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Government Updates – STAP | Low-value asset threshold | Changing depreciation

16 February, 2021

 

COVID-19 Short-Term Absence Payment now available

On 8 February 2020 the Government announced a new COVID-19 Short-Term Absence Payment (STAP) to support employers and self-employed workers.

The STAP is available from 9 February 2020, through Work and Income, to employers for employees, and self-employed workers, who:

  • need to miss work to stay at home while waiting on a COVID-19 test result, and
  • cannot work from home.

The STAP is a one-off payment of $350.

GST is not payable on the STAP.

For self-employed workers the STAP is considered income, so must be included on their Individual income tax return – IR3.

For employers, any amount passed on to the employee is “excluded income”, so is not included as income or claimable as a deduction on their income tax return. The employee pays tax on the amount they receive. Any excess amount not passed on to an employee is taxable and must be included on the employer’s income tax return.

The STAP is paid on top of an employee’s normal salary or wage for the pay period it is received in, with PAYE and their other normal deductions (such as student loans and KiwiSaver) being made from the total payment.

For more information, please visit:

Beehive.govt.nz – New COVID-19 Payment Supports Businesses

Work and Income – COVID-19 Short-Term Absence Payment

IRD.govt.nz – COVID-19 financial support for businesses

 

Low-value asset threshold for depreciation

The Government has recently passed legislation that temporarily increases the low-value asset threshold for depreciation from $500 to $5,000. This will allow you to deduct the full cost of your business assets with a value of less than $5,000 in the year they purchased them. This is instead of having to spread the cost over the life of the asset.

The low-value threshold will be raised further to allow the immediate expensing of assets purchased on or after 17 March 2020 that cost less than $5,000.

The Government is only raising the threshold for a short time until 16 March 2021. They’re doing this so you and other business people keep investing in their businesses throughout the COVID-19 outbreak.

For assets purchased on or after 17 March 2021, this threshold will be permanently increased from $500 to $1,000.

 

Changing depreciation for commercial and industrial building

From the 2020-2021 income year onwards we’re changing depreciation for commercial and industrial building. Previously, tax depreciation on all buildings was at 0% because of 2011 tax changes.

Now if your business is eligible you’ll be able to claim depreciation deductions in your tax return for commercial and industrial buildings. These changes are to help:

  • you with your business cash flow in the short-term
  • economic recovery long-term by encouraging you to invest in new and existing buildings.

The applicable depreciation rates introduced are 2% DV and 1.5% SL.

Residential buildings are not part of these depreciation changes. This is because they depreciate at a much slower rate.

 

 

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