Tax Changes

Tax Changes

The Business Continuity Package to assist businesses struggling due to the impact of the COVID-19 outbreak includes 5 proposals related to tax:
• Increase in the low-value asset write-off threshold: The low-value threshold has been raised to allow the immediate expensing of assets that cost less than $5,000 in the 2020-2021 income year. There will be a temporary increase for assets purchased in the 12 months from 17 March 2020. After 17 March 2021 the threshold will be $1,000.
• Increase in the provisional tax threshold: he provisional tax threshold has been increased from $2,500 to $5,000 from the 2020/2021 income year. While provisional tax may not be payable throughout the year, taxpayers will need to be mindful of a higher terminal tax cost on 7 April 2022.
• Use of money interest remission: The package allows Inland Revenue the discretion to remit use-of-money interest (UOMI) on late payment if the taxpayer’s ability to make the payment on time was significantly adversely affected by COVID-19.
• Depreciation on non-residential buildings: From the 2020/2021 income year onwards, depreciation is permitted on commercial and industrial buildings. The depreciation rate is 2% declining value or 1.5% straight line. This applies to existing and newly acquired buildings and to capital improvements made to existing buildings.
• Removal of hours test from the In-Work Tax Credit: The hours test eligibility requirement for the in-work tax credit (IWTC) is removed from 1 July 2020

Sunday, 10th January 2021

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