The Government has announced a raft of new measures to provide relief for small and medium-sized businesses during the Covid-19 pandemic.
Finance Minister Grant Robertson said in a statement the new measures include a tax loss carry-back scheme that is estimated to cost $3.1 billion over the next two years.
There will also $60 million in estimated annual savings to business each year from changes to the tax loss continuity rules and $25 million in the next 12 months for further business consultancy support.
The Government has already announced $20 billion in support.
They will also provide greater flexibility for businesses affected by the nationwide lockdown to meet their tax obligations, as well as 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,” Mr Robertson said.
The tax loss carry-back scheme will allow many businesses to access previous tax payments as cash refunds, he said.
“Essentially this means a forecast loss in the current financial year can be offset against the tax paid on a profit from last year.”
The Government will also change current tax loss continuity rules to make it easier for firms to raise new capital without losing the benefit of their existing tax losses.
Small Business Minister Stuart Nash said some businesses are struggling to meet their non-wage fixed costs - such as interest, rent and insurance - but are not currently in a position to take on additional debt.
He added that otherwise viable small and medium-sized businesses would be forced to close permanently without further Government support.
“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,” Mr Nash said in the same statement.
The support services will be provided by the Regional Business Partner Network, helplines run by the Employers and Manufacturers Association and the Canterbury Chamber of Commerce.
“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.”
New measures have also been 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 said the Government will extend the current timeframe for commercial landlords to cancel leases from 10 working days to 30 due to the difficulties businesses may face in paying rent, and landlords who are unable to meet their mortgage obligations.
The extension will apply for both "the period the tenant is in arrears before the notice is given, and for the period to remedy the breach,” Mr Little said in the same statement.
The timeframes for lenders will also be extended from 20 to 40 working days for mortgaged land, and from 10 to 20 working days for mortgaged goods, he said. The extension will apply to commercial mortgages and home loans.
However, mortgage deferrals, which had been previously announced, are likely to be the first choice for residential borrowers, he said.
“These measures will ensure an orderly process to deal with commercial lease disputes caused by Covid-19.”
Legislation enacting the changes will be introduced on April 27 and will apply effectively retrospectively following the passing of the bill.
Work is also underway on further support for businesses and households as the impacts of Covid-19 become clearer.
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