A $3.1 billion tax relief package is a good first step to help keep small businesses afloat, Southern business leaders say.
But more support will be needed as the economic impacts of Covid-19 continue to bite.
The Government yesterday announced a range of new support measures for small- and medium-sized businesses.
They included a tax carry-back scheme to allow businesses to offset a loss in a particular tax year against a profit in a previous year.
They could also receive a refund of the tax paid in the previous profitable year.
The package was expected to cost about $3billion over two tax years.
Finance Minister Grant Robertson said the Government recognised the need for more support, particularly in the small- to medium-sized business space.
Other measures announced included changes to the tax loss continuity rules — estimated to cost $60million — and funding for $25million worth of business consultancy support.
There would also be new rules allowing greater flexibility for affected businesses to meet their tax obligations and measures to support commercial tenants and landlords.
The rent measures involved extending the timeframes required before landlords can cancel leases and mortgagees can exercise their rights to sale or repossession.
Otago Southland Employers’ Association chief executive Virginia Nicholls said the tax package was welcome, but it was going to be "critical" for businesses to be supported through the recovery period.
More help was needed with rent relief, such as requiring commercial landlords to provide relief to tenants based on the tenant’s decline in turnover, she said.
"For businesses to survive, they will need confidence to carry on — and may need an expansion of the wage subsidy scheme, help with their commercial rents and cashflow assistance as they come out of the crisis."
She wanted the Government to consider direct grants to assist with cashflow — and for consumers to buy locally.
Deloitte Dunedin tax partner Phil Stevenson said the logic behind the carry-back announcement was sound in principle.
"We are aware of many businesses who have had excellent results in the year that has just finished but will be fighting for survival in this financial year.
"The prospect of reducing their 2020 tax bill will be attractive for these businesses."
But the devil would be in the details, and there many nuances that would need to be taken into account, he said.
— Additional reporting NZME
