COVID-19: Government announces tax changes to support businesses

Tax Tips Alert: 15 April 2020

The Minister of Finance, the Hon. Grant Robertson, has announced tax changes as part of a suite of new measures to provide further support for businesses impacted by the COVID-19 pandemic. The tax relief provided could be as much as $3 billion.

The key tax changes include: 

  1. A temporary tax loss “carry-back” scheme that will allow businesses that anticipate incurring tax losses in 2020 or 2021 to carry those tax losses back to 2019 or 2020 and, to the extent of the tax effect of the losses, get an immediate refund. This temporary scheme will be replaced by a permanent tax loss carry-back scheme in due course that will apply to later tax years.
  2. Relaxation of the tax loss carry-forward rules by allowing a “same or similar” business test (similar to Australia) that will allow tax losses to be carried forward despite a major change in the shareholding of the company. 
  3. Temporary discretionary powers for the Commissioner of Inland Revenue for a period of 18 months to modify all tax filing and payment time frames across the revenue legislation in response to COVID-19. This will allow Inland Revenue to respond quickly and flexibly to businesses struggling to meet tax deadlines as a result of COVID-19.

The key proposed tax changes are intended to be legislated under urgency as soon as Parliament can resume (currently scheduled for the week of 27 April 2020).

To find out more about these and other proposed changes, read our Tax Tips Alert.

 

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Geof Nightingale

Geof Nightingale

Partner, PwC New Zealand

Tel: +64 21 940 346

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Sandy Lau

Partner, PwC New Zealand

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