IRD and Coronavirus
It seems certain that the Coronavirus outbreak will have a significant impact on the economy in 2020. IRD have a number of options available for tax relief and income assistance for people affected by a downturn in business due to the Coronavirus – COVID-19.
Businesses & the self employed
Provisional Tax Estimates
The IRD is conscious that some businesses may have a change in circumstances due to this event. It is not difficult to imagine tourism providers, for instance, will be doing it tough at the moment. Certain exporters will also be impacted. Other industries may have a knock on effect down the track.
The IRD allows taxpayers to re-estimate their provisional tax payments as a matter of course and this is most certainly something client’s should consider if they believe they will be impacted. Don’t hesitate to contact us if you believe your profit for the year will be impacted.
If you are struggling to meet your income tax payments, the IRD can help you set up an instalment arrangement. The key here is to contact them early if you need assistance. Another option may be tax pooling. Reach out to us if you need advice.
In the case of serious hardship, IRD are able to write off tax if you are unable to pay the full amount. In order to apply for this option, the department would likely ask for a twelve month cash flow forecast and a disclosure of financial position. We are able to assist clients who need this information prepared.
If your entity has tax losses that are carried forward, IRD are likely to reduce these losses in proportion to any amount written off.
Certificate of exemption
Many contractors currently have withholding tax deducted from their payments by the company they are contracting too. In some instances, the IRD may be prepared to grant a certificate of exemption allowing the contractor to get their gross income paid directly to them.
This option is not available if you contract to an employment agency as a third party.
You can read more about those options here.
Tailored tax codes
You may be able to apply for a tailored tax code if you have losses that carry forward. In these cases, a unique code would be issued to you for you to give to your employer. You can see more information about tailored tax codes here.
Individuals who may struggle to meet their childcare commitments should contact the Department. They may agree to re-estimate your income and reduce the assessment.
Working for Families’ Tax Credits
Working for Families’ tax credits are based on family income over a twelve month period. If that income declines, taxpayers are entitled to increased Working for Families payments. Additionally, the frequency of those payments may be increased.
Individuals should approach Inland Revenue as soon as they become aware of a change of circumstances and ask for their assistance.
We think it’s great that IRD are publicising the ways that taxpayers can get tax relief at a time of genuine concern for all of us. This proactive approach is to be commended. Our experience is that the Department is open to approaches from taxpayers who have genuine circumstances beyond their control.
We are able to help businesses and the self-employed re-estimate provisional tax, draw up cash flow projections or produce statements of financial position. Please don’t hesitate to get in touch.