Essential HR

Covid-19 – Wages Subsidy and RBPN financial support winding downNew Blog Post

Monday 19th October 2020

With the end of the Wage Subsidies and the free consultant support provided through the Reginal Business Partners’ Network starting to expire there are still things you need to be doing now and things that you need to be preparing for. 

In this update we cover:

-          The need to check the subsidy was used correctly and the need to ensure tax and payroll items are being managed properly

-          When does your funding provided by the RBPN actually run out and what you should do?

-          Taking action where you suspect an employee may be under the influence of drugs

 

Wage Subsidy follow-up

All Wage Subsidy schemes should now have come to a close for most applicants.

So, what now?

Like it or not, we must now be prepared for being audited on our use of these funds (especially if you had a larger claim).  So, you should still ensure you can document or otherwise support the following – and best to do it now, before it gets lost in history:

1. Did you meet all the wage subsidy eligibility criteria?

2. Did you correctly pay all amounts through to your employees, and have you correctly dealt with any “unusual” employment scenarios?

3. Has your accountant checked the wage subsidy been correctly treated for income tax and GST purposes?

4. Have you been compliant with all other tax rules, including calculating PAYE and paying taxes on time – the Inland Revenue has announced it will be completing tax compliance reviews?

5. Is your payroll showing correct balances for things like leave, particularly where there have been unusual scenarios?

Did you meet all the wage subsidy eligibility criteria?

Clearly you must be able to demonstrate that you suffered the 30 per cent or 40 per cent (depending on the scheme that was applied for) drop in revenue over a set period. But you should also be able to show what active steps you took to mitigate the impact of Covid-19 on your business’s activities (for example making insurance claims; engaging with your bank and drawing on cash reserves if appropriate).

Did you correctly pay all amounts through to your employees, and have you correctly dealt with any “unusual” employment scenarios?

No problem if all the employees named clearly received wages that were at least equal to the subsidy (or their usual 100% pay), as long as they all stayed entitled to it.

I know many of you had some unusual situations and may have had to pay back some of the subsidy.  For example, situations like:

  • Leavers during the Wage Subsidy period;
  • Redundancies during the Wage Subsidy period;
  • Employees who received ACC income assistance payments during a wage subsidy period.
  • Employees who received Government-assisted parental leave during a wage subsidy period.

If you think you may have had an unusual situation and not adjusted your wage subsidy appropriately, best to take advice now rather than wait for an audit.

Has your accountant checked the wage subsidy been correctly treated for income tax and GST purposes?

Once businesses have determined the correct amount of wage subsidy they are eligible for (taking into account amounts that may be required to be repaid) the GST and income tax treatment must be considered.

A key point here is that if you received the subsidy prior to 31 March 2020, and that is your financial year end, then it needs to be apportioned across the two tax years, so don’t leave this check too long.

Have you been compliant with all other tax rules, including calculating PAYE and paying taxes on time?

A compliance audit, means broadly that the IRD will be checking that your PAYE (and other such tax obligations) related to the period you were receiving the subsidy has been paid.

Is your payroll showing correct balances for things like leave, particularly where there have been unusual scenarios?

Situations like where sick or annual leave has been used to top up the subsidy will obviously impact on the outstanding balance but, particularly where these payments are calculated manually, you should get your payroll provider to assure you the unusual items have been correctly treated.

My thanks to Deloitte for providing most of this information.

RBPN Funding Expiry

If you were one of the fortunate ones who obtained some free consultancy funding through the RBPN you need to be aware that this funding is only accessible for 6 months from when it was activated.  Your chosen consultant will know when this is and hopefully will be in touch with you in time to make use of any unspent funding. 

But do not wait for them to do so.  Be thinking of ways you can constructively use the funding – as long as it is in line with the purposes for which the funding was given.

If it is my services I should give you at least 2 weeks’ notice – but it’s definitely best if you contact me and tell what we can still do.

What to do if you think your employee is under the effects of drugs?

You should take action in line with your company policy and Employment Agreements – but many of them only allow testing if there has been an accident or if you have reasonable grounds for believing the individual is “under the influence”.  What are reasonable grounds?  More to the point if you are pushed to explain them to someone, what would you say?

It pays to have any manager, who may have to deal with this on any regular basis, attend training in this process.  One way of doing this is to attend a TDDA (The Drug Detection Agency) workshop.  While they do provide in-house training, they also have public workshops.  And they address how to make a reasonable decision and helpful tools, as well as covering the required process.

If you want more information – call Therese Gibbens on 03 3545352 or email therese.gibbens@tdda.com

 

Essential HR are here to help.  For ongoing help, contact Mike on 027 2808546 or mike@essentialhr.co.nz and Beccy on beccy@essentialhr.co.nz or 027 2909070 – and if you phone our landline 03 6590377 you can leave a message that gets delivered to us automatically.  Please bear with us if you can’t get straight through – we are getting many calls!  I’m happy for you to pass this on to others.

And this month’s piece of useless information – many people ask us if we are in Nelson – no, our phone number just looks that way!

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