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New Zealand: Tax relief in government's response to coronavirus (COVID-19)

New Zealand: Government's response to coronavirus

New Zealand’s government on 17 March 2020 released a fiscal and economic response to the COVID-19 pandemic. The amount of the proposed relief is equivalent to approximately 4% of New Zealand’s annual GDP.

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The measures in the package include:

  • $5.8 billion in wage subsidies for businesses, up to a maximum cash payment of $150,000 over the next 12 weeks capped at $585 per week per full-time employee. Businesses would need to demonstrate a 30% greater or decline in revenue due to COVID-19 for any month between January 2020 and June 2020.
  • $126 million to support paid leave for workers impacted by COVID-19 or self-isolation and a $100 million work redeployment package.
  • $2.8 billion in assistance to those receiving benefits, via a $25 per week increase in core benefits from 1 April and a doubling of the winter energy payment.
  • $500 million in additional health funding, to improve the COVID-19 response.
  • $600 million to support the aviation sector.

 

$=New Zealand dollars

Tax relief measures

  • The reintroduction, from the 2020-21 income year, of a 2% DV depreciation deduction for commercial and industrial buildings. This would include hotels and motels.
  • A temporary increase in the threshold for expensing low-value assets from $500 to $5,000 during the 2020-21 income year. The threshold would be $1,000 from the 2021-22 income year.
  • The threshold for paying provisional tax would increase from $2,500 to $5,000 of residual income tax, from the 2020-21 income year.
  • Inland Revenue would be given the authority to write off interest on late payments for those adversely, financially, affected by COVID-19 for tax payments due after 14 February 2020.
  • Changes to the calculation of the in-work tax credit to remove the hours worked test.
  • Inland Revenue would be given greater information sharing authority to facilitate a whole of government response to COVID-19.

Importantly, legislation is required to implement these measures, that is expected to be introduced shortly and to proceed under Parliamentary Urgency for prompt enactment.


Read a March 2020 report prepared by the KPMG member firm in New Zealand

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