11 October 2021

IMPORTANT UPDATE: The Resurgence Support Payment is now closed. See Business.govt.nz for details of COVID-19 financial support currently available for businesses.

The Resurgence Support Payment

The Resurgence Support Payment (RSP) is a payment to help support viable and ongoing businesses or organisations that are negatively impacted due to a COVID-19 Alert Level increase to Level 2 or higher.  The RSP is in addition to the Wage Subsidy and the scheme was introduced by Government officials in recognition of the one-off costs or impacts on cashflow faced by businesses when Alert Levels are increased.  Receiving any other Government COVID-19 support does not affect eligibility for the RSP.

If your business or organisation is facing a reduction in revenue due to the current Level 4 restrictions, you may be eligible for the RSP.

Each time the COVID-19 Alert Level is increased from Level 1, the Government may activate the RSP. Once activated, the RSP will be available nationally even if the Alert Level isn’t increased across the whole country.

The RSP is capped at the lesser of $1,500 plus $400 per full-time equivalent (FTE) employee up to a maximum of 50 FTEs (a maximum payment is $21,500 or $1,900 for sole traders), or four times the amount the applicant’s revenue has dropped over the 7-day period. This revenue cap was a change the Government introduced last week. Businesses and organisations can apply for the RSP each time it’s activated, as long as they meet the eligibility criteria.

Application dates

Following the Alert Level increase announced on 17 August 2021, the first round of RSP funding opened on 24 August.

Applications for a second round of the RSP opened on 17 September. To apply, businesses need to show a 30% or more drop in revenue in a 7-day period from 8 September until immediately before all of NZ returns to Alert Level 1 compared to a typical 7-day period in the 6 weeks before 17 August. As above, the payment is capped at the lesser of $1,500 plus $400 per full-time equivalent (FTE) employee up to a maximum of 50 FTEs, or four times the amount the applicant’s revenue has dropped over the 7-day period. For example, if a business has 3 FTEs (which would be $2,700), but revenue drop for the business was only $500, the RSP payment would be limited to $2,000 (being four times the drop in revenue).

Applications for a third round of the Resurgence Support Payment then opened on 8 October. The payment and eligibility criteria are the same as above, and businesses need to show a 30% or more drop in revenue in a 7-day period from 1 October until immediately before all of NZ returns to Alert Level 1 compared to a typical 7-day period in the 6 weeks before 17 August.

You can receive all three payments if you are eligible for them, and applications will remain open until one month after the whole of New Zealand returns to Alert Level 1.

Are you eligible?

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.

The 30% decrease in revenue must be measured in accordance with accounting and income recognition principles.  So, if your business continues to complete work for clients remotely, but doesn’t issue invoices for the work completed during the relevant period, this would not meet the criteria because the business’s income generating activity (i.e. completing work for which you will be entitled to issue invoices for, now or later) has not suffered a 30% decrease in activity.  This could be compared to say, an electrician’s business that is unable to continue work during Level 4 and cannot provide services remotely – it is likely this business would qualify for the RSP as the income generating activity cannot continue under Alert Level 4 and 3 restrictions (unless the business is providing essential services).

Seasonal businesses can compare their 7-day period decrease to a continuous 7-day period that is at a similar point in the seasonal cycle for a year prior to the revenue drop.

A business that has suffered the 30% drop in revenue must keep adequate records of how the drop in revenue has been calculated, the dates of the affected period and the comparison period and the amount of revenue earned in each period, in support of any claim made.  The calculation must be made on the basis of actual, not forecasted, results.

Start-ups and other pre-revenue businesses (i.e. businesses that have taken active steps towards being market-ready but are not actively trading) may be eligible if they have experienced a minimum 30% reduction in their capital raising ability over a 7-day period and meet the other eligibility criteria.  Again, sufficient records must be kept.

For commonly owned groups, the group as a whole, as well as the particular entity needs to be eligible before it can claim the RSP.  Note also that a ‘commonly owned group’ is a wide definition for the eligibility rules, with Inland Revenue stating that it is generally considered to be one where each entity has the same owners, even if those owners have differing ownership proportions.  It also includes complex structures where there is in substance centralised control.

On 3 September, a change to the eligibility criteria for the RSP was announced to make it easier for new businesses to qualify. Businesses and organisations that have been in operation for at least one month prior to the Alert Level increase on 17 August 2021 – so since 17 July 2021 – are now eligible to apply for the payment. The original criteria was six months. The change in criteria became active on 9 September 2021. Inland Revenue is contacting businesses that were declined due to failing to meet the six month criteria, and they can reapply under the new criteria.

In addition, there are other eligibility requirements:

  • Businesses and organisations must be physically present in NZ
  • The business or organisation must be considered viable and ongoing
  • Charities and not-for-profits can apply, providing they meet the other eligibility requirements
  • Passive income is excluded from the measurement of revenue (i.e. interest, dividends and all forms of residential and commercial rents)
  • Applicants must be aged 18 or over
  • Businesses must have a New Zealand Business Number, including sole traders

How to apply

The RSP is administered by Inland Revenue. Eligible businesses can apply here. You need to have a myIR account to apply, or speak to your usual Nexia advisor who can assist you with applying.

As part of the application process, businesses will be required to provide their NZ Business Number (NZBN). All registered companies in NZ will have an NZBN but other types of entities may not. Check your NZBN number or apply here.

Once approved, most applicants will receive their payment in full from Inland Revenue within 5 working days. It will be paid into the bank account supplied or chosen in the application.

Other information

Full-time employees are those who work 20 hours or more per week, with part time workers considered those who are working up to 20 hours per week.

Payments received under the RSP are not subject to income tax. Expenditure funded by payments under the RSP is not deductible. GST-registered businesses will return GST on payments received under the RSP. These businesses will be able to claim input tax deductions for expenditure funded by payments under the RSP. The payment must be used to cover business expenses such as wages and fixed costs.

The applicant details may be published publicly once approved. This includes the applicant’s name, business or organisation name, payment amount and alert level escalation period.

Businesses can apply for the Resurgence Support Payment in addition to the Wage Subsidy if eligibility criteria are met.

Need further help?

Please contact your Nexia advisor with RSP enquiries or for help applying. You can find our general contact details here: www.nexia.co.nz/contact-us

Find updates