The Government’s latest SME package, announced today, may be the key to survivability for thousands of local businesses, according to local business accounting software provider MYOB.
This morning the Government announced a new targeted business package, including a $3.1 billion tax loss carry-back scheme, changes to tax-loss continuity rules, greater tax payments flexibility and increased funding for business advice.
MYOB NZ country manager Ingrid Cronin-Knight says many smaller local businesses are staring down the barrel of a loss this year, and the Government’s scheme could make a vital difference.
“As we saw in our latest research, the majority of small New Zealand businesses expect to have a fall in revenue this year,” says Ms Cronin-Knight.
“So the ability to offset a forecast loss in the current year against the previous year’s tax will give them more options to reduce cost and free up cash.”
According to the latest MYOB Business Monitor, a survey of over 1000 SMEs nationwide in March, revenue growth over the 2019/20 year for the SME sector was already finely balanced, with 26% of SMEs reporting revenue growth and 26% experiencing falling revenue.
However, businesses saw an immediate hit in annual revenue from the coronavirus crisis, with 31% of the businesses responding later in the month reporting that their annual revenue was down.
Looking ahead to 2021, 40% of SME operators are forecasting a fall in revenue, while 21% believe it will be up. Again, the approximately 400 business owners surveyed after 16th March saw a greater impact from the coronavirus, with 51% expecting revenue to be down over the coming year, and just 12% expecting growth.
“Introducing greater flexibility on tax payments – and in particular extending the filing and payment periods for provisional and terminal tax – will also reduce the pressure on cash-strapped businesses this year, giving them some breathing room as their revenue falls.”
Ms Cronin-Knight says the biggest influence on SME confidence according to the MYOB Business Monitor survey is the time and cost of compliance.
“Reducing that headache in this period, and providing certainty about what the trading environment will look like in the future, which hopefully we’ll see in the coming days, will be key to giving local SME operators some assurance about their future. It will also give them the ability to make better decisions about ongoing investment, employment and how long they can sustain revenue losses.”
*The MYOB Business Monitor surveyed 1,000 SME operators from across the country and was conducted from the end of February to 24th March 2020.