Article:

Resurgence Support Payment FAQs

13 October 2021

Answers to commonly asked questions regarding the Resurgence Support Payment scheme.

Eligibility

What sources of revenue should be included in the revenue calculation?

All sources of income, except passive income, should be included in the revenue calculation.

Passive income may include, but is not limited to, dividends, interest, foreign currency gains and losses, and residential and commercial rental income.

Should I recognise my income on a cash or invoice basis?

Your revenue for the RSP calculation should be based on standard accounting principles for revenue recognition. i.e., how you would normally prepare your annual or monthly reports.

For example:

  • For a business that deals mainly in cash, such as restaurants and bars, revenue would be the daily takings.
  • For a business that invoices its customers, revenue would be the tasks carried out by the business that entitled it to invoice its customers, regardless of when the invoice was sent.

How do I know what 7-day period to use for my revenue calculation?

Applications are currently open for 3 different periods.

Affected revenue period: This is the period where your revenue may have declined due to alert level changes.

  • If you are applying for RSP number 1, your affected revenue period can be any 7 consecutive calendar days between 17 August 2021 and immediately before all of New Zealand returns to alert level one.
  • If you are applying for RSP number 2, your affected revenue period can be any 7 consecutive calendar days between 8 September 2021 and immediately before all of New Zealand returns to alert level one.
  • If you are applying for RSP number 3, your affected revenue period can be any 7 consecutive calendar days between 1 October 2021 and immediately before all of New Zealand returns to alert level one.

Comparative revenue period: This is the period where your business was not deemed to be impacted by the change in alert levels.

For any RSP application, your comparative revenue period will be:

  • For most businesses, the comparative period will be any 7 consecutive calendar days in the 6 weeks prior to the increase from Alert Level 1.
  • For seasonal business, the comparative period will be any 7 consecutive calendar days prior to the increase in alert level, and where that period would be considered “typical” of the business.

Is the 7-day period calculated using business/working days or calendar days?

The 7-day period refers to calendar days.

How do I calculate whether my revenue has dropped by 30% or more?

Firstly, you need todetermine what your business’s revenue was for the 7-day affected revenue period and the 7-day comparative period.

The revenue in the affected revenue period needs tohave declined by 30% or more compared to the comparative period.

How long do I need to have been in business for to be eligible to apply for the RSP?

For applications made from 9 September 2021, businesses must have been trading  for at least 1 month before the alert level increase on 17 August 2021For applications made prior to 9 September 2021, the criteria was to be trading for at least six months prior to the alert level increase on 17 August 2021.

My business is still open, but my revenue has decreased by more than 30%. Can I claim the RSP?

Yes, provided a business meets all of the eligibility criteria, they can access the RSP.

There is no requirement for your business to be closed to receive the RSP.

I operate a pre-revenue business (start-up) and I was due to open during lockdown. Can I claim the RSP?

For a pre-revenue business, the 30% decline relates to a decline in capital raising ability, rather than a decline in revenue.

All other eligibility criteria remain the same.

What is a pre-revenue business?

A pre-revenue business is a business which has taken active steps towards being market-ready but has not yet begun trading.

How do you define capital raising ability for a pre-revenue business?

Capital raising ability -

  • Includes, but is not limited to:
    • Debt funding
    • Equity funding
    • Grant funding
    • Fit-out contributions
  • Excludes, but is not limited to:
    • Shareholder funding
    • Partner funding
    • Self-employed funding
    • Other associated person funding
    • COVID-19 related government assistance payments

How do you define a commonly owned group for RSP application purposes?

Inland Revenue definesa commonly owned group of businesses as where each business has the same combination of owners. The proportion of ownership is not relevant.

A commonly owned group can also occur for the purposes of the RSP where the entity in question is ‘in substance’ part of a larger group of businesses.

This could be because the group has a dominating shareholder and the businesses operate together as if they were one, or where the ownership structure is complex, but the control is centralised, and the businesses are in substance one enterprise.

