Whatever your business, it’s likely that Covid-19 will be impacting you right now.
Hunter Withers Limited are here to help you and your business survive this uncertain time, whether that be with cashflow advice, business continuity or tax planning, please get in touch and we will be there to support you through this difficult time. IN THIS EDITION:
BUSINESS CONTINUITY FREE CONTINUITY PLAN AND GUIDE The impacts of Covid-19 on health and business are evolving fast.
Currently, we are prioritising helping our clients who have the greatest need. So, if you need urgent help, please get in touch.
It is essential that every business has a plan for dealing with the fallout from this pandemic.
A plan will give you peace of mind and clarity for decision-making for the future of your business, and ensure you access Government support entitlements and maximise opportunities to preserve your cashflow and profitability. In the worst-case scenario, we want you to have certainty about whether your business can continue and plan around that.
We’ve created some practical content to help you build your Business Continuity Plan. Download these free templates below or contact us if you have any difficulties in accessing these and we will email through.
We have two ways we can help you using our content:
Doing nothing here is simply not an option, we will be contacting clients who we think urgently need our support to outline these options in more detail. If you want to get started straight away, please let us know.
GETTING THROUGH "Innovation is the ability to see change as an opportunity - not a threat" - Steve Jobs There is no denying that things are rapidly changing at the moment - what can you do right now that can create a new opportunity for you? If you are not online - can you? What else can you offer to your customers right now that doesn't require a physical presence and can complement your current business? Some ideas could be educational videos to increase your brand awareness, increasing your own education or upskilling, offering remote service to your clients where you can video call and help them through problems (anyone else got a small maintenance issue that a builder may be able to provide guidance over a video call on how to fix?). There are ways to do things differently right now to help you longer term. Take this time as an opportunity.
WAGE SUBSIDY FAQs The Wage Subsidy is available to most businesses who have experienced a decrease in revenue of at least 30% due to Covid-19. Please note: There are changes to the "Leave Payment" as of today, to effectively cancel this subsidy, so we have not included any information regarding the leave payment in our newsletter. The leave payment will be replaced by a "sick leave" payment for essential workers.
We have been fielding many calls on the wage subsidy and how this works in terms of paying employees, calculating the reduction and general ability to claim the wage subsidy.
Please see the popular FAQs below:
How do I calculate whether revenue has dropped by 30% or more? The employer/business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year. That decline must be related to COVID-19.
Revenue means the total amount of money a business has earned from its normal business activities, before expenses are deducted. Practically we envisage that income will be calculated on the same basis as it was in the month against which the comparison is being made.
As some employers/businesses have only just closed their doors as a result of the upgrade in alert levels, the definition permits a prediction of future revenue.
What does it mean to take active steps to mitigate the impact of COVID -19? Your business must have taken active steps to mitigate the impact of COVID-19 This includes activating any business continuity plan and seeking advice and support from:
Do I have to pay my employees 80% of their ordinary wages while receiving the Government Wage Subsidy? You must make your ‘best efforts’ to pay 80% of the normal income of the employees for whom you have applied for a subsidy. As part of the application declaration, you must confirm that you have advised employees that you have included them in your application for the wage subsidy, and so you will need to ensure you have done so.
If you are unable to pay 80% of their ordinary wages you are required to at least pass on the subsidy.
Please note: The wage subsidy does not exclude you from your normal responsibilities as an employer. Therefore, it is important that you discuss any changes or reductions in an employees pay prior to doing so. Please see below section for further information on this.
Do I need to pass on the entire wage subsidy, for example, if my permanent part time staff member earns less than $350 per week? The $350 per week subsidy is payable to the employer in respect of permanent part time employees – defined as those who work up to 20 hours per week. You will need to consult whether casual employees are permanent part time employees eligible for the wage’s subsidy. The eligibility criteria stipulate a best effort to pay 80% of an employee’s normal wage.
What happens if I cannot continue to employ those for whom I applied for the subsidy? Businesses should consult their employment lawyers regarding individual employment agreements, and their legal obligations concerning minimum pay and redundancy before terminating employment.
