The government has activated the COVID-19 Resurgence Support Payment (RSP) as a result of the increase in alert levels from 11:59pm on Sunday 14 February 2021.

Enabling legislation was passed with urgency by the House of Representatives this week.

This means that businesses that qualify may be entitled to financial support from the government.

How much support is available?

A lump sum of $1,500.00 is payable to all businesses that qualify. Additional payments of $400.00 are available for each full time equivalent (FTE) employee up to a maximum of $21,500.00.

Sole traders can receive a payment of up to $1,900.00.

When can you apply?

Inland Revenue are accepting applications from Tuesday 23 February 2021. Qualifying businesses can apply from that date using MyIR.

Who are considered as full time equivalent employees?

The following rules apply when working out who is an FTE.

  • Employees working up to 20 hours per week are considered part time (0.6 FTE).
  • Employees working 20 hours or more per week are considered fulltime (1.0 FTE).

You should note that if your business has low revenue, it will have the payment capped at four times (4x) the amount your revenue has dropped over the 7-day period. For example, if the business has 3 FTE employees, they would be entitled to $2,700. However, if their revenue drop was $500, the RSP payment would be limited to $2,000.

Who qualifies for the payment?

Businesses must experience a 30% drop in revenue or more over a 7-day period at the increased alert level compared with a typical 7-day revenue period in the 6 weeks prior to the announcement of an increase from alert level 1.

The start date of the 7-day period can be anytime during the increased alert level period when the business experienced a drop in revenue.

Additionally, businesses must have been trading for at least six months so start-ups may not qualify. The business must be considered viable and with a realistic chance of trading through the lockdown into the future.

Other conditions include:

  • Applicants (including sole traders and trustees) must be at least 18 years old at the time of application;
  • Businesses or organisations with common ownership (commonly owned groups) must apply as one group. The revenue drop test is measured across the group as a whole. If the group meets the revenue drop test, and the other eligibility criteria, it would be entitled to a single payment based on the number of employees in the whole group up to a maximum of 50 Full Time Equivalent (FTE) employees;
  • Charities and not-for-profit organisations may be entitled to the RSP, provided they meet the other eligibility requirements including that they are a viable, ongoing organisation;
  • 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.

Other considerations

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 Inland Revenue (IRD) if requested. This includes:

  • dates of the affected revenue period and comparison period;
  • amount of revenue earned in each period; and
  • how the revenue drop has been calculated.

There are some exceptions for pre-revenue businesses that were going through a capital-raising process at the time of the lockdown.

Details of this and everything above is available on the IRD website which you can access here.