There is no doubt that NZ is a fantastic place to live and work and to the rest of world a fantastic place to visit and sample our hospitality.
Our two key productive sectors are agriculture and tourism and, with the latter of these being cut off at the knees by COVID 19, NZ is once again reliant on our farmers to keep the countries engine running.
This article tries to summarise the various relief available to farmers to assist their essential role.
There is a common misconception that the wage subsidy scheme does not apply to farmers. This is not true but rather the criteria that must be met to qualify for subsidies may be more difficult for farmers to attain than other more directly impacted industries.
One of the more difficult criteria to meet is the requirement that the business has experienced a minimum 30% decline in actual or predicted revenue over the period of a month, when compared with the same month last year, and that decline is related to COVID-19.
It may be difficult to argue, for example, that a dairy farmer’s revenue is or will decline 30% or more in a month when the farmgate milk price has increased and production is similar to the prior year
That does not mean that a beef & sheep farmer would not be able to demonstrate a reduction in revenue as a result of not being able to schedule stock for slaughter at the freezing works. A result of the bottleneck created by COVID 19
We would recommend the beef & sheep farmer identify and document the single month (with supporting financial information) where their revenue in total has:
– Declined by a minimum of 30%;
– as a result of COVID 19
It should also be noted that Work and Income will, of course, have the benefit of hindsight when subsequently reviewing claims where it turns out that the 30% criteria were not quite met!
Each farmer must consider their own position in light of the very prescriptive rules. Some may qualify but others may not.
Farmers should also note that other tax concessions may assist the farming community which your accountant will be addressing on your behalf such as:
– Allowing depreciation on commercial & industrial buildings
– The ability to write-off assets costing less than $5,000
– Increasing the threshold at which provisional tax applies
– Enabling tax to be deferred by arrangement where cashflow has been impacted by COVID 19
– Removing interest and penalties for late paid tax as a result of COVID 19
– Considering Certificates of Exemption from Withholding Tax for contractors
– Considering Income Equalisation deposits
The entire team at HC Partners LP are continuing to assist the farming community from within our many bubbles and are happy to address any questions you may have.
This article was written by the Team at HC Partners LP, your rural accounting specialists.