COVID-19 resurgence support payments - updated

The resurgence support payment (RSP) was introduced in February 2021 to help businesses directly affected when there is a move to alert level 2 or above for a week or more.

Applications are open for the RSP for the alert level increase announced on 17 August 2021, so long as the conditions that trigger the RSP apply. A business or organisation must have experienced at least a 30% drop in revenue over a 7-day period due to an alert level increase. For each of the 1st, 2nd, 3rd and 4th grants, eligible businesses and organisations can apply to receive the lesser of:

• $1,500 plus $400 per full-time equivalent (FTE) employees, up to a maximum of 50 FTEs
• Four times (4x) the actual revenue decline experienced by the applicant.

The maximum amount of the payment is $21,500. A sole trader can receive a payment of up to $1,900.

Applications for all 5 Resurgence Support Payments (RSPs) are now open. Applications for the first 3 close on 1 December.

From the 5th round, the RSP moves to fortnightly payments at double the current rate. For the payments starting on 12 November, eligible businesses and organisations can apply to receive the lesser of:

• $3,000 plus $800 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs
• Eight times (8x) the actual revenue decline experienced by the applicant.

This will make the maximum fortnightly payment $43,000. Sole traders can receive a payment of up to $3,800. This means the RSP will be a weekly rather than three-weekly payment (as it was up till the fourth round), but for smoother administration, it will be available in fortnightly instalments.

The enhanced RSP will be available until Auckland moves into the new Covid Protection Framework on December 2nd.

Eligibility

Businesses and organisations can apply for the RSP each time it is activated if they meet the criteria:

Applicants must have experienced a decrease in revenue or capital-raising ability of at least 30% due to the increase in alert level (if the applicant is part of a commonly owned group this 30% decrease also needs to be present across the group as a whole).

The scheme originally required businesses and organisations (including sole traders) to have been in business for at least 6 months but from 9 September 2021, if you've been in business for at least 1 month before the alert level increase on 17 August 2021, you can apply for the payment.The business or organisation must be considered viable and ongoing.Charities and not-for-profit organisations may be entitled to the RSP provided they meet the other eligibility requirements.

State sector organisations are excluded from the RSP but can apply to the Minister of Finance for an exemption to apply for the scheme. 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.

There is provision to apply for businesses still in a start-up phase (‘pre-revenue businesses’) that have taken active steps towards being market-ready while not yet trading. Pre-revenue businesses may be eligible if they have experienced a minimum 30% reduction in their capital-raising ability over a 7-day period because of an increased alert level and if they meet the other RSP eligibility criteria. They need to keep records of how the raised alert level affected their ability to raise capital or begin trading.

Receiving any other Government COVID-19 support does not affect eligibility for the RSP.

RSP and tax

RSP payments are excluded income to the extent that you use the payments for business expenditure. If you do not correctly use the RSP to fund business expenditure, you will be required to repay the RSP (and interest) to Inland Revenue.

You will not be entitled to an income tax deduction for expenditure funded by the RSP. 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.