Mon. May 23rd, 2022


The Real News Network

Covid 19 coronavirus: The tips and tricks for getting access to the subsidies

4 min read

Businesses that have seen a 30 per cent drop in revenue since Tuesday last week due to the Covid lockdown will be able to start applying for the Resurgence Support Payment from this [Tuesday] morning and could be eligible for that on top of the Wage Subsidy Scheme.

Unlike the wage subsidy the resurgent support payment is money that businesses can use themselves to pay fixed costs like rent and gives a one-off injection of up to $21,500 each time a lockdown takes place.

Businesses that are eligible can get $1500 plus $400 per full-time equivalent employee up to a maximum of 50 full-time employees while sole traders can receive a payment of up to $1900. Application is made via the Inland Revenue.

Robyn Walker, tax partner at Deloitte, said businesses that qualified could claim both the resurgent support payment and the wage subsidy.

“The wage subsidy has to be passed through to employees, the resurgent support payment is to cover other expenses. That could be for paying for more hand sanitiser orto do more cleaning or to pay rent.”

Walker said businesses should have records proving the revenue drop at the time that they make the application for the resurgent support payment.

Applications for the wage subsidy opened on Friday. As of late Monday 118,294 applications had been received and over 82,000 approved with a total value of $152.3 million.

The total number of employees in paid applications is over 118,227 with the self-employed making up 17,343 in paid applications and the number of businesses with paid applications totaling 34,436.

To qualify for the wage subsidy, a business must experience, or expect to experience, at least a 40 per cent decline in revenue as a result of the move to alert level 4.

The wage subsidy payment is $600 a week for each full-time worker (20 hours a week or more) and $359 a week for part-time workers retained.

Walker said the wage subsidy was available for as long as New Zealand remained at alert levels 4 and 3. Businesses apply to the Ministry of Social Development for this.

“For smaller businesses and those completely locked down it is relatively straightforward.”

But for larger businesses and those that were still able to operate but not at their full potential, there were other factors that may need to be taken into account, she said.

“The question that is being posed mainly comes from the perspective of larger businesses – there are all of these businesses that have been hammered through the media for the last year about the fact they claimed – they are quite gun-shy in terms of putting in a claim because of the whole scenario happening again.”

In some cases businesses took the wage subsidy and then paid out substantial dividends to their shareholders while others were pressured into paying the taxpayer back.

She said large companies, those with 50 or more employees, would likely be okay to weather out two weeks without claiming the wage subsidy given the strong performance of the economy over the last year.

But she said as soon as it started to stretch into three or four weeks things started to look a lot more grim.

“You get to a point where you think I could do a little bit myself but I can’t do the lot and at what point should you claim? It’s this whole balancing act.”

Businesses wanting to apply need to be able to show their drop in revenue is because of the alert level change, not due to other factors like the seasonality of the business.

On top of that Walker pointed to requirements for businesses to have taken steps to mitigate the financial impact of Covid which could include using their own cash reserves (as appropriate), making an insurance claim, engaging with their bank and seeking advice and support from a relevant industry body.

Walker said how much businesses should be required to dip into their cash reserves was not clear.

While the use of cash reserves was a grey area what was clear was the obligation to fully document the active steps a business had taken to mitigate the financial impact.

“Applicants should proceed on the assumption that this documentation will be requested as part of a post-application review.”

Businesses are also required to seek written permission from their employees to apply for the wage subsidy.

Walker said some businesses may need to consider if they are likely to get a large bounceback in revenue post-lockdown.

“Some businesses will suffer a permanent reduction in revenue due to a lockdown while other businesses have previously experienced a post-lockdown surge in sales where consumers purchase all the goods and services they otherwise would have been acquiring during the lockdown.”

She said this previous experience was something businesses should be considering as part of the process and some may be able to apply for bank lending support based on historic evidence.

Businesses who fraudulently apply for subsidies could face legal action at worst or having to pay the money back, Walker said.

So far no criminal charges have yet been laid but there are seven cases of civil recovery action in process.

Source: Read Full Article