Wage Subsidy Extension – Revenue Calculation

How to calculate a drop in revenue

Step 1:

1. Firstly, you must continue to bill invoices on the same basis as you did in the prior year

2. You should not defer billing, as this is still accrued income i.e. income you have earned but not yet received

3. You should look at revenue received over a 30 day period in the 40 days prior to applying and the same 30 days in the prior year (or the nearest comparable period last year).

4. If you have a 40% loss in revenue you qualify

Step 2:

1. If you do not have a 40% loss in revenue, you may need to look at your work in progress (WIP):

2. You will need to assess your WIP at the start and end of the 30day period this year and for the same period in the prior year

3. Then you can calculate the revenue generated in the 30day period this year compared to the same period last year

Example Calculation

Step One:

1. Invoiced revenue over 30days in current year = $64,000

2. Invoiced revenue over 30days in prior year = $100,000

3. Revenue loss = (100,000 -64,000) / 100,000

4. = 36% loss in revenue

Under test one you do not qualify.

Step Two:

1. WIP as at 24 May 2020 = $60,000

2. WIP as at 22 June 2020 = $50,000

3. Revenue for 2020 = $64,000 - $60,000 + $50,000 =$54,000

1. WIP as at 24 May 2019 = $80,000

2. WIP as at 22 June 2019 = $75,000

3. Revenue for 2019 = $100,000 - $80,000 + $75,000 =$95,000

Revenue loss = (95,000 – 54,000) / 95,000

= 43.2% loss in revenue (ensure loss is related to COVID-19)

Therefore, you qualify for the wage subsidy.

If you require our support please email our team at covid19@velocite.co.nz