covid 19 update

COVID Assistance Update & Traps

More details are coming to light as the application process startsĀ ..

so below are references to the Wage Subsidy application as that is the one that is open at the moment for the lockdown support.

The wage subsidy is available to support businesses that have experienced a 40% decline in revenue over a consecutive 14-day period between 17 August and 30 August (inclusive). This is to support payment of employees to retain jobs. It is also open to self-employed.

Without going into the detail, here are the considerations/traps that we see (in no particular order) –
1. the 14 day period is not up yet so if you select to get the wage subsidy now you will have to do the calculations after the 14 day period to ensure you still qualify:
2. employees must consent to be included in the wage subsidy application .. for transparency this should be in writing or other method that can be retained:
3. employment law still prevails .. you still need to pay your employees and cannot force them to use any type of leave. If you are changing their employment arrangement the proper process must be followed;
4. You must prepare and retain evidence that supports all of the declarations that you make as part of the application:
5. Active steps must have been taken to mitigate the financial impact of COVID-19 .. again undefined this time around but such things as using cash reserves, securing additional funding from the bank, activating the business continuity plan etc etc are all noted as active steps. Key here is the (4) above – document and provide evidence of what you have done to mitigate
6. MSD will be checking employee numbers against IRD records, so make sure the employee records held at IRD are correct.
7. Need to work out who is full time (20hours or more per week) and who is part time (less than 20 hours per week)
8. Revenue decline .. always a interesting process. So firstly, the revenue decline must be totally 100% related to moving to Alert Level 4. Secondly, the comparison period is a “typically” 14 day period between 6 July and 16 August – different for highly seasonal businesses. Thirdly, revenue is gross before any deductions of expenses and is not only what is collected but also includes revenue from entitlement to invoice out either immediately or at a later date ie if you are working but just not invoiced the work out it is counted as revenue for the calculation. Again all needs to be documented fully how the calculations were compiled to establish that the criteria was met.
9. If you apply and receive the subsidy, and then don’t meet the criteria you will need to pay it back.

We’re sure more issues will arise as applications are made.

The decision to apply and when to apply needs to be considered as we are only into day 3 of the 14 day criteria period .. if we are out and back next Wednesday to some sort of operating, there will still be 7 days of the criteria period.

Again, if we can be any assistance please don’t hesitate to contact us.