A Week in Review: Tax free support | IR determinations | IR km rates | First exercise

Tax free support for those losing jobs

From 8th June 2020, those who have lost their jobs due to the impacts of Covid-19 during the period 1st March 2020 to 30 October 2020, will be entitled to apply for and receive the Covid Income Relief Payment (CIRP).

CIRP is a 12 week scheme, payable at the rates of $490 per week for a full-time worker (usually worked more than 30 hours per week) and $250 per week for part-time workers (usually worked 15 – 29 hours per week). For those previously working less than 15 hours per week, CIRP is not available to them, and they will need to consider other financial assistance options already provided by the Ministry of Social Development (MSD).

CIRP will also be available to those self-employed persons, if due to Covid-19, their businesses are no longer viable, and there is no prospect of any further work or income.

For both affected employees and the self-employed, CIRP’s amounts received are tax-free, and will not be treated as income for either child support, Working for Families or student loan purposes.

A person may apply for CIRP provided they are either a New Zealand citizen or a New Zealand resident and they normally live and work in New Zealand.

Income testing will apply to CIRP applicants, with no entitlement to the scheme arising;
• should the applicants partner earn $2,000 or more gross per week in wages or salary,
• should the applicant have received a redundancy payment of $30,000 or more,
• should the applicant receive income protection insurance payments or,
• should the applicant be receiving earnings-related ACC payments.
CIRP entitlements are not affected however by any non-work income the person receives such as rental income.

CIRP recipients cannot receive the Jobseeker Support benefit at the same time, and a person receiving CIRP is expected to seek work or retraining during the 12 week period, and should new work be found, then the CIRP payments will cease at this time.

Applications to receive CIRP can be made up until 13th November 2020.

 

IR Determinations – Updates Issued

IR has certainly continued being busy of late with its publications, last week issuing a number standard-cost updates to previous Determinations issued.

The first was with respect to DET 09/02 – Standard-cost household service for childcare providers, where the hourly standard cost (per child) has been increased from $3.60 to $3.70 and the annual fixed administration and record-keeping standard cost from $352 to $361.

The second was in relation to DET 19/02 – Short-stay accommodation, where the daily standard-cost household service for short-stay accommodation (for each guest) has been increased from $50 to $51 for an owned dwelling and from $45 to $46 in respect of a rented dwelling.

Finally, DET 19/01 – Household boarding service providers, has had its standard-cost household service for boarding service providers increased from a weekly standard cost (per boarder) of $186 to $191.

Last week also saw the release of the National Average Market Values (NAMV) of Specified Livestock Determination 2020, applies to specified livestock on hand at the end of the 2019/20 income year. NAMV’s are used by taxpayers who are in the business of livestock farming to value their livestock on hand where the taxpayer has elected to use the herd scheme to value livestock in an income year.

 

IR kilometre rates unchanged for now

Around this time of year, IR will usually release its kilometre rates for the business use of vehicles (either used to reimburse the use of an employee’s private vehicle for work purposes, or alternatively for taxpayers choosing not to base their deduction claims on actual costs incurred), which in the present case, could be used by taxpayers filing their March 2020 income tax returns.

However as IR sources the information from a third party to then calculate the applicable per kilometre rates, it has advised that one impact of Covid-19 has been a delay in receiving the required information from the third party, and consequently taxpayers should continue to use the 2019 rates for their 2020 filing positions or reimbursing their employees at this time.

Once the 2020 rates are released, taxpayers who have filed their 2020 income tax returns and feel that they have been materially adversely affected by using the 2019 rates, can seek an adjustment via either section 113 or 113A of the TAA94.

The 2019 rates were:
• Petrol/diesel vehicles – 79c for Tier 1, 30c for Tier 2
• Petrol hybrid – 79c for Tier 1, 19c for Tier 2
• Electric – 79c for Tier 1, 9c for Tier 2
If you require a recap on how to apply the kilometre rates in practice, reference should be made to either OS 19/04A: “Commissioner’s statement on using a kilometre rate for business running of a motor vehicle — deductions” or OS 19/04B: “Commissioner’s statement on using a kilometre rate for employee reimbursement of a motor vehicle”.

 

First exercise of new administrative flexibility powers

You may recall that the recent passing of the Covid-19 Response (Taxation and Other Regulatory Urgent Measures) Bill, provided the Commissioner with greater administrative flexibility powers to deal with potential Covid-19 impacts on a group of affected taxpayers in attending to their compliance with the various Revenue acts.

Prior to the legislative change, the Commissioner would usually require an Order in Council to amend the likes of a particular filing due date, which in itself was not a time efficient process.

Last week we saw the first exercise of the new flexibility muscle, with the issue of Determination COV 20/01, which in this case has application to section HB 13(3)(b) of the ITA07, which governs the due date a new company must file an LTC election by, in order for that company to essentially obtain the LTC status from day one.

With respect to a ‘new’ company that commenced during the 2019 income year, those entities with a tax agents extension of time, in essence had until 31st March 2020 to file the LTC election notice. However recognising that the country was in Level 4 lock-down on the 31st March 2020, which may therefore have impacted on the ability of the company to file the LTC election on time, IR has issued COV 20/01 to extend the due date for filing until 30th June 2020.