New Zealand Government’s COVID-19 economic response package

New Zealand COVID-19 economic response

On 17 March, 2020 New Zealand Government released its NZ$12.1 billion (US$6 billion) fiscal and economic response to the COVID-19 pandemic.

As the situation changed, the package has been expanded. The package now includes:

  • An estimated NZ$8-12b in wage subsidies so affected businesses can keep their staff employed, through support received directly from the Government.
  • NZ$500m additional health funding to get the virus under control.
  • NZ$126m in COVID-19 leave and self-isolation support for people who are unable to work because they’re sick, self-isolating, or caring for dependants. Since being announced, this has been rolled into the Wage Subsidy Scheme.
  • NZ$2.8b income support package in assistance to those receiving benefits, including a permanent NZ$25-per-week core benefit increase from 1 April, 2020 and doubling the Winter Energy Payment for 2020.
  • NZ$100m redeployment package, to keep more Kiwis in work.
  • NZ$2.8b in business tax changes to reduce cashflow pressure, including a provisional tax threshold lift, the reinstatement of building depreciation, and writing off interest on the late payment of tax.
  • NZ$600m package to support the aviation sector and protect New Zealand’s supply chains.
  • NZ$6.25b Business Finance Guarantee scheme for small and medium-sized businesses, to protect jobs and support the economy.
  • NZ$27m package for social sector services and community groups so they can continue to provide essential support to communities.
  • A leave scheme for essential workers who take leave from work to comply with public health guidance, to ensure they will continue to receive income.

Other measures the Government has taken include:

  • NZ Government, Reserve Bank and retail banks have agreed on a six-month mortgage principal and interest payment deferral for affected individuals and Small and medium-sized enterprises.
  • To protect renters during this difficult time all rent increases frozen for six months, prohibited no-cause terminations for an initial period of three months, and evictions cannot occur for unpaid rent for up to 60 days.

Tax measures in NZ Government Covid-19 response

  • The reintroduction, from the 2020-21 income year, of a 2% DV depreciation deduction for commercial and industrial buildings. This includes hotels and motels.
  • A temporary increase in the threshold for expensing low-value assets fromNZ$500 to NZ$5,000 during the 2020-21 income year. The threshold will be NZ$1,000 from the 2021-22 income year.
  • The threshold for paying provisional tax will increase from NZ$2,500 to NZ$5,000 of residual income tax, from the 2020-21 income year.
  • Inland Revenue will be given the power to write off interest on late payments for those adversely, financially, impacted by COVID-19 for tax payments due after 14 February 2020.
  • Changes to the calculation of the in-work tax credit to remove the hours worked test.
  • Inland Revenue will have greater information sharing powers to facilitate a whole of government response to COVID-19.

Additional measures announced on April 15, 2020

  • NZ$3.1 billion tax loss carry-back scheme (estimated cost over the next two years). Businesses expecting to make a loss in either the 2019/20 year or the 2020/21 year would be able to estimate the loss and use it to offset profits in the past year. In other words, they could carry the loss back one year.
  • NZ$60 million estimated annual savings to business each year from changes to the tax loss continuity rules
  • NZ$25 million in the next 12 months for further business consultancy support
  • Greater flexibility for affected businesses affected to meet their tax obligations
  • Measures to support commercial tenants and landlords

Check the official website of the New Zealand Government Beehive.govt.nz for the latest information https://www.beehive.govt.nz/feature/covid-19-economic-response-package or Inland Revenue website https://www.ird.govt.nz/Updates/News-Folder/covid19-business-changes

COVID-19 financial support in different countries around the world

COVID-19 economic response

Governments in majority countries opened accounts to support their people and businesses to minimize impact by corona virus (COVID-19).

Here is a list of supporting initiatives:

AUSTRALIA

CANADA

EUROPEAN UNION

NEW ZEALAND

UK

US

COVID-19 Early access to your super in Australia

Australia superannuation Covid-19

Besides other taken measures to help individuals Australian government is allowing early access to your super in very limited circumstances.

You can’t use early access to your super and transfer it into a self-managed super fund. It is illegal and heavy penalties would apply. For more information, about illegal early release of super read here.

Applications for early release of superannuation (super) will be accepted through ATO online services in myGov from 20 April, 2020.

The government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21. Individuals will not need to pay tax on amounts released and will not need to include it in their income tax return.

For Australian and New Zealand citizens and permanent residents

Eligible Australian and New Zealand citizens and permanent residents will be able to apply to access up to:

  • $10,000 of their super before 1 July 2020
  • a further $10,000 from 1 July 2020 until 24 September 2020.

To apply for early release, you must satisfy one or more of the following requirements:

  • You are unemployed.
  • You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
  • On or after 1 January 2020, either
    • you were made redundant
    • your working hours were reduced by 20% or more
    • if you were a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

For temporary residents

The government has also announced that eligible temporary residents will be able to apply to access up to $10,000 of their super before 1 July 2020.

To apply for early release as a temporary resident, you must satisfy one or more of the following requirements:

  • You hold a student visa which you have held for 12 months or more and you are unable to meet immediate living expenses.
  • You are a temporary skilled work visa holder, your working hours have reduced to zero and you remain engaged with your employer
  • You are a temporary resident visa holder (excluding student or skilled worker visas) and you cannot meet immediate living expenses.

You will not be required to attach evidence to support your application; however, you should retain records and documents to confirm your eligibility.

Warnings

Withdrawing your superannuation may affect your:

  • income protection insurance
  • Life / Total Permanent Disability insurance cover.

Insurance may not be available on accounts that:

  • are fully withdrawn
  • have a balance below $6,000.

Consider whether you need to seek financial advice before starting your application.

For more information check ATO website https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/early-access-to-your-super/