Important IRD changes that may impact you

By on 25th February 2021

Outlined below are some recent IRD changes that may impact you.

New top tax rate

From 1 April 2021 there will be a new top tax rate of 39% which will apply on personal income in excess of $180,000 for the 2021-2022 and later tax years.

Any provisional tax payers may need to adjust their provisional tax payments throughout 2021 to account for the larger year-end tax bill.  We will advise accordingly if this is required.

COVID-19 Short-Term Absence Payment now available Resurgence Support Payment (RSP) activated

On 17 February 2021 the Government activated the Covid Resurgence Support Payment.

Eligible businesses will be able to apply for the payment form Tuesday 23 February 2021.  To be eligible businesses must experience a 30% drop in revenue or more over a 7-day period after the increased alert level – as well as meet a range of other RSP eligibility criteria.

If you are eligible you may qualify for the lesser of either:

  • $1,500 plus $400 per fulltime equivalent (FTE) employee, up a a maximum of 50 FTE’s, OR
  • Four times (4X) the actual revenue drop experienced by the applicant

As your tax agent we can apply for the RSP on your behalf, providing we have your authority.

For more information, click here

The Small Business Cashflow Scheme change – extended until 31 December 2023

Applications remain open until 31 December 2023.

The loan will now be interest free for 2 years (up from 1 year), and restrictions on how the loan can be used have eased.  As well as spending on core operating costs, businesses will be able to choose to use the loan to invest in their business, helping it to adapt to the impact of COVID-19.

There are also changes to the eligibility criteria in the following 4 areas:

  • When the business was established
  • The decline in business test
  • Employee number test
  • Re-borrowing

The changes took effect from 28 January 2021.  Note that the change in the decline in revenue test will significantly change which businesses are eligible as the time period will no longer include the April 2020 lock down.

For more information, click here

Minimum family tax credit

The annual rate minimum family tax credit (MFTC) threshold will increase from $27,768 to $29,432 for the 2020-2021 tax year and subsequent years which is a maximum of $32 per week extra.  To get this payment customers must work for salary or wages and not be self-employed.

IRD begun paying the higher rate in weekly or fortnightly payments from late December 2020 to customers who receive their payment throughout the year.  All MFTC customers will have any unpaid increase from 1 April 2020 included as part of their end of year square up.  A Notice of Assessment will be sent after the tax year end, around June/July 2021.  The Notice of Assessment will indicate if the customer has an overall refund or bill once everything is taken into account.

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