Deductible Expenses


JACAL Covid-19 Key Updates

APRIL 20th 2020

Hi All


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:


The Covid Government Business NZ website also has great information:


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:


  1. Clean up your 2020 financial records, draft your 31 March GST return, complete your 31 March 2020 internal management accounts/cashbook to the extent you do these and management reports, get all your information in your system check the data is clean, save all the supporting documents, we have added a deductible expenses listing to the website,  look at this and see if it prompts you to check if anything is missed, then we can deal with options, if you require a year end checklist please ask.


  1. Budgets and Cash flows, put estimates in place and if you have them in place already, review them again and perhaps put a flexed budget and cash flow together that might model a different outcome as a result of the effects of Lockdown and Covid on your business.


  1. Review the Checklists and plans at the link above to the extent they apply to your business and get on to the two or three key areas you can cope with to start, or that are most urgent to address, everything is in there that you will need to tracked or managed.


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:


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


  • It’s a log jam at IRD, they closed for computer upgrades on the Thursday before Easter (9th), and reopened late last Thursday the 16th of April, and combined with Covid support for other Govt agency’s they have a backlog to clear, as do we with the IRD.
  • We will keep good records of all client issues, but it might take time to get action, our resources may better spent in some instances in other ways than trying to engage directly with IRD in the immediate term.
  • We are going to log issues with IRD using our IRD portal and templates and triage matters.
  • Any unfiled 31 March 2019 tax returns can be filed until 31 May without being penalised.
  • IRD’s preference for communication is via my IR, and well will work through this portal and clear matters for you as we can.
  • Temporary and Permanent Tax Loss Carry Back Scheme,  we sent the brief on this last week and the tax team will further update this during the week. See Red IRD Link below for the brief.
  • If you have an NZ or Overseas tax residency status matter or issue, because either you are locked in or out of New Zealand, please contact us.
  • IRD have also relaxed shareholding continuity requirements to retain tax losses, by lowering the 49% threshold if you pass the “same or similar business test” see Red IRD Link


Tax Payment Strategies for On Time or Overdue Taxes and Dealing with Tax Cashflow Issues


  • Please contact us for a strategy no matter the tax type or period we can help, in terms of dealing with tax, the sooner we start reviewing options the better, for past, present or future taxes.
  • We can arrange TMNZ tax purchase/options, so there are other ways for you to deal with tax payment issues in addition to direct payment arrangement deals with IRD on taxes to be paid.


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:


  • Before committing to a 7th May 2020 tax payment, based on your draft results to 31 March 2020, due to lockdown and Covid we recommend clients review their cash flow needs, and only pay IRD in the first instance if they have significant surplus funds to do so.
  • We understand that you might be of the view if IRD will not charge penalties or interest for non-payment, and why pay the tax now and instead kick the can down the road and deal with IRD later, I would rather be on the front foot, I think early engagement will get a better result.
  • Penalty and Interest relief period is for 24 moths effective 24 March 2020 to 24 March 2022.
  • In any event not paying the IRD upfront, will require a repayment arrangement or use of a TMNZ type Scheme.
  • At this stage we are still working through what IRD will deem an acceptable repayment arrangement.  If come 7th May 2020 and the IRD hasn’t yet signalled what an acceptable repayment arrangement is, we would assume 6 to 24 months, until told otherwise.
  • Instalment proposals may be accepted by IRD with “minimum requirement” if it’s within 24 months, thought this still needs to be clarified.
  • Any proposal that IRD views as risk based may require in support of the application three months bank statements/credit card statements, management accounts, lists of debtors and creditors, cash flow projections.
  • IRD link


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,


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:


  • Make sure you have all your bank account mandates IDs and Addresses for anti-Money Laundering (AML) ready, have scanned copies of your IDs, Drivers Licences and Passports and Utility Bills, if you don’t have certified copies, find a local JP to certify them if you can (ask on your community FB page), banks will check and may require they have up to date information from you.
  • Contact your accountant and work out what you need to put together, and what you can do v what is needed from the accountant.
  • Collate signed copies of your last year’s financials and taxation returns.
  • Clean up your internal management accounts in your accounting system, if you have final 2019s this will be March 2020s, if you only have 2018 finalised, then you need 2019 and 2020 for 31 March, this means making sure all the items are reconciled and basic items accounted for, makes sure you have a clean Profit and Loss Account and Balance Sheet Printed.
  • Scope out a basic cash flow and budget for the 2021 tax year, get your accountant to help you if needed, at least draft something to start with.
  • Do a one to two page summary outline of the business and why you need the funding and what you are going to use it for and what your basic business plan is for the next 12 to 24 months is, as clearly as best as possible.
  • Our checklists and plans Are here they will help you:


  • Here are the main banks links to the scheme, I try to load some examples of what you may need to complete to our website.



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:


Loyalty Programmes


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:

  • Giving directors of companies facing significant liquidity problems because of COVID-19 a ‘safe harbour’ from insolvency duties under the Companies Act.
  • Enabling businesses affected by COVID-19 to place existing debts into hibernation until they are able to start trading normally again.
  • allowing the use of electronic signatures where necessary due to COVID-19 restrictions.
  • Giving the Registrar of Companies the power to temporarily extend deadlines imposed on companies, incorporated societies, charitable trusts and other entities under legislation.
  • Giving temporary relief for entities that are unable to comply with requirements in their constitutions or rules because of COVID-19.
  • Here is the companies office link also

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,

Steve Lawrence at PFK , 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:


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:

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.