COVID-19 Resurgence Support Payment (RSP) activated

18 February 2021

On 17 February 2021 the Government activated the Covid Resurgence Support Payment.

Eligible businesses will be able to apply for the payment from next Tuesday, 23 February 2021.

The RSP was announced before Christmas as part of the Government’s COVID support initiatives for businesses with reduced revenue due to COVID alert level increases.

Resurgence Support Payments

This support payment is in the form of a grant and consists of a base payment of $1,500 per applicant, plus $400 per full time equivalent (FTE) staff member up to a cap of 50 FTEs. This means a business can receive a grant of up to $21,500. Key eligibility criteria are:

  • The business must have suffered a decline in revenue of 30% or more. This is calculated by comparing the seven day period during the higher alert level with typical weekly revenue in the six weeks preceding the move from Level 1.
  • A business cannot receive a payment more than four times the amount their revenue has declined by.

There is no restriction on what the funds can be used for, unlike the wage subsidy. Business could therefore use this to pay rent, cover the cost of stock that needs to be disposed of due to trading limitations, and so on. Any size business can apply for the resurgence support payment.

Unlike the wage subsidy, the resurgence support payment is governed by the Tax Administration Act. This means Inland Revenue can undertake audits and any overpayments will be subject to the usual penalties and use of money interest regime.

The resurgence support payment is provided once every time restrictions are put in place. Accordingly, a business could apply for the resurgence support payment now, and then if restrictions were put in place again in for example, six months time, they would be able to apply for the resurgence support payment again.

The income tax and GST consequences of the resurgence support payment are similar to those for the wage subsidy.

HR Considerations

Given many businesses are currently unable to trade, or are subject to practical limitations on trading, you may be thinking of altering employee hours and/or wages and salaries. Extreme care must be taken if your business wishes to do this, as usual employment law continues to apply. The key requirement is that there must be consultation with employees to obtain their consent to any changes in conditions. Baker Tilly Staples Rodway have a team of HR specialists who can assist with any HR queries.

You can find full information on the IR website: Resurgence Support Payment (RSP) (ird.govt.nz)

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