The ability to communicate clearly and effectively with employees is crucial during this time.
If you have applied for and obtained a wage subsidy in good faith it appears there is no need to pay any wage subsidy back. Be prepared for your entitlements to be reviewed if you terminate an employee’s employment.
Terminations within a short time of application for the wage subsidy may be reviewed closely.
Does my business or legal structure preclude me from receiving the subsidy? At the highest level, the intention of the wage subsidy is to keep people employed through these difficult times. The specific legal structure of your business, or specific employee & contractor agreements, should not preclude you from being eligible.
Types of employment relationships and how these might affect eligibility The below examples give some direction for determining part-time or full time-eligibility for the Wage Subsidy.
I don’t have any evidence to support my claim for the wage subsidy. What do I need to do? When making the application you are signing a declaration that the application has been made in accordance with the eligibility criteria. If you have provided false or misleading information or receive any subsidy or payment that you were not entitled to receive, you may be subject to an investigation including for offences under the Crimes Act 1961.
Given this declaration, it is important that you review the criteria to ensure that you have evidence to support your claim.
Evidence will include documentation on how you arrived at a 30% drop in revenue – this should be self-evident for most employers who are unable to carry on their business during the Level 4 COVID-19 lock down period.
The active steps criteria will mainly include seeking advice from a third party, but may also incorporate all internal actions that assist with mitigating the impacts of COVID-19.
It is crucial you get this information together as all payments made by the MSD are subject to an audit. Payments claimed in error may be subject to repayment.
Should I apply for this or ask you to make the application? We encourage you to complete the application (you need to sign the declaration) and seek guidance from us if you require.
I applied for the wage subsidy, but accidentally left off one of my part-time employees. How do I get the subsidy for them now, as it says you can only apply once? We understand you will need to contact the MSD directly and ask them to add on the additional employee.
Does the structure of my organisation matter (assuming I am not a government entity?) No, this is based on being a NZ employer with NZ employees. So, you can be an incorporated society, trust, charity, etc. A sole contractor will claim for themselves and any staff that they employ
How are the subsidies treated for tax? The receipt of the wage subsidy to the business is not taxable and has no GST included. Please code treat this as exempt income for GST purposes. If you require a new code entered in to your accounting software please let us know.
The payments to employees are taxed like normal for PAYE.
The payments to employees that are related to the wage subsidy are not tax deductible to the employer. There is nothing that you need to do in respect of this as we can handle this at year end.
How long does it take to receive the subsidy? WINZ administers the subsidies, and experience so far is that waiting times can be between 2 to 7 working days.
EMPLOYER RESPONSIBILITIES There seems to be a lot of confusion regarding the employers responsibilities during this lock down period, especially around topping up employee wages (what to top them up with, and how much to top up).
Your employer obligations during this lock down period depends on your employment agreements with your individual employees. It is best to work with your employees to ensure you reach an agreeable solution that is best for all involved.
For most employers who have applied for the wage subsidy they will need to review employment agreements and discuss with employees if they want to only top up to 80% of the wages. Employees do not have to agree to this but it is worthwhile highlighting to them that for business continuity it may be in their best interest to ensure the business survives this period too. The purpose of the wage subsidy is to keep as many people employed as possible. WAGE SUBSIDY The Wage Subsidy can be applied for online through the Work and Income Website. Please ensure you have your business IRD number, NZBN and bank account number handy. Please also ensure you have employee names, IRD numbers and dates of birth available before beginning the process. CONTACT US Please understand that our team can work from their homes with no disruption to the service we provide.
Our accounting software is cloud based (we can use it via the internet), and we are available via email and mobile.
So, contact us if you need our help. MENTAL HEALTH Lastly, now is the time to prioritise your mental health. As they say, put your own oxygen mask on before assisting others. If the situation is affecting you, consider blocking out social media or things that may worsen anxiety, but whatever you do, please stay in touch with us - so that together we set a plan to help you in these difficult times. PO Box 13, Pukekohe 2120
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