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The worst long-term damage from coronavirus is the financial turmoil it's generated. How various governments ride this wave is vital to ensure businesses survive. That's why we'll go through the most critical tax relief and funding efforts across the globe.
The United States
The US has rolled multiple tax aids for citizens since the pandemic started. The IRS has been vital in ensuring people, businesses, and organizations can survive the crisis. In 2021, the second wave of Economic Impact Payments makes the latest help.
Individuals don't need to do anything as long as they're eligible. These payments are automated via direct deposits. The official website offers constant news about these measures. Businesses that suffered the most damage can also apply for these benefits.
IRS Measures
The IRS provides tax relief for multiple categories, covering most of the population. Individuals, families, businesses, and retirement and health plans are eligible for the tax relief programs.
Interest payment refunds, tax credits, and deadline exceptions are just part of the package. Even unemployment tax treatments have been vital pieces to help financial victims from the pandemic.
Biden’s $1.9 trillion relief bill
One of the most important recent news has been President Biden’s trillionaire relief plan for COVID-19. The budget splits into reducing coronavirus’ spread, family assistance, and emergency relief for businesses and communities.
Biden's administration measures include a $2,000 total in stimulus checks, expanding insurance for unemployment, and increasing child tax credit. Expectedly, this cash should increase purchasing power and aid the economy as families spend these amounts on businesses.
The United Kingdom
On the other hand, the UK has already updated their COVID-19 funding measures for the following two years. The UK's approach is somewhat different from the US because they focus on aiding local authorities instead of centralizing help.
While the government is optimistic about the virus dying out with incoming vaccination, not all problems will disappear immediately. This support package is estimated at around £3 billion for 2021.
The plan for 2021-2022
The plan goes through a £1.55 billion budget to guarantee aid against the pandemic's immediate and long-term consequences. It also reforms local tax support and income guarantees, distributing an additional £670 million fund.
They’re also continuing the guarantee schemes for local tax losses, with an estimated value of £800 million. Additionally, social care funding oscillates the £1 billion mark.
COVID-19 expenditures
The most compelling aspect is the £1.55 billion for coronavirus-related expenditure pressures. It goes through the Relative Needs Formula, the same method used during the last fourths of the 2020-2021 funding.
Past funding is an essential consideration for allocating this budget. The main focus will be local authorities facing more significant difficulties for the current period. That includes social care for adults and children, public health, and country re-opening.
Local tax measures
The local tax support focuses on enabling financially vulnerable households suffering from the pandemic. These supports include welfare systems. On the other hand, the tax income guarantee states that deficit repayments will spread throughout the three following years.
Additionally, irrecoverable local tax deficits will be part of the spending review. The government will be responsible for compensating 75% of these losses to local authorities. Scope loss measurements for councils and businesses will follow different approaches.
SFC extension
Finally, the government will likely continue the 2020-21 scheme for the start of the 2021-22 financial period. Its operation is confirmed for the first quarter of the upcoming financial year, from April to June.
The same principles from the previous year will remain during the extension, with a deductible rate and loss absorption for councils sitting at 5%. Eligibility for losses is also the same as the current scheme. The same documentation available today will remain relevant.
Business reliefs
Finally, this recent report from TaxAssist Accountants goes through significant business reliefs in the UK. Essentially, it goes through the extension for the relief plan from Budget 2020 into the current year.
Additional grant funding has also made the announcement, including funding for leisure, hospitality, and retail businesses. Other budgets have been allocated for businesses already receiving extraordinary relief.
Other grants include discretionary funds for local authorities, business rates and grants, hardship reliefs, and micro-business funds.
Australia
Australia has provided extensive documentation regarding its tax relief and funding attempts. What's worth noting is that the Australian government already provides financial assistance in the JobKeeper program and other support programs.
Despite that, every state and local government is free to provide additional assistance. This support divides into several categories, but do note that there’s no guarantee that all local governments will implement all or some of these measures.
Payroll tax relief
This type of relief includes threshold and waiver increases for payroll taxes, as well as interest-free deferrals. How it’s delivered will determine the repercussions of receiving this type of support.
For instance, businesses' allowable deductions will be lower if there's no payable tax for payrolls. Refunding payroll taxes offers businesses allowable deductions less the given refunds. However, GST consequences won't apply for relief coming from the state and territories.
Business support
Business support is a little more complicated. Some of the payments for supporting small businesses count as NANE income (non-assessable non-exempt) when filing taxes. These payments include funds, such as the Sole Trader Support, Alpine Business, Licensed Hospitality Venue, Business Support, Melbourne City Recovery, and Outdoor Eating and Entertainment package.
Criteria for NANE eligibility include the payment being from one of those programs or belonging to the 2020-21 financial period. Small business entities during the same financial year are also eligible.
Government payment assistance is assessable income, however. That includes single payments and installments. Businesses using accruals accounting methods, income is derived as the payment right comes. Cash accounting derives the income after receiving the payment.
GST for grant funding usually isn't necessary unless when the value is provided in return. That includes goods, services, binding legal obligations, or other requirements for receiving the payments.
