OK, now for some boring stuff. Money is going to become very short over the next few weeks. Sure, businesses have had some assistance from the government to help to pay wages (and I commend the government on their assistance package) but as payments to businesses dry up, things will get harder. Already I have had discussions with clients over who to pay first; mostly they are paying their staff and their fixed costs, such as rent, but it is their suppliers that are probably going to fall short. This is a question I can’t answer for you. That is a decision for you alone.
WAGE SUBSIDY.
But first, if you have not yet applied for the wage subsidy, here is what you do. The process is straightforward and the money is paid promptly. You go to this website. Apply in the name of your company, if you have one. You will need your NZBusiness number (go to https://companies-register.companiesoffice.govt.nz/ and look up your own company and you will find it there), IRD numbers for your company and for all employees that you are applying for. If you are a sole trader or partnership, you may need to apply for an NZ Business Number first. Go to https://www.nzbn.govt.nz/get-an-nzbn/get-your-nzbn and apply there. It is instantaneous once you’ve filled in all the boxes.
If you are applying for the wage subsidy, don’t forget to apply for yourself. You need to eat too.
MORTGAGE HOLIDAYS
Banks can give up to 6 months mortgage holidays for those that need them, and that facility is available to just about everyone right now. However, don’t forget that interest will still accrue on the mortgage while you are not making payments, so if you can afford to keep paying your mortgage, then you should. However, as I said, cash is going to get very tight soon. It is a judgement call for you, but you need to survive this. Banks do not foreclose on mortgages unless they really have to, so if you get into difficulty, talk to your bank. They are being encouraged to be as helpful as possible at the moment, and are still operating, although branches will be closed.
TAX
There is still nothing more certain than death or taxes, but the IRD does have the powers to be lenient. Paying your taxes may become difficult over the next few months, and the government is bracing itself for a significant fall in tax revenue. Terminal tax for the 2019 year is due on 7th April (for those with accountants) and you may find it difficult to pay this. The normal practice is to contact your accountant to make an instalment arrangement, but to reduce penalties to 1%, this must be done by April 6th.
Your accountant can do this online, so contact them immediately. (Most accountants will still be working from home.) The same will apply with provisional tax payments due on 7th May. IRD will still be operating, and I am going to assume that they will apply some leniency regarding penalties at this time, but don’t count on it. If you are not going to be able to pay your taxes, get onto it now. Please note that the leniency will only apply to penalties (and possibly interest), not to the taxes themselves. If you’ve had the money, you are still liable for the tax, unless you want to call in a liquidator.
KIWISAVER
Don’t look. The markets are starting to tick up a bit, but there is a long way to go yet. If you switched from a growth fund to a conservative fund at the beginning of March, you may have saved yourself some money in the short term, but it is too late now. We will get through this, and most of our listed companies are very solid. I have lost about 30% on my share portfolio, which is positively tragic and being a glutton for punishment, I keep checking on it, but I have no intention of selling up and locking in losses. The markets will recover. If you have some spare funds, it is a great time to buy shares, but try not to run out of cash. We simply don’t know how long this will go on.
There are lots more questions, many of which I don’t know the answers to but this site has a plethora of expertise, so let’s start to use it. I have a question for any people out there from the insurance industry. What happens if you cannot get a warrant for your car due to the lockdown, but you have an accident on the way back from the supermarket. Are you still insured?
Stay safe everyone. We will survive this. My problem is that all that IRD leniency does not apply to getting tax returns filed before 31st March, so I am working like a dog to get it all finished. But if any of you need help, just ask. That is what we are here for.
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