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Wellington Head Offices

44 Mairangi Road, Wadestown
Wellington 6012, NZ

Customer Services
Phone: + 64 4 830 3351
Email: enquiries@fspfinancial.co.nz

Business Development Team
Phone: + 64 4 888 1324
Email: info.wellington@fspfinancial.co.nz

Cork City Offices, Ireland

Commerce House, Office 103
Washington Street West
T12NCF2 Cork City
Republic of Ireland

Phone: + 353 212 028 051
enquiries.ie@atrium-associates.com

Altrincham Offices, UK

Peel House, 30 The Downs, Ste 28
Altrincham, Cheshire, WA14 2PX
England

Phone: + 44 161 3941 173
Email: info.altrincham@fspfinancial.co.nz

COVID-19: New Zealand Legislates For New Loss Carryback Regime

covid-19:-new-zealand-legislates-for-new-loss-carryback-regime

Posted on 05-04-2020

New Zealand’s parliament has endorsed the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Bill, a second taxation Bill in response to COVID-19. The Bill received Royal Assent on April 30, 2020.

The Bill contains a temporary tax loss carry-back regime to provide cash-flow quickly to businesses, and it increases the administrative flexibility for Inland Revenue to quickly modify due dates, timeframes, or other procedural requirements for taxpayers impacted by COVID-19.

The Bill also includes provisions to ensure the tax and social policy treatment of benefits and pensions paid to people stranded overseas is consistent with the treatment of equivalent payments to people in New Zealand.

Under the loss carry-back scheme, a firm would be able to offset a loss in a particular tax year against a profit in a previous year, and receive a refund of the tax paid in the previous profitable year. The proposed mechanism will provide cash to firms that expect to post a loss in the 2019/20 tax year or during the 2020/21 tax year, by allowing them to set the loss off against profits made in the past year.

The Government is considering permanently introducing the measure, subject to a consultation to take place in the second half of 2020.

The Government has said taxpayers need not rush to re-estimate their provisional tax before May 7. The proposed law change will make it possible for taxpayers to re-estimate it after the date of the final installment.

New Zealand’s parliament has endorsed the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Bill, a second taxation Bill in response to COVID-19. The Bill received Royal Assent on April 30, 2020.

The Bill contains a temporary tax loss carry-back regime to provide cash-flow quickly to businesses, and it increases the administrative flexibility for Inland Revenue to quickly modify due dates, timeframes, or other procedural requirements for taxpayers impacted by COVID-19.

The Bill also includes provisions to ensure the tax and social policy treatment of benefits and pensions paid to people stranded overseas is consistent with the treatment of equivalent payments to people in New Zealand.

Under the loss carry-back scheme, a firm would be able to offset a loss in a particular tax year against a profit in a previous year, and receive a refund of the tax paid in the previous profitable year. The proposed mechanism will provide cash to firms that expect to post a loss in the 2019/20 tax year or during the 2020/21 tax year, by allowing them to set the loss off against profits made in the past year.

The Government is considering permanently introducing the measure, subject to a consultation to take place in the second half of 2020.

The Government has said taxpayers need not rush to re-estimate their provisional tax before May 7. The proposed law change will make it possible for taxpayers to re-estimate it after the date of the final installment.