A business or organisation must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to the increased COVID-19 alert level. This decrease in revenue or capital-raising ability is compared with a typical 7-day revenue period in the 6 weeks prior to the increase to alert level 1.
For the 28 February alert level change, we recognise that the weeks spent at, and following, the alert levels 2 and 3 changes after 14 February have not been typical, so the typical similar period is in the 6 weeks before the initial escalation in alert levels.
To be eligible for the Resurgence Support Payment, your business or organisation must meet all of the following criteria.
- Applicants must have experienced a decrease of revenue or capital-raising ability of at least 30% due to the increase in alert level.
- Businesses and organisations (including sole traders) must have been in business for at least 6 months.
- The business or organisation must be considered viable and ongoing.
- 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. If the group meets the revenue drop test and the other eligibility criteria, it would be entitled to a single payment based on the number of employees in the whole group (up to a maximum of 50 full-time equivalent employees).
- Charities and not-for-profit organisations may be entitled to the RSP, provided they meet the other eligibility requirements.
- State sector organisations are excluded from the RSP, but can apply to the Minister of Finance for an exemption to apply for the scheme.
- Income that is received passively – such as interest and dividends, and all forms of residential and commercial rent – is excluded from the measurement of revenue.
- Your business must be physically present in New Zealand.
Receiving any other Government COVID-19 support does not affect eligibility for the RSP.
When applying for the RSP, you can choose the start date of the 7-day period where your business or organisation has experienced a drop in revenue. The total 7-day period must be within the increased alert level period.
Calculating your drop in revenue
Revenue refers to income generating activity by a business or organisation. Standard accounting principles relating to income recognition apply.
- For a cashflow business, such as a restaurant, this is likely to be the daily takings.
- For a business that invoices clients, this will be the activities the business carries out that would entitle it to bill or invoice either immediately or at a later date.
To calculate affected revenue due to an increase in COVID alert levels, businesses and organisations need to measure their revenue over a continuous 7-day period where the first day is on or after the first day of the increased alert level.
All 7 days must be within the period of the increased alert level.
This affected revenue period then needs to be compared against a regular 7-day revenue period that starts and ends in the 6 weeks prior to the increased alert level. If you're applying for the increased alert level of 28 February, the 2 weeks leading up to it may not have been typical revenue periods. You should instead use the 6 week period before the increased alert level that started on 15 February.
Both the affected revenue period and the comparison period must be calculated retrospectively. The calculations must be based on what has happened, not a forecast of what might happen.
Make sure you keep a record of your calculations so you can give it to us if requested. This includes:.
- dates of the affected revenue period and comparison period
- amount of revenue earned in each period
- how the revenue drop has been calculated.
Seasonal businesses and organisations
For highly seasonal businesses and organisations, the comparative revenue period should be a 7-day period that is at a similar point in the seasonal cycle for a year prior to the revenue drop.
Pre-revenue businesses and organisations
Pre-revenue businesses and organisations may be eligible if they both:
- have experienced a minimum of 30% reduction in their capital-raising ability over a 7-day period as a result of an increased alert level
- meet the other RSP eligibility criteria.
A pre-revenue business or organisation is one that has taken active steps towards being market-ready but has not yet begun trading. They will need to keep records of how their ability to raise capital or begin trading was affected by the raised alert level.
Resurgence Support Payment amount
The maximum size of the payment your business or organisation may be eligible for is depended on the number of full-time equivalent employees (FTEs) you have, and your level of revenue.
The RSP is calculated as $1,500 plus $400 per FTE (up to 50 FTE). The maximum payment is $21,500. Sole traders can receive a payment of up to $1,900.
- 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)
Businesses with low revenue will have their payment capped at four times (4x) the amount their revenue has dropped over the 7-day period. For example, if your business has 3 FTEs, they would be entitled to $2,700. However, if their revenue drop was $500, their RSP payment would be limited to $2,000.
Example: Bright Spark Electrical – drop in revenue
Bright Spark Electrical does wiring for businesses. During the increased alert level period, they’re not able to work for one of their clients due to social distancing requirements. Because of this, their revenue dropped by 50% compared to the week before the alert level raise. Bright Spark can apply for the RSP as their drop in revenue is more than 30%.
Example: Dimmer Electrical - not a 30 % drop in revenue
Dimmer Electrical issued no invoices during the increased alert level period. Most of their clients are not affected by the increased alert level restrictions, and over this period their billable hours are 90% of the typical week’s revenue from the 6 weeks before the alert level increase. Dimmer Electrical is not eligible for the RSP because it has not experienced a 30% reduction in its income generating activity.
Please note that standard accounting principles for income recognition apply. For a business whose revenue is not consistent over each week, income needs to be spread over the relevant period.
Example: Nikau's Dance Studio - choosing the best week to compare income against
Nikau’s Dance Studio was unable to continue running classes during the alert level raise in March. When measuring the studio's revenue drop, Nikau was unsure which week of the past 6 weeks to choose to compare income against. As there was a previous alert level raise in February, he did not select any of the weeks when the alert level was higher than 1, as this was not a normal reflection of his revenue. Instead, Nikau chose a continuous week in January (10th to the 16th) when classes were running as normal.
Example: Dolphin Entertainment Tours - full-time equivalent (FTE) shareholder employee
Elena is the director of Dolphin Entertainment Tours - which is not a registered employer and has no employee . However, Elena receives a shareholder salary from the company and shows this in the company’s income tax return. Dolphin Entertainment Tours can apply for the RSP with Elena as one FTE.
Example: Scott employs 12 staff – full-time equivalent (FTE) calculation
Scott has 8 full-time and 4 part-time employees. To work out his total FTE, Scott does the following calculations.
- 8 full-time employees × 1 FTE = 8.
- 4 part-time employees × 0.6 FTE = 2.4. This is rounded up to the nearest whole number, in this case 3.
- 8 + 3 = 11 FTEs
Scott can apply for the RSP based for 11 FTEs.
Example: Commonly owned group - builders Daniel and Jordan
Brothers Daniel and Jordan are the shareholders in 2 building companies, Mario’s Builders and Luigi’s Building Services. Daniel is a 60% shareholder in Mario’s Builders and Jordan is a 40% shareholder in Mario’s Builders.
For Luigi’s Building Services, Daniel is a 20% shareholder and Jordan is an 80% shareholder. As the 2 companies have the same shareholders, they are a commonly owned group. They will make one application and list both companies and all of their employees in the 1 application.
Use this calculator to estimate the amount of Resurgence Support Payment you may be entitled to if you meet the eligibility criteria.Go to this tool