Your business may be able to get the COVID-19 Resurgence Support payment from Inland Revenue. It's to help with fixed costs like rent. You can get this as well as the COVID-19 Wage Subsidy August 2021
The Resurgence Support Payment (RSP) is a payment to help support viable and ongoing businesses or organisations due to a COVID-19 alert level increase to level 2 or higher. If your business or organisation is facing a reduction in revenue due to an alert level increase, you may be eligible for the RSP.
Applications for the alert level increase announced on 17 August will open at 8am on 24 August.
What the RSP IS
Each time the COVID-19 alert level is increased from level 1, the Government may decide to activate the Resurgence Support Payment. It will generally be activated when the period of increased 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.
How the RSP Works
A business or organisation must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to the increased COVID-19 alert level.
Once activated any business in New Zealand that has experienced a 30% drop in revenue or capital raising ability over a 7 day period as a result of the alert level increase would be eligible (subject to all other criteria being met).
How much eligible businesses and organisations can apply for
When the RSP is activated, eligible businesses and organisations can apply to receive the lesser of:
It's possible that the Government could decide to activate the RSP multiple times if there are multiple alert level increases from level 1. Businesses and organisations can apply for the RSP each time the it's activated, as long as they meet the eligibility criteria.
Eligibility for the Resurgence Support Payment (RSP)
A business or organisation must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to the increased COVID-19 alert level (subject to all other criteria being met). This decrease in revenue or capital-raising ability is compared with a typical 7-day revenue period in the 6 weeks prior to the increase from alert level 1.
If the business of organisation is part of a commonly owned group each member of the group may be eligible for RSP. Your business or organisation and the commonly owned group must:
This 30% drop in revenue (or decline in capital raising ability) also needs to be satisfied across the commonly owned group as a whole. For more information on commonly owned groups please see below.
To be eligible for the Resurgence Support Payment, your business or organisation must meet all of the following criteria:
When applying for the RSP, the start date of the 7-day period where your business or organisation has experienced a drop in revenue is the date the increase in the alert level started.
If the increase in alert levels lasts for more than 7 days, you can choose a different start date for the 7-day period where your business or organisation has experienced a drop in revenue. The total 7-day period must be within the increased alert level period.
Calculating your drop in revenue
Revenue refers to income generating activity by a business or organisation. Standard accounting principles relating to income recognition apply:
To calculate affected revenue due to an increase in COVID alert levels, businesses and organisations need to measure their revenue over a continuous 7-day period where the first day is on or after the first day of the increased alert level.
All 7 days must be within the period of the increased alert level.
This affected revenue period then needs to be compared against a regular 7-day revenue period that starts and ends in the 6 weeks prior to the increased alert level.
Both the affected revenue period and the comparison period must be calculated retrospectively. The calculations must be based on what has happened, not a forecast of what might happen.
Make sure you keep a record of your calculations so you can give it to us if requested. This includes:
Seasonal businesses and organisations
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 drop.
Commonly owned groups
A commonly owned group of businesses is generally considered to be one where each business has the same combination of owners. It does not matter whether those owners have the same proportion of ownership in each businesses.
A business may also be treated as being in a commonly owned group if it is in substance part of a larger group of businesses. For example, this may occur in the following situations:
Each business or organisation in the commonly owned group is eligible for RSP if they and the commonly owned group as a whole meet the criteria noted above. This is a change from previous alert level increases.
Pre-revenue businesses and organisations
Pre-revenue businesses and organisations may be eligible if they both:
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
meet the other RSP eligibility criteria.
A pre-revenue business or organisation is one that has taken active steps towards being market-ready but has not yet begun trading. They will need to keep records of how their ability to raise capital or begin trading was affected by the raised alert level.
Resurgence Support Payment amount
The maximum size of the payment your business or organisation may be eligible for is depended on the number of full-time equivalent employees (FTEs) you have, and your 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 can receive a payment of up to $1,900.
Businesses with low revenue will have their payment capped at four times (4x) the amount their revenue has dropped over the 7-day period. For example, if your business has 3 FTEs, they would be entitled to $2,700. However, if their revenue drop was $500, their RSP payment would be limited to $2,000.
NOTE: You need to have a myIR account to apply for the Resurgence Support Payment. If you don't already have a myIR account, you can create one here.
Cristina Canard is the principal accountant at Apex Accountancy Ltd. Cristina keeps up to date with all the relevant tax changes in New Zealand.