The Government has introduced legislation for the Resurgence Support Payment (RSP). When the Government activates the RSP, viable businesses that experience a 30% drop in revenue due to the COVID alert level increasing to 2 or higher for a minimum of 7 days can apply for the RSP.
The RSP is available nationally even if the COVID alert level is not increased throughout all of New Zealand. Businesses can apply for the RSP each time the RSP is activated if they meet the eligibility criteria.
Following the alert level changes this week, the Government has activated the RSP. This means eligible businesses can submit their application, via myIR, from Tuesday 23rd February 2021, through until one month after the return to alert level 1.
The eligibility criteria for the RSP are as follows:
- experienced a 30% decrease in revenue due to the increased alert level
- must have been in business for at least 6 months
- applicants must be at least 18 years old at the time of the application
- the business must be considered viable and ongoing
- businesses with common ownership must apply as one group and the 30% revenue drop is measured across the group
- charities and not-for-profit organisations may be entitled provided they meet the other eligibility criteria including that they are a viable, ongoing organisation
- state sector organisations are excluded but can apply to the Minister of Finance for an exemption
- passive income (eg interest, dividends, and commercial and residential rent) is excluded from the measurement of revenue.
Eligible businesses will receive the lesser of:
- $1,500 plus $400 per fulltime-equivalent (FTE) employee, up to a maximum of 50 FTEs, or
- four times the actual revenue drop experienced by the applicant.
Receiving any other Government COVID support (eg, cashflow loan or short-term absence payment) does not affect eligibility for the RSP.
Calculating your drop in revenue
The 30% revenue drop is calculated over a continuous 7-day period after the alert level was increased. i.e., Monday 15th February 2021 to Sunday 21st February 2021 (inclusive).
The 7-day affected revenue is then compared against a regular 7-day continuous period within the 6 weeks prior to the increased alert level. Both the affected revenue and the comparison must be calculated retrospectively; forecasts of what might happen cannot be used.
There is further guidance on the Inland Revenue website on calculating your drop in revenue including for seasonal businesses, groups of companies with common ownership and pre-revenue businesses.
Tax and the RSP
The RSP must be used to cover business expenses such as wages and fixed costs. The RSP will not be subject to income tax and the business expenses the RSP covers are not deductible. For GST- registered businesses the RSP is subject to GST and must be included in your GST return.
Tax agents can apply for the RSP on behalf of their clients if they have authority to apply and hold a record of that authority.
Please contact your Hayes Knight advisor if you need assistance assessing your eligibility.