Budget 2020 is a whopping 94-page document, and there’s even more commentary. We’ve cut through the blah-blah, watched the webinars, and read the extensive commentary to bring you just what matters to small and medium businesses. We’ve also included a reminder of the useful packages that were put in place before the budget. So here it is, the Budget in Brief aka “what the government has done for you lately”.
We’re sure you’ve heard, the Wage Subsidy has been extended for another 8 weeks, and you can apply for this from 10 June 2020 until 1 September 2020. You can’t apply for it yet, but here are the key criteria and how to apply:
You’ve had, or expect to have, revenue loss of at least 50% (up from 30% in the earlier scheme) for the 30 days before you apply, vs. the same time last year.
You have the same obligations as you had under the previous scheme (which you can check out at the work and income website below)
High growth and new firms are now eligible, as are pre-revenue R&D start-ups.
You can find out more and apply here: https://www.workandincome.govt.nz/covid-19/wage-subsidy-extension/index.html
$10 million of funding is being pumped into supporting small businesses to improve their e-commerce service offerings, and encouraging e-commerce adoption. Keep an eye out for how to apply if you’re wanting to ramp up your online offering.
MBIE Business Support
Some of our budget went into beefing up some existing business support platforms. If you haven’t signed up for Business Connect yet, it’s an online platform hosted by MBIE. It helps you apply for things like licences, permits and registrations from different government agencies all in one place. If you are wanting to access information about how the business hibernation scheme works or about location tracking, check it out here https://businessconnect.govt.nz or email them at firstname.lastname@example.org for help. A chunk of our budget has also gone to https://www.business.govt.nz/ to provide tailored recovery advice for 600,000 small businesses. It’s mainly focused on how to:
Forecast and manage cash flow and adapt your businesses
How to get funding
How to market your business, how to adopt to new digital technology, including e-commerce
How to deal with isolation and mental health issues
Sounds pretty good to us!
Prior to the budget the government introduced a couple of very handy little schemes to help out with cashflow. The Business Finance Guarantee Scheme and the Small Business Cashflow Scheme.
The Guarantee Scheme for small and medium-sized businesses is a partnership with banks and the government. The government is guaranteeing 80% of the risk, while banks cover the remaining 20%. With interest levels being at all time low levels, this could be just what you need. Loans can be up to $500,000 for up to 3 years. To apply, jump on your bank’s website.
Then there’s the Small Business Cashflow Scheme. This is a loan which is interest free if paid back within 12 months. You can apply for a loan of $10,000 plus an additional $1,800 for every full-time employee (up to maximum of $100,000). After 12 months the interest rate is 3 per cent for a maximum term of five years. No repayments are required for the first two years. Here are some of the key requirements:
Your business is experiencing a minimum 30% decline in actual or predicted revenue from Jan 2020 to June 2020
You’ll use the loan to pay for core operating costs, like rent, insurance, utilities etc
You won’t use the loan to pay shareholders or owners of the business
You can apply for these loans from 12 May 2020 to 12 June 2020 here: https://www.ird.govt.nz/covid-19/business-and-organisations/small-business-cash-flow-loan
Need skilled tradies?
Check out the $1.6 billion Trades and Apprenticeships Training Package. This includes $412 million to help you keep your apprentices, free apprenticeships and training in certain industries. Keep an eye out for when the details are up here: https://www.www.govt.nz/browse/education/training-and-apprenticeships/apprenticeships/
Give me a (Tax) break!
There are quite a few tax changes courtesy of Covid-19. Here are the changes to really sit up and pay attention to (or check that your accountant is).
Relief from late payment penalties and use of money interest if you can’t pay because of Covid-19. (Just remember that this is an “application”, not guaranteed. So check with your advisor before getting too carried away.)
One-year carry back of tax losses (If you’ve got a current year loss, you can carry back to the prior year. If you paid tax in that prior year, you can get a refund of that tax).
Introduction of a same or similar business test for the carry forward of tax losses. (Translation: Usually if your company’s shareholding changes by more than 51% you lose your tax losses. For companies trying to raise money to keep afloat, particularly new businesses, that’s harsh. This new change means as long as your business carries on in the same or a similar way it did before the ownership change, you keep your losses. Hurrah).
You can now expense/claim a full deduction in that year, on the purchase of assets which cost up to $5,000. (It used to be less than $500, so that’s a nice change.)
Other highlights we really like:
Family Violence Services
The largest funding boost for family violence service providers in over a decade, so they can recruit and develop highly capable staff and respond to the demand they are facing. We’re deeply saddened that this is needed and very grateful that it’s finally getting the attention it so desperately needs.
Keeping Community-Based Services Open for Disabled People & Supporting Disabled New Zealanders to live Good Lives Funding to enable support disabled people to participate in, and contribute to, their wider community and security of funding for those living with long term impairments. If you’re not sure why this should matter to you, take a couple minutes to read this blog: https://diversityworksnz.org.nz/why-diversity/
We thought we would see a stronger mental health response, but we think it’s hiding in the $5.6 million health budget, and bits of it have made their way into the MBIE business advice funding.
If you’re wondering where our tourism segment is, we’re working on it and we’ll be posting it here: https://www.tourism.net.nz/.
We encourage you to take the support and help you need to get your business firing. We’ve led the world with our Covid-19 health response, let’s go show them how to rebuild an economy.