Don’t forget to tune into the Government announcement at 4pm regarding Lockdown changes.
Scroll and hit the bold headings for the bits that are of use to you, skip what’s not (it’s not a read the lot deal!), no order of importance, so just get round it that way. Usual spiel read any comments from both perspectives, we might say something from one side but consider the rational argument from the other side.
General Reading Notes
We have put useful links where we can, and the Five Step Plan and Checklists and Recovery Planning Tools are also now on the JACAL website, we will keep adding to the website so please save it to your favourites: https://www.jacal.co.nz/jacal-covid-19/
The Covid Government Business NZ website also has great information: https://www.business.govt.nz/covid-19
Three Tasks for the Week of Monday 20 April
If you have not done this part yet, these could be good starter tasks for the week ahead:
7 May GST, 2020 Tax Filing and Business Planning
Right now we favour drafting the 2020 Financial Statement positions, but not taking a final 2020 tax position too early, our view is wait and see what the Government rolls out next, there is still a budget to come in May and we don’t know how much more stimulus or legislation changes they will need to produce, You also need a bit of water under the bridge on how you fair for 2021 before we close off 2020. There are changes to various IRD rules as well that may make it beneficial to hold off filing 2020 tax returns early.
Having a good 2020 draft tax position though, means we can move to final accounts quickly if we need to for any reason, but we have flexibility to incorporate changes.
Please contact us urgently if you want to review your taxation, over the next few weeks to determine what is the best course of action for you, particularly for the 7th of May Provisional Tax and GST payments and returns.
To that end please clean up and have the GST return ready to file but consider filing and paying your GST returns on or after Monday the 4th of May unless we advise you to, please check with us if you have any doubts before filing these returns, or paying tax. If you are on an invoice basis the GST return might have Covid related Debtor and Creditor adjustments.
Take good counsel before making major decisions about your business, as you will have seen the Government is making a lot of changes and adding to the stimulus package regularly, we don’t think they are not done yet, and some of the stimulus will need time too fully roll out. The Stimulus can really impact on the viability of your business. If you feel you need to make a major call quickly, like shutting the doors (or keeping them open even), get a rationality test on the call from someone independent you respect.
You have a three day weekend coming up with the ANZAC day Monday the 27th being a public holiday, perhaps if some restrictions are lifted this will be a chance to get out!
It’s possible Tuesday the 28th will be the point the Government will move more fully from level 4 to level 3. The government might have some sort of progressive changes to level 4 as well, from this Thursday onward.
The Government will make a Public Announcement today at 4pm (20th of April) on level 4.
Cabinet will meet at 10.30am this morning to discuss any change in the level 4 mode, and how they will decide to move from level 4 and any changes to the criteria, here is a good link to the process: https://thespinoff.co.nz/politics/19-04-2020/jacinda-ardern-on-how-cabinet-will-decide-whether-to-move-to-level-three/
Workplace Operations and Covid19, and 1 to 4 alert Levels, for specific businesses please go to this link
Thanks to Rick Roper our IT director for assembling this guide below as an example.
Alert Level 4
At Alert Level 4, people must work from home unless that is not possible. Only essential work can be done from business premises if it cannot be done from home. It is possible for some business models to operate at Alert Level 4 even if doing non-essential work, e.g. providing online legal advice or online guitar lessons.
Alert Level 3
At Alert Level 3, everyone must still work from home unless that is not possible. Workplaces can be reopened if the work cannot be done from home and the workplace can operate consistently with public health guidance. However, there cannot be contact with the public. For example, retail needs to be by contactless purchase and delivery, including drive-through and click and collect. Retail storefronts cannot open to customers (except supermarkets, dairies and petrol stations).
Alert Level 2
At Alert Level 2, businesses are encouraged to use alternative ways of working where possible. The aim is to reduce levels of people movement and interaction. For example, a business could use staggered shifts to reduce the amount of interpersonal interaction between workers on premises.
I can technically work from home, but it’s really inconvenient, e.g. because my IT services are too slow, or I want access to printing. Can I go into the office at Alert Level 3?
You must work from home at Alert Level 3 unless that is not possible. We understand this isn’t always very convenient, and may result in people being less productive than they otherwise would have been in an office. However we all need to play our part in stopping the spread of COVID-19. Even if it is inconvenient, people still need to work from home wherever possible.
When can I meet with new or existing clients?
At Alert Levels 3 and 4, you should only meet with existing or new clients remotely, unless this is in the course of providing an essential service. You can meet clients in person at Levels 1 and 2.
|Alert Level 2||Alert Level 3||Alert Level 4|
|A financial advice firm can open its office.||A financial advice firm can open its office for workers who cannot work from home. The firm cannot take in-person appointments with clients.||A financial advice firm must close its office, but can continue to provide financial advice remotely. The Financial Markets Authority has also issued guidance on what financial services are considered essential, and therefore can be done from premises if working from home is not possible.|
Seems like Level 3 is continue working from home and Level 2 is return to normal-ish, but could give option/consider work from home, depends where NZ is at with active cases of Covid-19?
IRD Operating Status – in relation to dealing with all tax and administrative issues
Tax Payment Strategies for On Time or Overdue Taxes and Dealing with Tax Cashflow Issues
We can still purchase 2019 terminal tax due 7th of April 2020 as far out as 17 June 2020 for final payment, and we can look at a variety of dates for the various provisional taxes. In some instances this may be more economical than the time and cost to complete a payment arrangement and remission of penalties and interest.
