$3 billion small and medium business relief package announced

The Government has just announced a “tax loss carry-back scheme” package for small and medium sized businesses amounting to over three billion dollars.


Government backs business through COVID-19

The Government has announced a suite of new measures to provide relief for small and medium-sized businesses during the COVID-19 pandemic.

Finance Minister Grant Robertson says while the Government has already acted swiftly in response to the crisis, with about $20 billion in support already announced, it recognises that more is needed.

The new measures include:

  • $3.1 billion tax loss carry-back scheme (estimated cost over the next two years)
  • $60 million estimated annual savings to business each year from changes to the tax loss continuity rules
  • $25 million in the next 12 months for further business consultancy support
  • Greater flexibility for affected businesses affected to meet their tax obligations
  • Measures to support commercial tenants and landlords

“We have taken decisive action throughout this pandemic to cushion the blow for our businesses and workers – today’s announcement continues that focus. We need our businesses to stay solvent to help with the economic recovery as we emerge from this health crisis.

“Our focus on cashflow 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. 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” Grant Robertson said

Minister for Small Business Hon Stuart Nash says some businesses are 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 cashflow relief, we are going to provide tailored support services to help businesses weather the storm, at no charge to the business.

“Using established services including the Regional Business Partner Network and the helplines run by the Employers and Manufacturers Association and Canterbury Chamber of Commerce, we can get specialist, tailored advice where it is needed, fast. This could range from human resources advice to business continuity planning to financial management – because every one of these small businesses will have a different need,” Stuart Nash said.

New measures are also being announced to support stability in commercial property transactions, extending the timeframes required before landlords can cancel leases and mortgagees can exercise their rights to sale or repossession.

Justice Minister Andrew Little says many businesses may be finding it difficult or impossible to pay rent if they are no longer able to access their property, and if landlords are not receiving rent, they may not be able to meet their mortgage obligations.

“As a result, the Government will extend the current 10 working day timeframe that commercial landlords may cancel the lease to 30 working days. 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. 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.

“These measures will ensure an orderly process to deal with commercial lease disputes caused by COVID-19,” Andrew Little said.

Legislation enacting the changes announced today will be introduced on April 27 and will apply effectively retrospectively once the bill is passed.

Work is also underway on further support for businesses and households as the impacts of COVID 19 become clearer.

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14 Comments

  1. David

     /  15th April 2020

    Smoke and mirrors from Robertson. The 3.2 billion is basically getting your provisional tax that you have paid back earlier because your forecast profits have changed because of the shutdown, there is not one penny of taxpayer money shelled out on this policy. The man is a damn liar and the media are woeful in letting him away with this.
    Look he doesnt have to support businesses that is fine but dont pretend you are with vast headline grabbing $billions.

    Reply
    • Blazer

       /  15th April 2020

      So there is nothing helpful or positive for SMB here?

      Reply
      • David

         /  15th April 2020

        Sure there is in terms of flexible terms for tax affairs but there is no cost to the taxpayer and certainly not 3.2 billion. You forecast what your profit is going to be and pay tax on that forecast so its just getting that tax back that you have already paid earlier than when you do your annual accounts because you wont make a profit this year.
        If you didnt have a very profitable year last year or your business was formed in the last 18 months there is absolutely no benefit for you at all. As a taxpayer you should probably be happy but Robertson is throwing make believe numbers around and the package may well be worth 3.2 billion but all it is is getting the tax you have overpaid back.
        Its like claiming those people who help you get a tax refund as a government support package for workers.

        Reply
    • Duker

       /  15th April 2020

      Robertson is only saying this – beehive.govt.nz

      Finance Minister Grant Robertson says while the Government has already acted swiftly in response to the crisis, with about $20 billion in support already announced, it recognises that more is needed.

      The new measures include:

      $3.1 billion tax loss carry-back scheme (estimated cost over the next two years)
      $60 million estimated annual savings to business each year from changes to the tax loss continuity rules
      $25 million in the next 12 months for further business consultancy support
      Greater flexibility for affected businesses affected to meet their tax obligations
      Measures to support commercial tenants and landlords….

      Are you complaining about the media headlines – which he doesnt write…
      sure ‘$3.1 bill tax loss carry back scheme’ is the truth, as you even agree.
      Check your facts next time…. oh thats right your own lies are excluded

      Reply
  2. David

     /  15th April 2020

    3 weeks into a 4 week lockdown they finally have something for businesses struggling with their rent, 90% of people have already sorted these issues. The solution is we will make it more difficult for the property owner to enforce the rent obligations of the tenant by extending out the enforcement past the lockdown.
    Again its not help for anyone its just the government tilting the playing field in favour of a more vote rich environment. There is no taxpayer support for anyone, which is fine, but they are including it in a ficticious 3.2 billion dollar business package.
    Smoke and mirrors.

    Reply
    • Blazer

       /  15th April 2020

      quite interesting- commercial tenant versus commercial landlord….both motivated by turning as much profit as possible,and now a Mexican standoff,with neither being able to expect any sympathy from the hamster class.

      I forgot…blame the ‘gummint’…!

      Reply
      • David

         /  15th April 2020

        Robertson has basically tilted that in favour of the tenant by not allowing the landlord to evict them or enforce the lease. Same as he did for residential tenants but they all just give social welfare a call and they pay the rent, they also had the banks agree to do mortgage holidays none of which are available for commercial landlords.
        Either help both or get out of the way and let commercial people sort their commercial arrangements. Robertson has teased help for 2 weeks and then delivered nothing when he should have just said sorry no help from the taxpayers at the start but he is playing for a headline.

        Reply
        • Blazer

           /  15th April 2020

          Residential tenants HAVE to pay their rent.
          Residential landlords can get a 6 month mortgage holiday.

          You would think those bastions of free enterprise ,the rentier class masters would be too proud to accept Govt handouts….then again…..! 😉

          Reply
          • Pink David

             /  15th April 2020

            “Residential landlords can get a 6 month mortgage holiday.”

            You do realise this is taking on more debt that they then have to pay for don’t you?

            Happy to extend tenants credit at an interest rate that matches the bank. That’s all the ‘holiday’ is.

            Reply
            • Duker

               /  15th April 2020

              No you cant provide credit without the proper licenses.

            • David

               /  15th April 2020

              Course you can extend credit without a licence, where are you 1973

            • I read that people will add $14-40,000 to their mortgage if they take the 6 months ‘holiday’.

              The government is taking with one hand and pretending to give back with the other. They stuffed the economy and are now using our own money in a big gesture to ‘fix it’.

              It seems that more and more people are saying that the lockdown has been a gross over-reaction and doing more harm than good.

            • Blazer

               /  15th April 2020

              @Kitty…people have mortgages with the banks,not the Govt….believe it…or not.

            • Duker

               /  15th April 2020

              Maybe not a ‘license’ but
              https://www.consumerprotection.govt.nz/general-help/consumer-laws/credit-contracts-and-consumer-finance-act/

              ‘Under the Credit Contract and Consumer Finance Act a lender must comply with disclosure obligations and determine affordability and suitability of the loan. Failure to do so can result in a refund of interest and fees and or damages to the borrower.”
              Anyone can extend credit , but charging interest.

              Didnt you notice the bank interest rates have been falling recently, I bet you didnt give the ‘windfall of reduced loan charges’ to the tenants , nor should you in scheme of things as you take the risk in the swings and roundabouts. You will have a bit more interest to pay under this scheme and a bit less under falling interest rates. You know all this far better than me , why do I have spell it out. The value of your investment might take a dive too – on paper ..but you knew all along that nothing is certain

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