If you started a new business during the year, either self-employed or in a partnership, you may be able to get an early payment discount by making voluntary payments.
Early payment discount
You may be able to get an early payment discount of 6.7% if you:
are self employed or a partner in a partnership
have started a new business
get most of your income from the business
make a voluntary income tax payment before the end of the income year
elect to receive the discount before the income year’s tax return is due
do not have to pay provisional tax in the income year, or in the past 4 years
have not received an early payment discount, any self employed income, or any partnership income in the past 4 years.
The discount can quickly add up:
Danny owes $5,000 income tax. The discount saves him $335.
Miriama owes $20,000 income tax. The discount saves her $1,340.
Tax Issues?
For more tips on saving your business expense, contact one of our tax advisory team by emailingbas@ursacorp.co.nzor simply call 09 281 8885 to discuss your situation today!
The new Trust Act 2019 will come into effect soon on 31 January 2021 and will replace the Trustee Act 1956. The update marks the first significant change in New Zealand’s trust law in over 60 years.
Trust Act 2019 restated and clarified the current trust law. Some of the changes include:
a description of the key features of a trust to help people understand their rights and obligations
mandatory and default trustee duties (based on established legal principles) to help trustees understand their obligations;
requirements for managing trust information and disclosing it to beneficiaries (where appropriate), so they are aware of their position;
flexible trustee powers, allowing trustees to manage and invest trust property in the most appropriate way;
provisions to support cost-effective establishment and administration of trusts (such as clear ruleson the variation and termination of trusts);
options for removing and appointing trustees without having to go to court to do so.
“The Trusts Bill will provide better guidance for trustees and beneficiaries, and make it easier to resolve disputes.“
The New Zealand government has announced some changes to the eligibility criteria for the Small Business Cashflow (Loan) Scheme (SBCS).
The Government has announced some changes to the eligibility criteria for the Small Business Cashflow (Loan) Scheme (SBCS). These changes align the eligibility criteria with the Government’s recent decision to extend the application period for the scheme until the end of 2023.
These changes will take place from early February 2021. In the meantime, the current eligibility criteria will remain in effect and businesses can continue to apply for the loan using the existing criteria.
“We want to keep viable businesses afloat where we can.”
Revenue Minister David Parker
The main changes to SBCS include:
Businesses established after 1 April 2020, which have existed for six months, will now be eligible for a loan if they meet other eligibility criteria;
Firms can draw down a second loan, if they still meet eligibility criteria and have repaid the original loan in full;
Enable borrowing for investment in new equipment and digital infrastructure. Previously, SBCS should only be used for business operating costs.
A summary of proposed SBCS loan criteria
Application close
31-Dec-2023
Loan amount
$10,000+$1800 per full-time equivalent employee (FTE*), with a maximum of $100,000. Sole traders can receive a loan of up to $11,800. Business may apply for the loan more than once. *Work out the number of FTEs using the calculator here.
Interest rate
No interest if repaid within the first 24 months; 3% per year after 24 months.
Maximum term
5 years.
Limitation
The loan should be used for core business operating cost and investment in new equipment and digital infrastructure.
Eligibility
1. The business must have no more than 50 FTE staff. 2. The business has existed for at least 6 months. 3. The businesses can demonstrate an actual drop in revenue of at least 30% because of COVID-19, over any 14-day period in the previous six months, compared with the same 14-day period a year ago. If the applicant was not in business a year ago, the 14-day period can be compared with the same or similar period in the previous month. 4. The business must be viable.
Last updated on 18 Dec 2020.
What does “viable” mean?
A business is viable means that it is more likely than not that the business will be able to pay its debts as they fall due within the next 18 months.
An evidence of the business’s ongoing viability will be required when apply the loan. Acceptable evidence could include:
a cash-flow forecast,
a forecast of future revenues,
financial statements, or
your accountant’s assessment.
How do I apply?
Eligible businesses should log in to myIR through the Inland Revenue website, then select “apply for a Small Business loan” to create an online application.