I own two separate companies. One hasn’t had a reduction in income, but the other has experienced a reduction in income of more than 30%. Can I apply for the RSP?

This will depend on if the two companies are part of a commonly owned group.

The definition can be found here (link to above FAQ “How do you define a commonly-owned group for RSP application purposes?)

Scenario One: If the two companies are part of a commonly owned group

The two companies would’ve had to experience a collective reduction in revenue of 30% or more.

  • Company One would calculate their revenue for the 7-day affected revenue period and 7-day comparative period.
  • Company Two would calculate their revenue for the 7-day affected revenue period and 7-day comparative period.
  • Company Once & Two must use the same date ranges for the affected and comparative revenue periods.
  • If the collective revenue for Company Once & Two in the affected revenue period, has declined by 30% or more than their collective revenue in the comparative period, then they may be eligible to apply for the RSP.

If they have collectively had a reduction in revenue of 30% or more, any company can apply for the RSP, provided that the individual company has also experienced a reduction in revenue of at least 30%.

i.e., The group has suffered a 30% decline in revenue AND the individual company has suffered a 30% decline in revenue.

Even if the individual company has suffered a 30% decline in revenue, if the group has not suffered a 30% reduction in revenue, they will not be eligible for the RSP.

Scenario Two: If the two companies are not part of a commonly owned group

The company with the decline in revenue of 30%, will be eligible for the RSP, provided they meet all the other criteria.

The company which did not suffer a reduction in revenue, will not be eligible.

My company operates two service lines. One division has had a 100% drop in revenue, but the other has only experienced a 5% drop in revenue. Can I claim the RSP?

Revenue means the total amount of money a business has earned from its normal business activities before expenses are deducted.

For a business that operates multiple service lines, that would include the revenue from all service lines.

The revenue reduction must be 30% or more across the whole business.

Please also refer to the following FAQ for the revenue calculation. (Link: to FAQ “What sources of revenue should be included in the revenue calculation?”)

Can I apply for the RSP payment if I am claiming the wage subsidy?

Yes, provided your business meets the eligibility criteria for both.

Can I apply for multiple RSP payments?

Yes, provided your business meets the eligibility criteria for each application period.

Does the reduction in revenue have to be related to the change in alert level in my area?

The reduction in revenue must be related to the alert level changes in New Zealand but does not have to be specific to your area.

Example: My business is in Christchurch, but my most of my customers are in Auckland. My business has been affected by the alert level changes in Auckland, even though I am physically located in Christchurch.

 

Applications

When do applications open for RSP?

For the alert level increase announced 17 August 2021:

  • Applications for the first RSP payment opened 24 August 2021.
  • Applications for the second RSP payment opened 17 September 2021.
  • Applications for the second RSP payment opened 8 October 2021.

All applications will be open until one month after all of New Zealand has returned to alert level 1.

When does the RSP scheme get activated?

The government can, at their discretion, activate the RSP each time there is an increase in COVID-19 alert levels upwards of level 1.

Once the RSP has been activated, it will be available nationally, regardless of where the alert levels changes have happened.

What amount will I receive for the RSP?

If your business is eligible, your business will receive the lessor of:

  • $1,500 plus $400 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs
  • OR
  • Four times the actual revenue decline the business has suffered.

Is there a limit to how much can be received from the RSP?

Yes, the RSP is limited to a maximum of 50 FTEs, or a maximum payment of $21,500.

The limit for sole traders is $1,900.

How long will RSP applications be open for?

Applications will remain open for one month after all of New Zealand has returned to alert level 1.

What information will the IRD ask for?

  • Your New Zealand Business Number (NZBN)
  • Employee details: This includes each employee’s name, IRD number, and whether they are a full or part time employee
  • New Zealand bank account number
  • Revenue details: Revenue details for the 7-day elevated alert level period (referred to as the “affected revenue period”) and the 7-day comparative period. If you are having difficulty with calculating this information, you can contact your local BDO advisor for assistance (link)
  • If your business is part of a commonly owned group, you will need to provide the names and IRD details of other members of the group, and the group’s revenue details.

