Mā te pūnaha whiwhinga moni tōtika, e pai ake ai te noho me te mahi ki Aotearoa. Ko tā mātou aronga nui i tēnei tau ko te tautoko i ngā kiritaki me ngā pakihi i roto i ngā āhuatanga o te mate urutā Kowheori-19.
An effective and resilient revenue system significantly contributes to making New Zealand a great place to live and work. Our focus this year was firmly on supporting customers and businesses through the challenges of COVID-19.
As COVID-19 continued to significantly impact the world, we’ve helped New Zealanders, their families, whānau and businesses survive and stay compliant with their tax obligations.
Working with colleagues from across government, and with advice from stakeholders such as tax agents, we administered a number of initiatives and rapidly developed new services as part of the Government response to COVID-19. Our people were motivated by being able to help New Zealanders and ensure the revenue system remains a strong foundation for delivering Government priorities.
A new support payment helped businesses and their staff through COVID uncertainty
In December 2020, the Government announced a Resurgence Support Payment to help businesses and organisations experiencing a 30% decline in revenue due to an increase in New Zealand’s COVID-19 alert levels to level 2 or above. The payment was activated in February and March 2021 for businesses affected by increased alert levels in Auckland. Moving Auckland to alert level 3 was estimated to have kept 250,000 workers at home.
The payment scheme was developed in 45 days. We set up an easy-to-use online process where businesses could apply via their myIR accounts. More than 5,940 businesses applied on 23 February, the first day that the payment was available.
"We did open for takeaway for three days, from Monday to Wednesday, but I had only one customer for three days. That really affected our revenues. We have staff to pay, rent to pay. I'm just trying to do my best to survive." - An Auckland restaurant owner in February 2021
Small-to-medium-sized enterprises have been the main recipients - most businesses in New Zealand employ fewer than 50 people and smaller firms are less resilient to economic shocks than larger ones. Most eligible businesses have had the money in their accounts within 3 days.
The payment became an important part of the Government’s COVID-19 response to help businesses survive, save jobs and prevent a major shock to the economy. It has also supported the underlying public health aims of the alert level increases - stamping out COVID-19 outbreaks by helping communities to self-isolate as appropriate.
You can read about how we implemented the scheme in our case study.
As at 30 June 2021: The Resurgence Support Payment
- 71,200 applications have been approved.
- $200 million has been paid out.
- 10 March was our busiest day.
- We paid out $42.5 million to approximately 9,000 customers.
The payments have helped approximately:
- 60,000 businesses with 5 or fewer FTEs
- 9,000 businesses with 6 to 20 FTEs
- 7,500 cafes, restaurants and takeaways
- 5,900 road transport services
- 3,700 allied health services such as physios
- 3,100 personal care services
- 2,300 cleaning, pest control and gardening services.
Businesses received cashflow when it was most needed
Small Business Cashflow Scheme loans have continued to help businesses with expenses such as rent and insurance. Over 106,000 businesses have taken up a loan as at 30 June 2021. Most customers received their loans within two days of approval.
The scheme was extended until December 2023. We also implemented a number of changes that have expanded the number of businesses that are eligible. For instance, new businesses that have been operating for more than 6 months can now apply.
“Different businesses may need to access the scheme at different times, so it’s important it remains as a backstop for them to fall back on if times get hard.” - Prime Minister Jacinda Ardern in November 2020
Businesses are now starting to repay their loans. As of 30 June, approximately 13,000 customers have repaid $117 million. Around 5,000 customers have repaid the full loan amount.
You can read about the checks we built into our systems to stop ineligible applications for both the Resurgence Support Payment and Small Business Cashflow Scheme loans.
As at 30 June 2021: Small Business Cashflow Scheme loans
- $1.72 billion has been loaned.
- $16 thousand is the average loan amount.
Small Business Cashflow Scheme loans have gone to approximately:
- 19,800 construction businesses
- 12,100 businesses in professional, scientific and technical services
- 10,200 accommodation and food businesses
- 9,700 businesses in retail trade.
The loan is $10,000 per firm plus $1,800 per FTE, to a maximum of $100,000 with 50 FTEs.
The loan term is 5 years - no repayments are required in the first 2 years.
If the loan is repaid in the first 2 years no interest is charged.
Wage subsidies kept thousands of New Zealanders in their jobs
The Wage Subsidy Scheme administered by the Ministry of Social Development (MSD) has supported employers to retain staff. It’s estimated to have indirectly supported about 1.8 million employees*.
This year, we’ve kept supporting MSD by verifying applications and providing information to inform its investigations into any errors or potential wrongdoing.
In June 2020, we set up a temporary information portal that let MSD staff access information to verify applications from 35,000 employers. It was a valuable time saver to help get funding to eligible customers quickly, while protecting people’s privacy. The portal had appropriate access permissions and provided the minimum data needed for verification.
Our focus now is on following up the tax implications for employers and the self-employed who took up this subsidy and other COVID-19 initiatives. IR3 income returns for 2021 now include a field for ‘government subsidies’ and we designed rules into our systems to ensure customers are correctly reporting Wage Subsidy payments in their returns.
* From the March 2021 report by the Office of the Auditor-General on the Management of the Wage Subsidy Scheme.
In November 2021, Inland Revenue, the Ministry of Social Development, Ministry of Business, Innovation and Employment and the Treasury were joint winners of the Te Tohu mō ngā Hua E Pai Ake Ana - Better Outcomes Award at the Te Kawa Mataaho Public Service Commission Te Hāpai Hāpori Spirit of Service Awards.
Our Commissioner Naomi Ferguson said the award “recognises and celebrates the fantastic work our four agencies did to support more than half a million New Zealand businesses during the Covid-19 lockdown in three cross-agency initiatives - the wage subsidy, leave support and small business loan schemes.”
A range of initiatives are releasing cashflow
Aside from the Small Business Cashflow Scheme loans and Resurgence Support Payment, we’ve implemented a number of other changes to help businesses improve their cashflow and incomes:
As at 30 June 2021
- $16.4 million in use-of-money interest has been written off for 94,000 customers.
- Reintroduction of depreciation of commercial buildings from 2020-21 is forecast to provide businesses with $2 billion in 2023-24.
- 5,000 customers have applied for a loss carry back in the 2019 or 2020 tax year.
- $158.4 million is the monetary benefit of loss carry-backs.
- An increase in the threshold for low-value write-offs until March 2021 is forecast to provide businesses with $596 million over 2023-24.
- Increasing the provisional tax threshold for the 2021 tax year is estimated to remove 95,000 customers from having to pay instalments throughout the year and provide $350 million in cashflow benefits.