On 23 February 2021, the Government introduced a Resurgence Support Payment (“RSP”), which is available through the Department of Inland Revenue (“IRD”), for businesses who are affected by an increase in the COVID-19 alert levels.
With the recent increases in alert levels (both at 11:59pm on 14 February 2021 and 6.00am on Sunday, 28 February 2021), many businesses may be eligible for the RSP.
In what circumstances can a business receive the RSP?
The RSP is available where the alert level increases to Alert Level 2 or higher for a duration of one week or more. Each time the Government increases alert levels, they may activate the RSP to allow businesses to apply for the payment. However, it is not guaranteed that the RSP will open for applicants each time an alert level increase occurs.
What are the criteria to be able to receive an RSP?
For a business, organisation or sole trader (“Applicant”) to receive the RSP, the Applicant:
- must have been in business for at least 6 months;
- must be at least 18 years old at the time of application (including sole traders and trustees);
- must be considered viable and ongoing;
- must experience a drop of at least 30% in revenue over a seven-day period at the raised alert level compared with a typical seven-day period in the six weeks prior to the increase from Alert Level 1; and
- the drop in revenue must stem from an alert level increase (a general drop in revenue due to COVID-19 is insufficient).
Charities, non-profit organisations, the self-employed and pre-revenue businesses (i.e., start-ups) can also apply, as long as they meet the above eligibility criteria. State sector organisations are excluded from receiving the payment but can apply for an exemption from the Minister of Finance.
How do I apply for the RSP?
Applications for the RSP must be made through Inland Revenue’s portal myIR. Applicants are able to apply from seven days after the alert level increase, and within one month after the alert level returns to Level 1.
When the Applicant applies for the RSP they must provide:
- NZBN number;
- employee details;
- the bank account number the RSP is to be paid into (this must be a New Zealand bank account); and
- income details for the seven-day elevated alert level period and the seven-day comparison period.
How do I calculate a drop in revenue for my business?
The drop in revenue must be measured over seven consecutive days. Applicants can choose the start date of the seven-day period, as long as the total seven days fall within an increased alert level period. Once the seven-day period is determined, the revenue must be compared to a typical seven-day period of revenue, which starts and ends within the six weeks before the alert level increased.
Calculations must be retrospective and not a forecast of what might happen in the future. A record of the calculation must also be kept in case the IRD require proof of the revenue calculated.
Income received through interest, dividends, and all forms of commercial or residential rent, are excluded from the measurement of revenue for the purpose of calculating a drop.
How much will my business receive?
The maximum amount you can receive under the RSP is dependent on the size of the business and the level of revenue it generates. Businesses or organisations which meet the eligibility criteria will receive the lesser of:
- a lump sum of $1,500, plus $400 per full-time equivalent (“FTE”) employee (up to a maximum 50 FTEs), capped at $21,500; or
- four times (4x) the revenue drop suffered by the business over the seven-day period.
For the purposes of the RSP, full-time employees are people who regularly work 20 hours or more a week, whereas part-time employees are people who regularly work less than 20 hours a week.
The RSP must be used to cover business expenses, such as wages or fixed costs. Most Applicants will receive the RSP within five working days of their application being approved.
The RSP is another important tool to support businesses during these periods of uncertainty, who suffer a decrease in their income due to changing COVID-19 alert levels. Further details on the RSP and how to apply can be found here.
It is anticipated that further information relating to the Wage Subsidy will be released in the coming days. We will keep you informed about this (and any other additional support), as this information is released.
If you have any questions about the RSP, please feel free to contact us on 0800 339 002.