What good news is there for the coming weeks and months, in view of the 4-week lockdown? This post was updated on 27/03/20 with new info.
The government has announced it is:
So this will definitely help ease the pain. It means that if your end of year tax bill is under 5k, you don't have to start paying provisional tax (2-3 times yearly). It also means that if you bought an asset e.g. a clothes line, or a new letterbox, for the financial year ending March 31 2020, and it is under $1,000, you can claim the lot, instead of having to write it off over several years (depreciate it, in other words). And next year gets better, with the level going up to 5k!
WHAT ELSE CAN YOU DO?
1. LOANS: In other news, with the OCR dropping to 0.25%, your bank should be passing on rate cuts for any floating loans, and it is worth looking at existing loans to see if you should break and re-fix or extend the term. Break fees are tax-deductible. Ask the bank or your mortgage advisor to do the calculations for you, or use this tool here. You might also want to look at a mortgage holiday, but just be aware that this will increase the loan,^ but it will buy you some time, so in the big picture, may be worth it. We suggest you only do this if you really need to i.e. don't rush and organise that with your bank or broker today; wait a couple of weeks to see how things pan out. (By the same token, if doing so relieves you of stress, then it is probably well worth it. Don't feel bad, either way. These are unprecedented events.)
Please see this detailed page with info about mortgage holidays, including links for all the major banks to apply for one. See also our blog post with 4 options for your mortgage to improve cash-flow right now
2. RENTS: Rent increases are off the table at the moment, as rents have been frozen by the government. In Australia, landlords have been asked to be lenient if tenants start to get behind on their rent, and we suggest you keep in close contact with your property manager over the next two months.
3. PAYMENTS: Of course, cash-flow is king, and in this environment, we suggest asking your suppliers if you can start paying in smaller regular installments, rather than bigger sums. This will help reduce the impact during the 4-week lockdown. EpsomTax.com group offer interest-free time payment plans to all customers as a matter of course; please contact us to arrange this now.
4. INVESTING: This might also be the time to look out for housing bargains - see this article about timing and buying. If you can get a good deal on a cash-flow positive rental, that's going to introduce some $ into your portfolio. Banks are working as normal, and documents can be signed remotely. Of course, inspecting properties is an issue, and getting tenants in (as moving services are likely not considered to be "essential." Nonetheless, getting pre-approval and "looking" (online/via video) at houses can still be done during this time.
5. OTHER RESOURCES: Xero.com have provided a page with links to educational content. You don't have to be a Xero user to access all of it. Webinars include managing stress, resilience, business continuity and so on.
* The wage subsidy and leave payments are NOT subject to GST - an Order in Council is being drafted to treat it as exempt (Section 5(6E)(B)(iii GST Act). The wage subsidy paid to the employer is not taxable; it is excluded income under section CX 47 of the Income Tax Act 2007; it is also therefore not deductible when paid by the employer as part of wages to employees. The payments made to employees are taxable for the employee and subject to PAYE, KiwiSaver deductions, Student loan etc in normal way. The same is true for self-employed persons: it is taxable income.
^ How it works is that the principal payments temporarily stopped and the interest is added to the mortgage
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