In mid-December 2020, the Government announced the introduction of a new financial support package for COVID-19 affected employers and self-employed persons, known as the COVID-19 Resurgence Support Payment.
The purpose of this payment is to ensure businesses remain viable, keep people employed, and recognise the fixed costs associated with escalating Alert Levels.
The Government may choose to assist businesses during this time by implementing a one-off payment to eligible businesses if New Zealand is at Alert Level 2 (or above) for a week or more. The Government may decide to activate this payment, but it is not guaranteed. The payment is expected to be used for business expenses, such as wages and fixed costs.
Once the government has made the decision to activate the payment, it will be available nationally, regardless of whether the alert level increase affected the whole, or just part, of the country. Businesses can apply for the Resurgence Support Payment each time the scheme is re-opened, provided they meet the eligibility criteria.
Please note: The payment is not a loan and does not need to be repaid. You can also still receive the Resurgence Support Payment even if you are receiving other COVID-19 payments.
Please get in touch with your local BDO adviser for any advice related to the COVID-19 Resurgence Support Payment, including whether you may be eligible for the payment and how much you might receive.
30% Decline in Revenue
The payment will be made to businesses who
- incur a 30% or more decline in revenue (or a 30% decline in capital raising ability for pre-revenue businesses),
- over a 7-day period,
- when compared to a typical 7-day period in the 6 weeks prior to the alert level change; and
- the revenue decline must be a direct result of an Alert Level escalation. It cannot be the general impacts of COVID-19 (often described in earlier schemes)
Where the 6 weeks prior to the alert level escalation may include other alert level escalations, then the 6 weeks before the initial escalation may be used. E.g., This would apply to applications made in respect of the 28th February 2021 Alert Level Escalation.
There are special rules relating to seasonal businesses and pre-revenue businesses, as well as detailed explanations about how to determine what revenue should include (depending on how your business operates).
Please refer to Inland Revenue’s website here for further details on the revenue eligibility criteria.
Revenue specifically excludes passive income, such as interest and dividends, and all forms of residential and commercial rent.
Other Eligibility Criteria
- You must have been in business for 6 months to be eligible.
- Your business must be considered viable and ongoing.
- The business (including commonly owned groups) must have 50 or less FTE’s (Full-Time Equivalent Employees)
- Charities, not-for-profit organisations, self-employed persons, and pre-revenue businesses (like start-ups) may also be eligible for the scheme, provided they meet the other eligibility criteria.
- State sector organisations are specifically excluded from the scheme. These entities can apply to the Minister of Finance for an exemption.
What you might receive
The level of support available through the Resurgence Support Payment is the lesser of:
- $1500 core business rate plus $400 per FTE Employee (Full-Time Equivalent Employee), up to a maximum of 50 FTE’s, OR
- Four times the actual revenue drop experienced
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).
Payments will be administered by Inland Revenue. Applications open 7 days after the alert level increase and will remain open for one month after a nationwide return to alert level 1.
Please note that this is a retrospective payment and eligibility cannot be created by projecting the anticipated impact that an increase in alert levels will have on a business.