December Update

Proposed Tax Changes

1. The new top personal tax rate of 39% for income earned above $180,000 applying from 1 April 2021.
2. Integrity measures introduced to support the new 39% rate and address issues like the potential for people to shelter income in trusts to avoid the top tax rate.
3. Increased IRD disclosure requirements for trading trusts from the 2021 tax year.
4. Getting the flexi-wage scheme up and running by the end of the year (essentially a wage subsidy programme that assists employers to hire and help people with training or mentoring to gain the skills for a job)
5. Closing loopholes so multinational corporations pay their fair share
6. Sick leave extended from 5 days to 10 days.

Resurgence support payment proposed

• The one-off payment will be $1,500 plus a $400 payment per employee up to a total of 50 FTEs.
• Businesses will need to declare a drop of 30% or more in income over a 14-day period as a result of an increase from Alert Level 1 to Alert Level 2 or higher.
• They must have been in business for at least six months in order to apply.

The First Major Trust Law Reform In 70 Years

As a minimum, trustees are now required to provide beneficiaries with basic Trust information. This is a positive obligation on trustees to provide this information that applies even if the beneficiary has not requested any information about the trust. See basic Trust information here

• If you’re willing and able to undertake the increased obligations;
• If you’re comfortable with the increased information provided to beneficiaries as greater transparency will mean that infomation that some trust owners might prefer to keep private will no longer be private;
• If you are still willing to be a trustee of a trust given the obligations imposed on you;
• If the reasons for setting up the trust are still relevant;
• If the trust will offer the same protection; and
• If the trust will still be cost-effective with the extra trust compliance requirements as compliance duties will increase the time and cost of administering some trusts, meaning some are no longer cost-effective.
• Who the beneficiaries are and what information they could be entitled to.
• Removing beneficiaries that do not fit with the purpose of the trust (i.e. some final beneficiaries could be appointed under a will instead).  

Small Business Cashflow Loan Scheme

• Currently no interest is charged if the loan is repaid within one year. This will be increased to two years.
• Currently the loan can only be used for core operating costs. This will be broadened so that the loan can be used, for example, on capital expenditure.

In addition applications for the loan can now be made until 31 December 2023, an extension of three years.

These changes are expected to be made before 31 December 2020.
 

Christmas Shutdown

Our office will be closed from 22nd December and reopening on the 6th January