Jonanthan Cartu Reported Money: Jeremy Tauri offers help with your tax bill - Jonathan Cartu CPA Accounting Firm - Tax Accountants
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Jonanthan Cartu Reported Money: Jeremy Tauri offers help with your tax bill

Money: Jeremy Tauri offers help with your tax bill

Jonanthan Cartu Reported Money: Jeremy Tauri offers help with your tax bill

So you’re facing a tax bill.

Tax is not something most people look forward to paying at the best of times but when we’re in the midst of a dramatic recession, it can be even harder to find the money to cover it.

The good news is that Inland Revenue has recognised times are tough for a lot of people and is willing to work with you to get it sorted.

Businesses who cannot pay tax right now because of Covid-19 don’t have to get in touch with Inland Revenue immediately – they can do this when they are able and the department will then write off any penalties and interest that have accrued.

But it says it helps if you can continue to file because this information is used to make correct payments to people and for the Government to respond to what is happening in the economy.

There are also some changes that will help some businesses.

You can now depreciate any commercial or industrial buildings you own – this could be only a small impact on most people directly but worth having as it will allow landlords to consider how they establish their rents to tenants

Write-offs: As a two-stage incentive to encourage spending, tax write-offs will be available for more low-value assets. For the 2020/21 income year, assets costing up to $5000 will be eligible for immediate write-off. As a permanent measure, from the 2021/22 income year, the existing $500 threshold will increase to $1000. That means you can “claim back” more asset purchases, reducing your tax bill in years when you make bigger purchases.

Provisional tax: Currently, taxpayers with residual income tax of $2500 or more pay provisional tax. From the 2020/21 tax year, this threshold will increase to $5000, so fewer businesses will need to pay provisional tax. You’d usually be pulled into the provisional tax regime if your income was about $20,000 a year but now it won’t kick in until roughly $34,000.

Interest: Businesses and individuals who are struggling because of Covid-19 and can demonstrate they’re unable to pay tax by the due date may be eligible for a use-of-money interest (UOMI) write-off. This applies to all tax payments including provisional tax, PAYE and GST due on or after February 14, 2020, for two years, unless the Government extends it. Interest can quickly add to the amount that you owe, so this will be a big help to people falling behind.

The upcoming terminal, provisional tax and GST payments in April and May usually provide a slowdown in payments and cashflow. As we deal with the fallout from Covid-19, these tax measures will be some relief for struggling businesses.

Jeremy Tauri is an associate at Plus Chartered Accountants.


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