First round of Wage Subsidy ended prematurely

The first round of the Wage Subsidy in August 2021 closed prematurely.  It was supposed to close at midnight last night but closed sometime around 8pm.  Hopefully, not too many businesses will be impacted by this.  

We are unsure at this stage if there will be any assistance for businesses who can demonstrate that they tried to make a claim but couldn’t.

Second round of wage subsidy applications now open

The second round of the Wage Subsidy August 2021 opened at 9:00am this morning.  Businesses who are still being impacted by the Alert Level increases can apply two-weeks after their application for the first round (if applicable).

The requirements for the second round seem to be basically the same as they were for the first round, except the revenue test period is the 14 days from 31 August to 13 September as compared to a 14-day continuous period prior to 17 August.

Here is the declaration that sets out the full terms:

To recap the key eligibility terms:

  • A business must suffer or predicted that it will suffer, a 40% revenue decline as a result of the COVID Alert Level increases.  
  • The revenue drop is calculated by comparing the revenue for the period 31 August 2021 to 13 September 2021 to a 14-day period in the six weeks before the lockdown commenced.  For a seasonal business, if six weeks prior to Lockdown is not representative of expected trading then they can compare their revenue against the 14-days 31 August 2019 to 13 September 2019 or 31 August 2020 to 13 September 2020 instead; and 
  • The business must keep records of the decline, how their decline in revenue is attributable to Covid and, if applicable, why the seasonal revenue test was used; and
  • Businesses must use best endeavours to retain the employees named in the application on 80%+ pay and cannot unlawfully compel them to use leave balances; and
  • Businesses need to repay the subsidy in full if the terms are not met and this specifically includes applying on the basis of a predicted 40% turnover drop which does not occur.

One significant change in the declaration is the removal of the specific requirement to document steps taken to mitigate the impact of Covid.  In the declaration for the prior round this included the problematic wording of “drawing on your cash reserves if appropriate”.  We welcome the removal of these terms as this was problematic for businesses.

One common issue we are seeing – Seasonal businesses

We are seeing some seasonal businesses that are clearly impacted by Covid not qualifying for the Wage Subsidy.  

As discussed above, if a seasonal business cannot demonstrate a turnover drop against the six weeks prior to 17 August, then it reverts to comparing the turnover against the 14-day periods 31 August 2019 to 13 September 2019 or 31 August 2020 to 13 September 2020.  We are seeing situations where the business did not exist in those prior years.  We have also seen a situation where a business existed in 2020, but 2020 was impacted by the August 2020 Covid outbreak.

COVID-19 Resurgence Support Payment (RSP) – still no word on a second round

Unfortunately, still no word on a second seven-day period of RSP being activated.

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