The COVID-19 pandemic has caused considerable economic disruption globally and here in New Zealand, both for individuals and business. If you’re feeling stressed about your finances, there is help available. We’ve compiled some useful information and links below. Our team are on hand to provide guidance and answer any questions you may have.
The New Zealand Government has released $12.1 billion scheme to support employees, employers, and individuals through the COVID-19 pandemic.
Government support package for individuals
If you’re an employee, self-employed worker, a contractor, or a sole trader, you may be eligible for the COVID-19 Wage Subsidy Scheme. There is also support available for individuals and households who are struggling due to COVID-19.
The government package includes:
If you’re employed, your employer will facilitate your wage subsidy application. It is illegal for your employer to receive the wage subsidy and not pass it on to their employers. You can search online to see if your employer has applied for the wage subsidy.
Government support package for businesses
The New Zealand Government has released a package to help cushion the effect of COVID-19 on businesses.
The package includes:
Business Finance Guarantee Scheme
In conjunction with participating banks, The Government has released a $6.25 billion finance scheme for small and medium-sized businesses to protect jobs and support the economy. Targeted new loans (including increases to existing limits) are available for eligible businesses who have experienced hardship caused by COVID-19.
If you’re having difficulty making repayments on your loan, there are options available to you. We encourage you to do plenty of research before making any changes. We’re available to answer any of your home loan questions.
You have the option of temporarily altering your repayments to interest-only which will reduce your repayments in the short term until we return to a new normal. If you are experiencing hardship, this should be your first port of call as the mortgage holiday option below will see you paying more in the long run.
Please note, if you don’t have any obvious reason to go to interest-only and if you haven’t been financially impacted by COVID-19, then the bank is unlikely to support your application.
You also have the option of taking a holiday from your mortgage repayments for up to six months. It’s important to note this isn’t really a holiday: throughout the break in repayments, interest will still accumulate. Any principal you have diligently paid down will revert to the bank, and you will have to repay that money again. For this reason, we view a mortgage holiday as a last resort.
For your convenience, please find below links to the main bank online repayment relief application forms.
It may be a good idea to look at your loan structure, especially if you have multiple loans. We see a lot of people with a number of loans secured against their property: some floating, some fixed, a loan for the car, and one for the recent renovation etc. Consolidating these loans into one and fixing the interest rate at the current low rate may free up vital funds to bridge the gap.
While there is some resistance from the general public around fixing, some banks charge no penalty if you can make regular extra payments on top of a fixed interest loan. This way, you can have the benefit of a floating mortgage by being able to pay extra, but also enjoy the benefits of a lower fixed interest rate. Only float what you can afford to pay back; otherwise, your bank is earning more money from you than they should.
If you require loan consolidation advice, please speak with a certified home loan specialist.
With the outbreak of COVID-19 being declared a public health emergency, IRD has provided a tax relief guideline.
If you are unable to pay outstanding tax due to hardship, then you may be able to set up an instalment arrangement in your myIR. In cases of serious hardship, you may also be eligible for a write-off when you don’t expect that you’ll be able to pay the full amount owing.
Extensions for late filing and late payment have also been made available for certain income tax returns. If a payment has been made late due to the coronavirus, then the normal penalties for late payments may be remitted.
If you have a tax agent, they should also be able to help.
We’ve put together a list of tips to help business owners in times of uncertainty:
Monitoring and tracking cash flow is a good business practice in the best of times, but now is the time to create a few different cash flow projections, so your business is prepared for the worst. If you need some extra assistance, speak to your bank.
Give your expenses a thorough overhaul and think about which costs can be reduced or eliminated. If you’re renting commercial premises, speak to your landlord about rent relief.
Customers and clients
Maintaining communication with your customers and clients is vital during times of uncertainty. Keep your contact open and honest.
Sales and marketing
Stay connected with your customer base and prospects, and rather than focusing on the hard sell, consider how you can offer value and support during this unusual time.
Now’s the time to streamline your work processes to help your team work well remotely. Responsibilities, tasks, and work hours may change over this time; be prepared to be flexible, and offer extra support to help your staff adjust to a new way of working.
Share reliable information on COVID-19, and keep everyone updated regularly. Keep the morale up with regular communication, and show your team that they are valued during this difficult time.
Assess your supply chain
The world is in various stages of disruption, so it’s a good idea to make plans to safeguard your supply chain. Could you order larger quantities or contact alternative suppliers?
The stock market isn’t immune to the coronavirus outbreak, but it’s key to avoid making any rash decisions.
Over the last few years, investors have seen their shares go mainly one way: up. Investors, media and the public have become used to seeing the value of shares grow very strongly, with minimal downward movement.
But in the short term, markets go up, and markets go down – sometimes both on the same day. Back in 2018, the markets reacted to a trade war threat with China, which was hyped up by the media. This time, it’s a similar situation with the media reports of the coronavirus outbreak.
Choosing the right fund
We cannot stress this enough: don’t panic and suddenly change your investment fund just because the value has dropped a little.
It may be a good time to check out an online risk profile questionnaire to ensure the fund you are in is still the right fit for you based on your time horizon and appetite to risk. Make sure you have chosen your fund based on this, as opposed to a fund with the best historical returns.
If you’re still unsure, you could have a chat with a financial adviser. They can help you with the risk profile results and talk through anything else that might be on your mind.
Everyone can benefit from a budget, not just people who are having trouble making ends meet. Budgeting will give you a sense of control over your finances, and will allow you to plan ahead,ticking off goals like eliminating debt and creating savings along the way.
It’s an excellent time to complete a full assessment of your outgoings. Check out the budgeting tool from Sorted. It’s an excellent starting point for anyone wanting to get a handle on their finances.