Key Tax Update - April 2020
Terminal Tax Payments Due 7 April 2020
A reminder that the terminal tax payment for the income tax year 1 April 2018 to 31 March 2019 is due for payment by 7 April 2020. Please make all payments to avoid accruing any penalties or interest.
Difficulty paying tax?
If you're having difficulty paying outstanding tax or upcoming provisional tax payments, we can help you setup a Tax pooling arrangement to defer the full payment to a time in the future that better suits your business cash flow. Tax Pooling is an IRD-approved service offered by our partner, Tax Management NZ (see link below for more information).
Further, the IRD maybe be able to help you set up an instalment arrangement. You can apply in myIR. You can also apply for a write-off due to serious hardship when you know you won't be able to pay the full amount
Wage Subsidy Schemes and other assistance
Before calling us, please read this link which answers common questions around the Government's wage subsidy scheme as well providing case studies and examples. There are a number of other business cash flow and tax measures that have been announced, including:
Giving Inland Revenue the discretion to remit use-of-money interest (UOMI) for customers significantly adversely affected by COVID-19.
Increasing the provisional tax threshold from $2,500 to $5,000 from 2020/2021.
Increasing the small asset depreciation threshold from $500 to $1,000 — and to $5,000 for the 2020/21 tax year.
Allowing depreciation on commercial and industrial buildings from 2020/2021.
Removing the hours test from the In-Work Tax Credit (IWTC) from 1 July 2020.
The Government is yet to release more detailed information on these measures. Please click here for the latest updates and information on these measures.
PAYE Payments and Payday Filing
The IRD has confirmed that all employers must continue the timely filing of all Payday filing and PAYE payments. Extensions can't be granted for GST and PAYE returns. However, the IRD acknowledges that this is challenging period of all businesses and have advised they may waive any penalties or interest due to late PAYE payments.
The IRD reiterated that the filing Employment Information ensures information about employees is up to date and accurate and will also help support any application for the Government’s recently announced wage subsidy (if required) given the current context of COVID-19.
This information will also assist the IRD the end of the tax year is closing – and IRD will be identifying refunds (in particular) which can be sent to customers to assist during this difficult time.
Increase in Minimum Wage on 1 April 2020
The adult minimum wage will increase by $1.20 from $17.70 to $18.90 per hour on 1 April 2020.
The new rate equates to an extra $48 per week before tax for employees on a 40-hour working week.
The starting-out and training minimum wage rates will increase 96 cents from $14.16 to $15.12, and will remain at 80% of the adult rate.
The Government acknowledges that the minimum wage increase is occurring during the COVID-19 Level 4 lockdown. This may challenge employers updating their payroll systems, or employers facing financial difficulties and using the Government’s Wage Subsidy scheme. The Governments has provided guidance for employers and employees on their rights and responsibilities regarding the minimum wage during the lockdown period - including allowing backdating the increase in pay to a later date. More information can be found by clicking this link.
