After reviewing the 2020 Budget we want to pass on the most important announcements for small business – here is the first one.
The 2020 Wellbeing Budget’s one job is to help New Zealand recover from the impact of the pandemic. The lockdown to safeguard us from a public health crisis has been phase 1. The Budget takes us into phase 2: economic recovery while staying clear of a second wave of COVID-19. We don’t know at this stage how many more phases there will be.
The fear and uncertainty of the last few months has primed us to cut spending where possible and keep hold of every available dollar. The Budget 2020 theme is that for our economy to recover, people need money in their pockets and the confidence to spend it. For that to happen businesses need to be able to hold their teams together and grow.
The Update published by Treasury in the budget papers notes that $62.1b has been made available to support the COVID-19 response. That includes $12.1b to date and the $50b COVID-19 Response and Recovery Fund established in the Budget. $13.9b of the Fund has already been applied. $15.9b is marked for more kickstart measures. $20.2b is in kitty because the only thing we’re certain of right now is more uncertainty still to come.
The economic response to COVID-19 from March forms a backdrop to the Budget. Although the Budget doesn’t introduce any new tax measures, it builds on the business support strategies:
- a $3.2b extension to the Wage Subsidy for a further 8-weeks (further to the 12-week period of the existing scheme) for those who, in the 30 days before application, suffered a 50% reduction in turnover compared with 2019
- broader refundability for Research and Development (R&D) tax credits is followed up with a $150m short-term temporary loan scheme for R&D. As incentive to businesses to continue investment for future growth, the loans provide one-off finance
- assistance to exporting firms in a $216m boost to New Zealand Trade and Enterprise
- lockdown spurred businesses to add or grow online operations. $10m is earmarked for small businesses to improve e-commerce capability.
We are continuing to work with our clients on ensuring their businesses are up and running. If you wish to discuss anything please get in touch with us.