COVID-19: Money In Your Pocket And A Few Reminders

Small Business Cashflow Scheme (SBCS) 
Applications open today 12 May. If your business was eligible for the Wages Subsidy, then it is also eligible for this loan. We are not permitted to apply for this on your behalf, but you must apply through MyIR.

We have set out some details below, and include the link to IRD’s website page here:

Of course, if you need any assistance or advice, you are welcome to contact us prior to applying.

A thumbnail of eligibility criteria:

  • Employ 50 or fewer FTE staff (Full-time equivalent)
  • Initial loan $10,000 + $1800 per FTE (up to a maximum of $100,000)
  • Eligibility criteria:
    • Same as for the Wage Subsidy
    • Required to provide a declaration that:
      • The business is viable and,
      • The funds will be used for core business operating costs and,
      • The business will enter a legally binding contract.
  • Loan is administered by IRD with the following terms:
    • No interest, if paid back within the 1st year OR
    • Interest charged at 3%
    • Maximum term of 5 years (repayments not compulsory in the first 2 years)
    • Must be repaid by 31 July 2025
  • Applications can be made from 12th May 2020 up to and including 12th June 2020. Funds should be received within 5 working days.
  • Tax agents cannot apply for the loan, on behalf of business owners, however we are here to help you if need, please contact us.
  • IRD have a calculator on their site – to determine how much loan businesses can get.
  • Businesses and organisations can apply for the SBCS loan through their myIR.

Loss Carry Back Scheme
Businesses expecting to make a loss in the 2020 year or 2021 year can use those losses to offset taxable income in the immediate prior year. Businesses need to have paid tax in the previous year.

We are presently setting up a way to help businesses who may be eligible. This will enable you to:

  • Find out if this will apply to you
  • Manage your tax payments
  • Receive funding to cover our fees for some of this work

We will advise in more detail in the next few days.
In the meantime, if you want more details, please contact us

Fee Funding
As referred to above, you may be eligible to receive funding for a registered service as part of the COVID-19 Business Advisory Fund.  While this does not extend to calculations, it may be of assistance to clients. There is an application process which we will advise to you in the next few days, and we are working to make it as simple as possible for you.

Wages Subsidy
This is still available if you are eligible and there are any members of your staff that you have not yet applied for.  For essential services, a limited leave allowance may still be applied for, contact us for details.

Bank Loans 
The bank lending announced by the government does not appear to have been a success, for a number of reasons. However, if you are planning to borrow from your bank, please contact us to discuss first, as some of our costs may now be funded, and we want to ensure the best possible structures and outcomes.

Paying (or not paying) tax 
While we have already sent you information about tax payments, remember to let us know if you plan to defer any tax payments. If you have already been in contact about 7 May or earlier tax, you do not need to contact us again.
We also recommend funding taxation through Tax Traders. Many clients are already using this, and finding it useful to even out tax payment flows. Again, we will provide more specific information soon.

And a parting shot from IRD – UOMI rate change 
The use of money interest rates payable on underpayments and over payments of tax and duties are to change “in line with market rates” (IRD’s words, not ours).
The rate charged on underpaid tax will decrease from 8.35% to 7.00%, while the rate for over payments of tax will decrease from 0.81% to 0.00%.
The new rates will apply from Friday 8 May 2020.