Should an eligible entity include business interruption insurance proceeds, received due to a halt in the entity’s operations and meant to replace lost revenue, in its qualifying revenue? Where the insurance proceeds are included in revenue in a prior period, and are based on a gross revenue benchmark less cost of sales, can the eligible entity determine its qualifying revenue for the particular prior reference period based on the insurance proceeds plus a notional amount to represent what its revenue would have been during that period had it been able to operate? The Directorate responded:
[A]n entity would typically acquire business interruption insurance to replace lost revenue when the entity is unable to carry on its ordinary activities. Accordingly … business interruption insurance proceeds would generally be included in qualifying revenue and would generally not be considered an extraordinary item.
Only amounts resulting in an inflow of cash, receivables or other consideration are included in qualifying revenue, therefore, an eligible entity would not be able to gross up their qualifying revenue by a notional amount.