In light of the recent change in alert levels, the Government has updated the financial assistance available to individuals, businesses, and organisations.
The Resurgence Support Payment (RSP) is a payment to help support viable and ongoing businesses or organisations that have a decrease in revenue due to a COVID-19 alert level increase to level 2 or higher. This is a payment to help support businesses or organisations with one-off costs and is available in addition to any Wage Subsidy Scheme (WSS).
The RSP scheme is administered by Inland Revenue.
When the COVID-19 alert level is elevated from Level 1, the Government may decide to activate the Resurgence Support Payment. It will generally be activated when the period of an elevated alert level is 7 days or longer, but this is not guaranteed. Once the RSP has been activated it will be available nationally, even if the alert level isn't increased across the whole country.
The Government has activated the RSP for the level lockdown that took effect from midnight 18th August 2021 and applications are open from 24th August 2021
Applications for the payment will be open in myIR for eligible businesses and organisations after 7 days of the alert level 4 increase. They will remain open for one month after the return to alert level 1.
To be eligible for this support your business or organisation must meet all of the following criteria:
- experienced at least a 30% decrease in revenue over a continuous 7-day period due to the increased COVID-19 alert level. The decrease is compared with a typical continuous 7-day revenue period within the 6 weeks prior to the increase from alert level 1. The start date of the 7-day period is, generally, the date the increase in the alert level started. If the increase in alert level lasts for more than 7 days a different start date for the 7-day period can be chosen, however, the total 7-day period must be within the increased alert level period and be for a continuous period.
- must have been in business for at least 1 month.
- must be considered viable and ongoing.
- businesses or organisations with 100% common ownership (commonly owned groups) must apply as one group and the revenue decrease test is measured across the group as a whole. If the group meets the revenue decrease test and the other eligibility criteria, it would be entitled to a single payment based on the number of employees in the whole group (up to a maximum of 50 full-time equivalent employees).
- charities and not-for-profit organisations may be entitled to the RSP, provided they meet the other eligibility requirements.
- income that is received passively – such as interest and dividends, and all forms of residential and commercial rent – is excluded from the measurement of revenue.
- The business must be physically present in New Zealand
- applicants must be 18 years or older
It should be noted that, unlike the original COVID-19 wage subsidy scheme, the decline in revenue cannot be based on a forecast. The revenue decline has to be based on what has actually happened. A record of the calculation to support the 30% decrease must be retained as this will be required if an audit is undertaken.
It is possible for a new start-up business, which is market ready but not trading, to be eligible for the RSP if they have:
- experienced a minimum of 30% reduction in their capital-raising ability over a 7-day period as a result of an increased alert level; and
- meet the other RSP eligibility criteria
For highly seasonal businesses and organisations, the comparative revenue period should be a 7-day period that is at a similar point in the seasonal cycle for a year prior to the revenue decrease.
The RSP amount is dependent on the number of full-time equivalent employees (FTEs) a business has, and its level of revenue.
The RSP is calculated as $1,500 plus $400 per FTE (up to 50 FTE). The maximum payment is $21,500. Sole traders, with no employees, can receive a payment of up to $1,900.
- employees working up to 20 hours per week are considered part-time (0.6 FTE)
- employees working 20 hours or more per week are considered full-time (1.0 FTE)
Businesses with low revenue will have their payment capped at four times (4x) the amount their revenue has decreased over the 7-day period. For example, if a business has 3 FTEs, it would be entitled to $2,700. However, if revenue decreased by $500, their RSP payment would be limited to $2,000 (4 x $500).
Payments received under the RSP scheme are not subject to income tax, however, expenditures funded by payments under the scheme are not tax-deductible. GST-registered businesses will return GST on payments received under the scheme. Clients should be careful when coding this in their accounting software.
McIntyre Dick is Here to Help
We recognise that this is a very stressful time for business. Therefore, as a show of support to our clients, we will not be charging for any advice, support, or assistance provided in relation to the RSP and other Government support packages.
Unfortunately, tax agents are unable to apply for the RSP on behalf of their clients, therefore, you will need to do this through your business’ MyIR login. If you require any assistance regarding this please email firstname.lastname@example.org and we can help guide you through the process.
If you need any further assistance, or have any questions please don't hesitate to get in contact.
Armed with an extensive knowledge bank, Brad specialises in providing taxation services to clients in the corporate, business, and rural sectors. He also has a keen interest in valuation, asset protection, and estate planning matters.