Grab a Lifeline!

"Resurgence": an increase or revival after a period of little activity, popularity, or occurrence. It could be used to describe the return of community transmission of the deadly virus. Or it could describe the hoped-for bounce back when the virus recedes, with the help of this lifeline.

When Auckland returned to COVID Alert Level 3 in August, the Government quickly moved to offer a further wages subsidy extension nationally. The 2-week COVID-19 Resurgence Wage Subsidy payment is for NZ employers and self-employed who have had a revenue drop of at least 40% because of COVID-19 for a 14-day period between 12 August and 10 September, compared to a similar period last year. New businesses or high-growth businesses must compare against a 14-day period that best estimates the revenue decline.

Knotted Rope

The subsidy is $585.80 per week per full-time employee (20 hours or more per week) and $350 per week per part-time employee. You can apply between 21 August and 3 September 2020. If you are already getting other COVID-19 payments for that employee, you must wait until those pay periods have run out. You must retain the employees for the period of the subsidy and try your hardest to pay at least 80% of their usual wages. If that isn't possible then pay at least the wages subsidy amount.

If you claim the subsidy you must mitigate the financial impact as appropriate, such as using cash reserves, activating your business continuity plan, claiming insurance, engaging with your bank, seeking advice or support from advisers. The Regional Business Partner programme has received a financial boost so more businesses can apply for COVID-19 support.

If you haven't claimed the 8-week Wage Subsidy Extension already, it's worth working out if you're now eligible for that subsidy rather than the Resurgence Wage Subsidy (see table).

Comparison between Subsidies

 

Wage Subsidy Extension

Resurgence Wage Subsidy

Application Period

10 June 2020 to 1 September 2020

21 August – 3 September 2020

Period affected

Any 30-day period in the 40 days before you apply

Any 14-day period between 12 August to 10 September

Decline in Revenue vs last year / comparison period

40%

40%

Weeks of subsidy

8 weeks

2 weeks

Total per full time (20+hours)

@ $585.80 per week

$4,686.40

$1,171.60

Total per part-time (<20 hrs)

@$350 per week

$2,800.00

$700.00


Calculating the Decline in Revenue

Revenue is your gross sales before deducting expenses. For many businesses you can look at your bank data or invoice history to work this out. For example, if you invoiced $15,200 between 12 August and 25 August 2020 inclusive and you invoiced $24,800 between 12 August and 25 August 2019.

Decline in sales = $24,800 - $14,200 = $10,600.

Percentage decline = $10,600/24,800 *100 = 42.7%. The decline is greater than 40%, so you are eligible if you meet the rest of the criteria.

If you collect deposits for work to be carried out later, or if your comparison period is not indicative of lost earnings, discuss it with us. We can help you with the calculations.

 Find out more about the Resurgence Wage Subsidy, and make your application here:

https://workandincome.govt.nz/covid-19/resurgence-wage-subsidy/index.html#null

Other Help for Businesses

Talk to us about whether these other lifelines can help you:

·         The Small Business Cashflow loan scheme has been extended until 31 December 2020.

·         Tax loss carry-back, tax instalment arrangements, penalty and interest waiver.

·         Tax deductions for low-value assets, depreciation on commercial and industrial buildings.

·         Regional Business Partner network for HR, health and wellbeing, business continuity, cashflow and finance management, strategy and digital capability.

·         Business debt hibernation.

·         Business finance guarantee scheme.

·         Business Mentors NZ.

We are here to help, so please reach out to us at JDW.

- Serena Irving

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The information and examples given in this article are general in nature and are not personal investment, financial or tax advice. We recommend that you contact the author or another professional advisor for advice that is specific to your needs. Serena Irving is a director in JDW Chartered Accountants Limited, Ellerslie, Auckland. JDW is a professional team of qualified accountants, auditors, business consultants, tax advisors, trust and business valuation specialists.