Money - Jeremy Tauri: Small businesses might be able to apply for tax relief

Jeremy Tauri.

For the majority of businesses, August will be a month for tax payments with the first of 2021 provisional taxes due and GST as well.

But small businesses could be in for some relief on their tax bills if they underpay provisional tax this year because Covid-19 throws out their forecasting.

The Covid-19 Response (Further Management Measures) Legislation Bill (No2) would allow businesses to ask for a break on the interest they were charged on underpaid provisional tax if the disruption of Covid-19 made it hard for them to accurately forecast their profit.

It is understood it will allow businesses that calculate their provisional tax payments using the easiest, 'uplift' method to reduce their payments to match their expectations of their probable tax bill.

It means businesses earning less this year can put less aside, instead of preparing to pay tax based on what they earned last year, before Covid hit.

This is good news for those who are struggling with cash flow and uncertain about what the next few months will bring.

Although things are looking brighter for many people, this is still a period of significant upheaval and many businesses are having to adjust quickly to new ways of doing business and new demands from their customers.

It's important to note that businesses who want to take advantage of this relief will need to apply to IRD for it. It won't happen automatically. It also should mean that you are looking at your numbers more often if you're not already, not only to gauge tax payments but to ensure you're monitoring trends and turning a dollar.

So as with most things at the moment, it helps to get on top of any issues quickly and engage with those who can help.

Jeremy Tauri Jeremy Tauri is an associate at Plus Chartered Accountants.