will be $5,600 at each instalment date). It will need to pay use-of-money interest on this amount over the three provisional tax instalment dates.

 

If you have any queries regarding the following, please feel free to get in touch with us on info@jzr.co.nz or call us on +64-9-972-2236.

Written by Rowain Pereira

Tax

Related Articles

Your Business Holiday Season Check-up

The Christmas shutdown time can be busy and eventful for most small businesses across New Zealand, who are preparing for the holiday season. To ensure that your Christmas break stress-free and for the best interests of your business, We thought it might be useful to...

How to Use Marketing Effectively to Grow Your Sales

Increasing sales is not only just an important marketing objective, but also an essential means of maintaining business viability, and potentially expanding your growth. There are many efficient and sometimes inexpensive ways of using marketing to drive your sales. In...

Ways To Boost Your Mental Wellbeing at Work

The resurgence of COVID-19 and the strain it has caused on the economy can seem intimidating to a lot of small business owners who are currently struggling to stay afloat. If you’re a business owner or  manager, there’s a lot you can do individually to support your...

Stay Up to Date With The Latest News & Updates

Join Our Newsletter

Stay up to date with all of the latest news and insights related to your business. Sign up below and we promise to only send you content