Voucher subsidy schemes
These vouchers enable eligible people to buy from businesses damaged by the COVID-19 pandemic. They represent contributed amounts from the state toward purchases. These vouchers vary in where you can use them.
However, regular applications include consuming in restaurants, bars, clubs, and cafes. Accommodations and recreation are also applicable. Tax implications are the same as the previous scheme.
Electricity rebates
A less common approach to financial relief used by states is electricity rebates. Several states have automated this benefit for both households and even businesses.
These rebates don’t count as assessable income, but businesses need to consider the implications. Most importantly, these rebates reduce claimable deductions from electricity.
Land tax relief
Land tax relief is another relief effort used by some territories. The main focus is to offer more breathing room for businesses harmed by the coronavirus. Credits, rebates, deferrals, refunds, reductions, and waivers make up the various types offered.
It’s vital to note that landlords must provide rent relief for business tenants if they wish to be eligible. Taxation consequences of this measure depend on the delivery.
Rent relief
We already mentioned how to rent relief was a requirement for landlords' eligibility for land tax relief. However, other states have issued waivers and reductions directly.
Some states have also implemented both practices. This measure has focused on commercial tenants within properties owned by the government. Again, deliverability determines taxation repercussions.
The Australian Treasury’s relief and recovery fund
This document detailing the COVID-19 Relief and Recovery Fund is another excellent read. The fund consists of $1 billion to help communities and industry sectors offset the losses from the crisis.
The types of support will depend on what the population needs to improve recovery. They can include fee reliefs, increasing grant program payments, and targeting new programs toward specific needs.
New Zealand
Measures in New Zealand also focused on alleviating the financial downturn from COVID-19. Like other tax reliefs and funding attempts, the approach depends on business and people’s circumstances.
The following measures also complement a considerable amount of educational resources available about COVID-19 and its implications.
Use-of-money interest
This relief effort was one of the first measures implemented by the New Zealand government, as early as March 2020. Use-of-money interest refers to writing off late payment interest by Inland Revenue.
It was applicable for payments after February 14 of the same year. Eligibility requires people to inform the government that they’ve been affected by COVID-19 and rendered unable to meet payments.
Tax leverage
The measures also allow New Zealanders to estimate/re-estimate provisional taxes, with early refunds for overpayments. People unable to pay their taxes can request installment payments and write-offs depending on the situation.
Extension for filing dates on income tax is also a possibility. It depends on the situation, but remissions may be available as well. Certificates of exemption and tailored tax codes are also available for workers.
Special entitlements
Entitlements include re-estimating child support payments and tax credits for families depending on yearly incomes against expenses. That means adapting taxes and obligations to your income.
Finally, paid parental leave is another entitlement for certain people. Eligibility requires baby expectations or birth. Additionally, those becoming children's (under six) primary caretakers after April 2016 are also eligible.
Middle East
The Middle East is one of the most complicated regions regarding our current subject. However, we can go through the two most prominent measures for tax relief and funding.
Even with all the information available, evaluating these measures' repercussions on your company can be a challenge. That's why having access to professional financial services has become more of a need than an advantage.
The IMF measures
Since the pandemic started, the International Monetary Fund has been a critical player for the Middle East. It continuously urged governments to provide pertinent relief programs to the population.
The pledge aimed primarily toward preventing the pandemic's financial damage. The central thesis was that a temporary crisis shouldn't cause long-term repercussions, like unemployment and business bankruptcies.
Particular cases
This article offers more insight into the COVID-19 situation in the Middle East. However, even that article fails to provide a complete outlook of the measures. However, it's worth noting the regions mentioned have implemented financial relief.
Iran and Pakistan have requested emergency loans from the IMF.
COVID-19 hit Lebanon while it was still seeking foreign aid, thus strengthening this need.
Turkey has been one most outspoken about financial measures, slashing interest rates being the most prominent.
Egypt has also employed significant funding, interest rate cuts (3%), and postponing bank loans.
Tunisia had also announced health care and financial resources to reduce the financial impact and IMF loans.
Finally, the Morocco government has launched public cleanup operations and a $1.5 billion aid fund to support healthcare and devastated industries.
Canada
Finally, Canada has also been quite open with its COVID-19 relief measures. It divides its support measures depending on the recipient: people, businesses, sectors, and organizations.
The measures include employee rehiring, job creation, tax relief, employment insurance, and mortgage referrals. It's also aided self-employed people and indigenous entrepreneurship. Various industry sectors also experienced different measures according to their needs.
Trudeau’s recent tax relief
Despite the importance of the mentioned relief efforts, Prime Minister Trudeau's latest tax relief is less known. This relief aims toward coronavirus-related income support beneficiaries.
It means that these people won’t have to worry about overdue tax interests from benefit programs. The minimum period is a year, and self-employed people will also receive amnesty if they’d received benefits without qualification.
Around 40% of Canada's labor force has received payments from the country's Emergency Response Benefit. The tax interest waiver will last until the end of April 2022. Eligibility for the relief requires earning less than CAD 75,000.