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Covid-19 News and Subsidies

How things have changed in the past 8 weeks. Who would have thought the terms level 4, level 3 and levels 2 could mean so much.
 
Now we are back to level 2 our office is back to the new normal. With social distancing and lots of hand washing of course.

Visiting our office

If you intend visiting our office we suggest you phone ahead so we don’t have too many visitors at any one time. Maintaining a distance of 2 metres can prove difficult as we have limited space.
 
As we move through preparing the annual financial statements when we come to finalising these you do have options.
  1. Visit our office and finalise face to face with Tony or Dean
  2. Finalise over a phone call.
  3. Finalise using the internet and your computer using Zoom or something similar. During lockdown we used Zoom to maintain contact with everyone in the office.
 
Wage Subsidies

As you are aware the Government has made various support packages available to businesses. Many of you have already claimed the Covid-19 Wage subsidy.
 
It is our understanding that there is a large team of government appointed auditors working through those who have claimed the Covid-19 wage subsidy to ensure the applicants were entitled to the subsidy.
 
The primary criteria for most employers to qualify for the wage subsidy is
  • You must have experienced a minimum 30% revenue decline in actual or predicted revenue over the period of a month, or 30 days, when compared with the same month, or 30 days, last year and that decline is related to Covid-19
  • The decline is between January 2020 and 9 June 2020.
 
Revenue means the total amount of money a business has earned from its normal business activities, before expenses are deducted.
 
So we suggest that if you have received the wage subsidy, at the end of May you check to see you have had a decline of 30% in revenue over one month, or 30 days, compared to the same period last year.
 
A small business loan is also available to businesses. Applying for this is not as straightforward as applying for the wage subsidy.
 
Application is done through your business myIR account with Inland Revenue. We suggest you take your time doing this and read all the fine print. For example, the loan is only interest free if you repay it within 12 months of the loan being made available to you.
 
To get an indication of your eligibility for the loan go to www.business.govt.nz/covid-19/small-business-cash-flow-loan-scheme-eligibility-tool/
 
And the Covid-19 Wage Subsidy Extension has also been announced. You cannot apply for this for employees until their 12 week Wage Subsidy has finished and applications do not open until 10 June 2020.
 
The criteria to claim the Covid-19 Wage Subsidy extension are:
  • You must have had, or expect to have a revenue decline of at least 50% for the 30 days before you apply, compared to the closest period last year
 
This scheme will cover 8 weeks per employee from the date you submit your application and is similar to the original scheme:
  • Paid to you as a lump sum.
  • You agree to :
  1. Pass the subsidy on to your employees
  2. Retain your employees for the duration of the subsidy
  3. Do your best to pay your employees 80% of their normal pay.
  4. Take active steps to mitigate the impact of Covid-19 on your business.
 
We have fielded some queries from farmers wishing to claim the wage subsidy, and you may have read some articles in the media regarding the ability of farmers to apply.
 
Ministry of Social Development who administer the Covid-19 wage subsidy scheme have been questioned on this, with no answer forthcoming to date.
 
This is a grey area and we do not have any definite answer as to farmer eligibility.
 
If you are going to claim the subsidy we suggest you look at the actual drop in revenue and ensure it meets the 30% decline in revenue for the same period last year. Remember, an increase in costs is not a criteria for claiming the subsidy. And any decline in revenue must be as a result of the impact of Covid-19. Lastly, you may have to justify your application to an auditor.
 
If you require any assistance with the subsidies or loan applications we are here to help you. It is amazing how many different situations we have seen relating just to the wage subsidy.
 
Stay safe
 
The team at Mitchell McCleary
 
03 6889092
admin@mitchellmccleary.co.nz
57a Theodosia Street, Timaru
​
Email admin@mitchellmccleary.co.nz

Phone (03) 688 9092
Fax (03) 688 1010
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