If you are applying for finance for instance a bank might require you or we to certify all taxes are up to date, a TMNZ arrangement in my view would meet that requirement, a direct tax arrears arrangement with IRD might not. Have a look here to get the basics of this at: https://www.tmnz.co.nz/
Accessing Bank Lending and Support for Covid-19 Affected Businesses
Thanks to Alan Robertson at Strata Funding a commercial lending broker for his input here, http://www.stratafunding.co.nz/
The Business Finance Guarantee Scheme is one avenue for small and medium-sized businesses (SMEs) to access funding. It is a partnership between the Crown and participating approved banks. It will be clearly flagged on your banks website!
The funding is intended to support SMEs with targeted new loans (including increases to existing limits), as a response to difficulties caused by COVID-19.
Businesses with annual revenue between $250k and $80m can apply to their banks for loans of up to $500,000, for up to three years. $6.25 billion is available to New Zealand businesses.
The Government is guaranteeing 80% of the risk, while the banks are covering the remaining 20%. A normal lending process will be followed by the banks, who will make the lending decisions.
You need to apply with the bank you are an existing customer of, some of the banks are accepting enquiries and applications now but may still be working through how they will assess the lending.
The banks will get a lot of lending applications, therefore if you want to be at the top of the pile ensure you banker has what they need in a good format to assess your application for approval.
Banks have a managers to deal with and frame up customer lending requirements, in most instances a credit review officer vets the lending application for final approval. Therefore be organised, tidy and put your banker in the best position to get through credit approval.
Before you apply formally, collate and preparing the following to go with your application, this can apply to any lending not just this scheme, note the banks are developing templates to assist with business plans and applications also:
Kiwibank Kiwibank COVID-19 Business Support
For Charities, Not For Profits and Community Groups
Here is a great little link that puts a lot of the agencies that can help you on one page
Auckland Foundation below – have a community response fund.
Auckland City Council
If you are in the grants system and are getting them you must check here to see if you are going to be affected.
Musichelps Covid-19 Emergency Grant for those in the music industry
If you are involved in the Music Industry or know someone that is and are they or you are doing it tough we found this site for an direct grant of $500.00.
It’s not available to businesses or organisations, but it does apply to a wide race of jobs in the whole industry.
Creative NZ Opens first phase funding for Covid-19 impacted arts sector.
If you are in the creative and arts sector head here for information on funding assistance available to you:
If you have any type of reward or loyalty scheme it may be worth checking them, in case the benefits reduced or changed. If you have Fly Buys, Credit Card Points that attach benefits from other providers or Air Points, Loyalty Cards, and Gift Vouchers, review and see what points you can turn into Vouchers, Redeemable Products or Services or Cash Equivalent.
If you have unused Vouchers use them, though consider this might cause some small businesses considerable financial pain if you lay vouchers on them so perhaps use your judgement first, perhaps they will extend them for a period?
A lot of loyalty programs convert to supermarket vouchers, and they have done pretty well in lockdown, so if you can get New World, Pack & Save or Countdown supermarket vouchers and use them or better still donate them to a good cause it could be a great idea!
Companies Act/ Office Changes
The temporary changes affecting companies include:
Covid19 Insolvency Law Changes – Safe Harbour – Business Debt Hibernation Scheme
We have had various chats with the following, who have all been very knowledgeable and helpfull :
Aaron Nicholls at Nicholls Law Limited https://www.nichollslawlimited.co.nz/,
Steve Lawrence at PFK http://www.pkfcr.co.nz/ , and
James Cochrane at Stace Hammond, the Stace Hammond Website Link here provides a very good overview of your options, better than us spelling it out again:
If you think you are going to have issues in this space contact your usual lawyer or Jacal and we will refer you to the appropriate party for advice.
What’s happening in Australia in terms of a Covid-19 response and plan from their Government?
If you have Australian business interests or are interested in comparing what’s happening across the Taman try this link, there is a wealth of info, here they have apps and such, it’s also worth look to see if New Zealand might adopt some of these measures: https://www.australia.gov.au/
The have also set up a code of conduct on Commercial Leases, here is a link to that also:
We note that some of our clients have shown some really progressive and constructive work they have done on both sides as tenant and landlord.
Surveys – of your team and employees
We have utilised the free version of SurveyMonkey at Jacal to help assess and check the team, their welfare and where they are in relation to the impact of Covid -19 on them personally, professionally and how they feel we are dealing with it as leaders and as a business, to establish some of the broader things they may need. SurveyMonkey have a range of free Covid-19 templates that are very fast to generate, our survey took less than two minutes to complete and you get a summary of results, so definitely worth a look.
Wage Subsidy update
The MSD has now processed a vast number of these applications, there is the odd one with errors or waiting on information to be cleared or cross checked with IRD, and for the most part these are getting cleared and paid promptly.
A question we have been asked by non-PAYE shareholder employees and partners is whether, when the subsidy is received, you need to pay that as a salary or wage to the person concerned. In these circumstances the subsidy covers salary and drawings and should be used as appropriate to cover
the means for which that person is remunerated, that is, if the person normally takes drawings, the
subsidy will assist funding drawings, and tax implications will flow through the provisional tax system in the usual manner
We have added the MSD Link here, as it is now updated and has very good sections on clearing basic questions or providing information: https://www.workandincome.govt.nz/products/a-z-benefits/covid19-wage-subsidy.html
Disclaimer – While all care has been taken, Johnston Associates Chartered Accountants Ltd and its staff accept no liability for the content of this newsletter; always see your professional advisor before taking any action that you are unsure about.