I don’t have an NZBN (New Zealand Business Number), can I still apply for the RSP?

You will need a NZBN to apply for the RSP.

If you do not have a NZBN, you can apply for one here (link: https://www.nzbn.govt.nz/get-an-nzbn/get-your-nzbn/ )

Where do I find my employee details?

Employee details includes each employee’s name, IRD number, and whether they are a full or part time employee.

Your employee’s name and IRD numbers will already be on the application if, in the last 30 days, your business has filed an employment information (EI).

Alternatively, you should be able to find this information in your payroll system or on payslips sent to employees.

How do I calculate full-time equivalent (FTE), given I have part-time workers?

A full-time employee (working 20 hours or more) is equal to 1 FTE.

A part-time employee (working less than 20 hours) is equivalent to 0.6 FTE.

E.g., Brian has 10 full-time and 6 part-time employees. Brian completed the following calculation to work out his business’s total FTE:

  • 10 full-time employees × 1 FTE = 10.
  • 6 part-time employees × 0.6 FTE = 3.6

This would be rounded up to the nearest whole number, in this case 4.

  • 10 + 4 = 14 FTEs
  • Brian’s total RSP payment will be the lessor of $7,100 (14 FTEs x $400 + $1,500), or 4 times has actual drop in revenue

Where do I apply?

You need to apply in MyIR.

Select “Apply for Resurgence Support” in the “I want to…” section.

Why can’t I see the “Apply for Resurgence Support Payment” link in IRD?

You may not be the ‘owner’ of the account. Please contact IRD if you think this might be you.

You will need to provide evidence that you are the rightful owner of the account.

Examples of an ‘owner’ may include a director, trustee, partner, or other executive officer of the business.

Can I still apply if my business doesn’t have a MyIR account?

Your business will need a MyIR account to apply for the RSP. You can register for a MyIR account here.

(For businesses or organisations: https://www.ird.govt.nz/topics/myir-secure-online-services/register-a-myir-account-for-a-business-or-organisation )

(For a personal MyIR account: https://www.ird.govt.nz/topics/myir-secure-online-services/register-for-a-personal-myir-account )

How long does it take to be paid after the application has been approved?

 The RSP will usually be paid within 5 working days of the application being approved.

If the information provided in your application do not match IRD, this may cause delays in your application processing.

What can I use the RSP for?

This can be used to cover any business expenses, not just wages.

If the RSP is greater than your costs during the alert level increase, the RSP does not need to be repaid. It can be used to fund your ongoing costs as well.

Who can apply for the RSP?

Every business and organisation (including sole traders) can apply for the RSP, including charities and non-for-profit organisations.

State Sector organisation have been specifically excluded from applying for the RSP, however, they can apply to the Minister of Finance for an exemption to apply for the scheme.

 

Accounting treatment

Are there any GST implications for the RSP?

Yes, GST-registered businesses will return GST on payments received under the RSP.

They will also be able to claim GST on expenditure funded by the payment.

Please contact your local BDO advisor if you are unsure how to record the RSP in your GST return.

How do I recognise the RSP in my accounts?

Like the Wage Subsidy, it is recommended that the RSP is recognised as other income.

Please contact your local BDO advisor if you are unsure how to record the RSP in your accounts.

How is the RSP treated for income tax purposes?

Payments received under the RSP are not subject to income tax.

In addition, expenditure funded under the RSP is not tax deductible.

Please contact your BDO advisor if you are unsure how to record the RSP in your income tax return.

 

Declaration & Privacy

Will information about my RSP claim be made available to the public?

Yes, applicant details may be published once an application has been approved.

This will show the name of the applicant, the business or organisation name, payment amount and alert level escalation period.