COVID-19 economic support package: what’s in it for the property sector?
Yesterday, the Government released its COVID-19 economic support package worth $12.1 billion. The package is a substantial armoury of tools designed to help New Zealand businesses during this period of uncertainty.
We applaud the Government for moving swiftly to develop this package and note several announcements of significance to the property sector:
- Reinstatement of depreciation deductions for commercial and industrial buildings. A Bill will be introduced shortly and allow property owners to depreciate buildings (at 2%) for the 2020/21 year effective immediately. Property Council has been pursuing the reinstatement of depreciation deductions since they were removed in 2010. This announcement aligns with our recommendation to the Tax Working Group in 2018.
- Wage subsidies for all businesses that can show a 30% decline in revenue (or forecast review) for any month between January and June 2020 compared to the previous year. If eligible, employers would be paid $585.80 per week for full time staff (<20 hours p/w) and $350 for part time staff (>20 hours p/w). Applications can be made from today for the next 12 weeks via the Work and Income online portal.
- Leave support for businesses to apply for leave on behalf of employee’s who are unable to work because they are in self-isolation, sick, or caring for dependents. The same rate of wage subsidies (as above) will apply.
- Small businesses provincial tax increase from $2,500 to $5,000 on 1 April 2020. This will result in fewer small businesses having to pay provincial tax and help reduce cashflow pressures.
- Waiving interest for late tax payments to provide relief for businesses who are directly affected by the COVID-19 outbreak. This will apply for all tax payments due on or after 14 February 2020 and will be at the discretion of Inland Revenue.
- Low value asset deductions to increase to $5,000 for 12 weeks and revert to $1,000 in the long term. (Note: the current threshold is $500, but the proposed adjustment to $1,000 in the long-term aligns with Australia’s threshold).
As Minister Grant Robertson said, “this is not a one-off package; it is just the beginning.” The Government is undertaking work on how larger or more complex businesses that fall outside of this package can be assisted.
Yesterday’s announcement was a great start, but New Zealand will need further financial support to deal with the crisis period, to foster a strong recovery and to help our economy grow.
With every crisis comes opportunity, and the property industry has a big role to play in lifting the country out of recession during these uncertain times. We have the opportunity to show leadership and prove that reinstating depreciation will help the economy, by injecting that money into building upgrades and maintenance.
As an industry we must take this opportunity to work with the Government to develop policies that allow us to create cities where communities can thrive. If we work together, we could re-set years of poor planning and under-investment, emerging to be better placed to face the future.
With the Government battling to deal with both a health crisis and an associated economic one, our advocacy is critical at this time.
Property Council will be working with the Government over the coming months to ensure that the voice of the property industry is considered as any further support packages to the property sector are developed.
> For more COVID-19 information for businesses click here.
> To read our media release welcoming the support package click here.
For the latest Property Council COVID-19 update and information, please click here.