We understand that the COVID-19 outbreak has created a lot of uncertainty for customers. Many customers will have a sudden reduction of income and may be in receipt of a leave subsidy. We want to help customers understand the tax implications of these changes.
Wage and leave subsidies
Self-employed customers may be eligible for a wage subsidy paid by the Ministry of Social Development (MSD) if they have been affected by COVID-19. Leave payments for self-isolation as a result of COVID-19 are also available to self-employed workers who satisfy the eligibility criteria and are prevented from working.
Home-based childcare providers
A childcare provider who derives gross income from providing childcare services may meet the criteria to use the standard cost in Determination DET 09/02. If a childcare provider elects to use the standard cost in the Determination, and they receive a wage subsidy, then the IR413 can be used to calculate the net income under the standard cost method.
Reduced self-employed income
We understand that the COVID-19 outbreak will mean a sudden reduction of income for many customers. You can apply for a tailored tax code if your income has been significantly affected so that your current withholding rate will be too high for your reduced annual income.
Also, some self-employed customers can apply for a certificate of exemption. Certificates of exemption can only be used for schedular payments. They cannot be used for salary or wages.
The provisional tax threshold has been increased from $2,500 to $5,000. This means any current provisional taxpayers with provisional tax payments of less than $5,000 will have until 7 February following the year they file to pay their tax bill. This is intended to lower compliance costs for smaller taxpayers and allow them to retain cash for longer.
Loss carry-back scheme
You will be able to elect into the loss carry-back scheme if you're expecting to make a loss in the 2019/20 or the 2020/21 year.