What is the RSP?
When there is an increase in COVID-19 Alert Levels, as was the case on 17 August 2021, the Government may activate the Resurgence Support Payment (RSP). The RSP is a payment to support viable businesses with their financial commitments if they have been impacted by the change in Alert Levels and meet the eligibility criteria.
The Minister of Finance has announced that eligible businesses and organisations can apply for three payments of the Resurgence Support Payment (RSP) for the Alert Level increase that started on 17 August:
- August 2021 RSP payment #1: Applications open from 8:00am Tuesday 24 August
- August 2021 RSP payment #2: Applications open from 8:00am Friday 17 September
- August 2021 RSP payment #3: Applications open from 8:00am Friday 8 October
Businesses and organisations are able to apply for all three payments. Each RSP will remain open for one month after all of New Zealand returns to Alert Level 1.
Eligible businesses can apply for the RSP as well as the Government’s COVID-19 Wage Subsidy Scheme.
How do I apply?
The RSP is administered by Inland Revenue (Te Tari Taake). Eligible businesses can apply here.
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. Applications may take a few days to process, so we suggest commencing as soon as possible.
How much can I claim?
Eligible applicants can receive the lesser of the following:
- $1,500, plus $400 per full time equivalent (FTE), up to 50 FTEs, or
- 4x the actual revenue decline experienced by the applicant.
An FTE is defined as an employee that ordinarily works 20 hours or more per week.
The maximum payment is $21,500. Sole traders can receive up to $1,900.
What is the test?
Applicants must have experienced a decrease in revenue or capital-raising ability of at least 30% over a continuous 7-day period (“affected period”), due to the increase in Alert Level.
The affected period for RSP #1 begins on 17 August 2021 and ends immediately before all areas of New Zealand return to alert level 1.
The affected period for RSP #2 begins on 8 September 2021 and ends immediately before all areas of New Zealand return to alert level 1.
The affected period for RSP #3 begins on. 1 October 2021 and ends immediately before all areas of New Zealand return to alert level 1.
Applicants will need to document and be prepared to prove that they have suffered this decrease when compared with a typical 7-day continuous period in the 6 weeks prior to the increase in Alert Level 1 (“comparison period”).
The start date of the 7-day affected period is the date the increase in the Alert Level started, unless this Alert Level lasts for more than 7 days - in this case you can choose a different 7-day affected period, but it must be within the increased Alert Level.
Seasonal businesses and organisations are permitted to compare their 7-day affected period decrease against a continuous 7-day period that is at a similar point in their seasonal cycle for a year prior to the revenue drop.
If the applicant is part of a commonly owned group, then this test needs to be satisfied across the group as a whole.
Am I eligible?
It is important that applicants ensure the eligibility criteria specific to each payment are met before applying. Businesses that were eligible for a previous payment, might not be eligible for subsequent ones.
There are other eligibility requirements aside from the revenue/capital raising test noted above:
- Businesses and organisations that have been operating for at least one month prior to the Alert Level increase on 17 August 2021 will be eligible to apply for the payment.
- The business or organisation must be considered viable and ongoing
- Charities and not-for-profits can apply
- Passive income is excluded from the revenue test (i.e. interest, dividends, residential and commercial rents)
- Applicants must be aged 18 or more
Each business or organisation in a group is eligible for the RSP if they and the group as a whole meet the test and criteria noted above.
How is the RSP treated for tax?
The payment received is non assessable for income tax purposes, but equally the expenses it covers are non-deductible.
Applicants that are registered for GST will need to return GST of 3/23rds of the RSP funds received but will be able to claim 3/23rds of any costs covered by the RSP that include GST.
What else do I need to know?
Every business or organisation that receives the RSP will be publicly named in a register.
As is the case with the Wage Subsidy Scheme, it is essential that applicants take their time to ensure that they meet the eligibility requirements and document this carefully. Please contact your BDO adviser for help with this process and related RSP enquiries. You can also view our detailed RSP FAQs here.