Latest update from Inland Revenue

May 11, 2020

 

Inland Revenue has provided further guidance on Small Business Cashflow (loan) Scheme, as well as phone delays and changes to Use of Money Interest rates.

 

Small Business Cashflow (loan) Scheme
You may already be aware, the Government has introduced the Small Business Cashflow (loan) Scheme (SBCS) to support businesses and organisations struggling because of loss of revenue as a result of COVID-19.  

Overview

  • To be eligible for the SCBS loan a business or organisation must have 50 or fewer full-time-equivalent employees and be eligible for the Wage Subsidy Scheme. They must also have a sound plan to be viable and ongoing and hold information on file to verify this.
  • Applications will be open from 12 May 2020 up to and including 12 June 2020Most will receive funds within five working days.
  • IRD will administer the payments and repayments of this scheme. Businesses should speak with their financial advisors before taking this loan.
  • The loan has a five-year term and must be repaid by 31 July 2025.
  • The annual interest rate will be 3% beginning from the date of the loan being provided. Interest will not be charged if the loan is fully paid back within one year. Repayments are not compulsory in the first 24 months.
  • In most cases, businesses will be entitled to a loan amount of $10,000 plus $1,800 per full-time-equivalent employee, to a maximum of $100,000.  Details about eligibility criteria and applying for the loan can be found on the IRD website: Click here

 

Use of Money Interest (UOMI) rate change 
The Use of Money Interest rates payable on underpayments and overpayments of tax and duties are to change in line with market rates.

The rate charged on underpaid tax will decrease from 8.35% to 7.00%, while the rate for overpayments of tax will decrease from 0.81% to 0.00%. The new rates will apply from Friday 8 May 2020.

A Use of Money Credit Interest Rate of 0.00% means that there will no longer be any credit interest paid where any credit is held with Inland Revenue. This includes KiwiSaver contributions paid to Inland Revenue before being passed on to Scheme Providers.

The rates are reviewed regularly to ensure they are in line with market interest rates. They were last changed in August 2019. IRD states that the new rates are consistent with the floating first mortgage new customer housing rate and the 90-day bank bill rate.

 

Delays in IRD answering calls 
Inland Revenue’s focus continues to be providing support to New Zealanders impacted by COVID-19 through several Government initiatives in addition to their usual services.

IRD’s contact centres have reduced capacity due to staff working from home and the need to maintain social distancing in their offices.

As a result, IRD’s phone services will be severely limited. IRD are prioritising social policy contacts like Working for Families and Child Support, and supporting businesses with COVID-19, for example administering the Government’s Small Business Cashflow Scheme.

The only effective way to contact the IRD continues to be online and through the myIR portal. Web messages are the best way to ask them any questions and IRD have additional staff responding to these at present.

IRD state “Given the ongoing impacts of COVID-19 we anticipate we’ll need to operate in this way for some time. Thank you for your patience in what is a difficult time for all New Zealanders.”

 

If you would like to discuss any of the available relief packages, or recent changes from the Government that may affect your business, please contact our team at Nexia NZ who are here to assist you or offer advice.

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