Government commended for helping businesses survive pandemic

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Businesses have given the government’s Covid-19 emergency tax measures high marks, although not all measures have rated highly.

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A recent survey of clients by Chartered Accountants and Tax Management has found the government’s shotgun approach to tax relief mostly hit the target.

The most popular measures included increased provisional tax thresholds, immediate low-value write-offs and allowing the deferral of tax payments and use of money interest asset write-offs to help businesses survive the pandemic.

“Remembering what the government and Inland Revenue were confronted with back in March last year, including having to act fast and not knowing for sure what would work, the survey indicates the government’s business response is as deserving of accolades as its health response,” Chartered Accountants tax leader John Cuthbertson said.

When it came to rating the department’s services, 63 percent of respondents said IRD’s helpfulness was excellent or good, for responsiveness it was 59 percent, 57 percent for understanding of the issue and 51 percent for consistency, while 15 percent rated the services as poor or terrible.

“In the circumstances, these levels of positive feedback are remarkable,” Cuthbertson said, noting the tax department received more than 77,000 small business cash flow loan scheme applications and approved loans worth about $1.2 billion in less than one month.

However not all tax measures rated highly, such as loss carryback provisions, the restoration of building depreciation and the tax commissioner’s variations, such as an extended deadline for filing statements for research and development loss tax credits and extended time for tax pooling transfers.

Cuthbertson said the temporary measure failed for two reasons, although those reasons were largely beyond the control of the policymakers.

“Firstly, the timing was all wrong. Covid-19 hit New Zealand at the end of the financial year for most taxpayers, and after the summer season for our tourism-dependent sectors,” he said.

“In short, many taxpayers wouldn’t have had losses to carry back.

“Secondly, respondents stressed the risk of estimating future tax positions in what has been an unusually uncertain time and the complexity of the rules.”

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