What financial assistance is available for businesses experiencing a reduction in income due to a COVID-19 alert level change?
The Resurgence Support Payment (RSP) is a payment designed to help support businesses (over 6 months old) that experience a reduction in income due to a COVID-19 alert level increase to level 2 or higher. It’s not a loan and does not need to be repaid. The RSP is already in place so businesses can submit their applications now via this link. You will need to create a ‘myIR’ account to begin the application process. Applications for these payments open in myIR for eligible businesses 7 days after the alert level increase. They remain open for one month after the return to alert level 1.
The RSP should not be confused with the Wage Subsidy Payment which is a separate financial assistance package aimed at helping employers pay their wage bill. The Resurgence Support Payment is intended to provide much-needed financial assistance to businesses.
It’s worth noting that the RSP can be activated by the Government any time the country experiences an alert level increase above Level 1 for (generally) seven days or more. It can be activated several times if there are reoccurring alert level increases above level 1, and if this occurs, eligible businesses can reapply each time. Once the RSP is activated, it’s available nationally, even if the alert level increase isn’t country-wide.
The amount businesses are eligible to receive under the RSP is dependent on their level of reduced income specifically due to fluctuating Covid-19 alert levels. If the RSP application is successful, the payment amount is calculated based on the lesser of:
- $1,500 plus $400 per full-time employee (up to a maximum of 50 full-time employees); or
- Four times the actual drop in revenue (whichever is the lower).
The maximum payment is $21,500. Sole traders can receive a payment of up to $1,900.
For calculation purposes, employees working up to 19 hours per week are considered part-time, and those working 20 hours or more are considered full-time. Click here to use the RSP calculator to determine how much you may receive.
Payments received under the RSP are not subject to income tax and GST registered businesses will be able to claim tax deductions for the expenditure funded by payments made using the RSP.
To be eligible for an RSP, a business must show:
- A decline in at least 30% in revenue over a 7-day period at the raised alert level compared with a typical 7-day revenue period in the 6 weeks prior to the increase from alert level;
- That it is at least 6 months old; and
- All applicants must be at least 18 years old at the time of application; and
- Businesses or organisations with common ownership (commonly owned groups) must apply as one group and the revenue drop test is measured across the group as a whole.
For further eligibility information, please refer to IRD’s Eligibility page.
Businesses need to measure their revenue over a continuous 7-day period where the first day is on/after the first day of the increased alert level. This affected revenue period needs to be compared against a typical 7-day revenue period that starts and ends in the 6 weeks prior to the increased alert level. The comparison between the two calculations must be retrospective and based on what happened (not a forecast).
Businesses with low revenue will have their payment capped at four times the amount their revenue has dropped over the 7-day period. For example, if the business has 3 FTE’s, they would be entitled to $2,700. However, if their decline in revenue was $500, their RSP payment would be limited to $2,000.