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Accumulus Newsletter - March 2020                                                                                                                                                                                             

27 March 2020

                                                                                                                                      

GREETINGS                                                                                   

The team at Accumulus wish all our clients a happy healthy and prosperous financial New Year. Though the chances of this appear somewhat threatened except for the certainty that carbon emissions will fall this year, could we even be in for some global cooling! As people in the present always say "we live in interesting times".


COVID 19 SUBSIDIES

The lockdown we are experiencing excludes essential services which crudely speaking consists of food, health and enforcement (Police, Army and the Courts) and all the related production, transport, distribution and support services.

In the Katikati area this consists primarily of orcharding, farming and the processing and transport of the produce especially Kiwis and avo's and the supply of supermarkets and dairies.

If you are self employed (or self employed and an employer), but not in the essential services the likelihood is that you should be making a claim for a subsidy.

Even businesses running essential services eg petrol stations may have a claim because their turnovers are likely to be down as a consequence of Covid precautions, the lockdown and reduced traffic flows. Kiwifruit growers could also be claimants if labour shortages mean that some of the crops don't get picked and processed.

https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null

 

There are two potential claims:

-       for a wage subsidy (business has experienced or anticipates that for at least one month between January and June 2020 it will experience a     downturn in sales compared with the prior year of more than 30% as the result of Covid 19),

-       for a leave subsidy (for people having to self isolate that cannot work from home).

The detail of what the requirements are to qualify are given on the website. Where there is the prospect of claiming on either, the wage subsidy presently looks the more generous. It is for 12 weeks (one time only) as against 2 weeks for the leave subsidy (repeat claims can be made). The application forms were in place before the level 4 call so things could change.

Recipients of the employer subsidy are obliged to pay out a minimum of 80% of an employee's normal wage for the duration of the subsidy – this may be more or less than the subsidy amount but the expectation is that the whole subsidy should be paid out.

The forms are very simple to complete and the same form is used for either subsidy depending which of the reasons you select for making the claim.

Please note the employer form should be used for both employees and owners of the business, so for a company shareholder employees and wage employees are all listed on the one form and for a partnership the partners and employees are all on the same form.

The payments are $585.80 per week for full time $350 per week part time (20 hours per week classifies as full time for the subsidy). Payments are made in full up front so a single full time wage subsidy amounts to $7029.60.

Please contact us if you have any doubts or questions regarding claims - by email and we will call you back as we are working from home.

 

TAX CHANGES

Minimum wage from 1 April 2020:

-       for an adult                  $18.90 ($17.70)

-       starting / training          $15.12 ($14.16)

Depreciation on Non residential Buildings is to be restored. 

Provisional tax threshold rises to $5,000 for the 2021 year.

Low value assets threshold from $500 to $5,000 from 17 March 2020 for a year before the threshold reduces to $1,000.

Use of Money Interest IRD may write this off if it is Covid related, (but no mention of whether any penalties could still apply).

 

The last four measures above are at the Bill stage in Parliament and being brought in as part of the Covid relief package. The most interesting one of these is the re-introduction of depreciation on "non-residential buildings". Maybe this is in some degree a recognition of the unfairness of IRDs stance on earthquake strengthening and leaky building repairs being all capital. Some of these cases are still wending their way through the courts. IRDs stance (prior to the re-introduction of depreciation) could lead to buildings having a cost of more than their market values none of which would be deductible to the owner.


 

 

HOME BODIES        

 

Accumulus staff are working from home and will respond to emails and call you back or contact Jodie on the Accumulus mobile number 022-419-0454 and she will pass on messages.

                                                                


Regards
Alan Dodwell
Principal

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