Wage Subsidy Extension – Revenue Calculation
How to calculate a drop in revenue
Firstly, you must continue to bill invoices on the same basis as you did in the prior year
You should not defer billing, as this is still accrued income i.e. income you have earned but not yet received
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).
If you have a 40% loss in revenue you qualify
If you do not have a 40% loss in revenue, you may need to look at your work in progress (WIP):
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
Then you can calculate the revenue generated in the 30day period this year compared to the same period last year
Invoiced revenue over 30days in current year = $64,000
Invoiced revenue over 30days in prior year = $100,000
Revenue loss = (100,000 -64,000) / 100,000
= 36% loss in revenue
Under test one you do not qualify.
WIP as at 24 May 2020 = $60,000
WIP as at 22 June 2020 = $50,000
Revenue for 2020 = $64,000 - $60,000 + $50,000 =$54,000
WIP as at 24 May 2019 = $80,000
WIP as at 22 June 2019 = $75,000
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.
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