Covid Support

This is an update on the Government’s Covid Support packages available (as of 29 March).

Resurgence Support Payment
Short-Term Absence Payment
COVID-19 Wage Subsidy Support March 2021
Other Covid relief packages

Resurgence Support Payment (RSP)

What is it?

This government-initiated plan is to help support viable and ongoing business operations when Covid-19 alert levels increase to Level 2 or higher.

When does it apply?

Applications can be made to Inland Revenue via myIR now.

  • First round of RSP (15 February lockdown) – applications closed on 22 March 2021
  • Second round of RSP (28 February lockdown) – applications can be made from 8 March 2021

If alert levels decrease, then increase again (to Levels 2 or above), the Government may decide to activate the RSP each time – it did so for both February lockdowns. However, it’s not a certainty – it is completely at the Government’s discretion.

Who is eligible?
  • Businesses which have experienced a reduction in income of at least 30%, for at least seven days, as a result of the increased alert level
    • This includes shareholder-employees and sole traders
  • All businesses throughout New Zealand – not only to the area(s) facing restrictions
  • You can submit only one application upon each government activation. If your application is accepted, the RSP will be paid in one lump sum.

So far, the Government has activated two RSPs – 14 February and 28 February. There may be more in the future.

You need to apply each time, assuming the eligibility criteria are still met.

How much is it?
  • $1,500 plus $400 per full-time equivalent employee (FTE)
    • Maximum claim is for 50 FTEs, or
  • Four times the actual revenue drop experienced by the business

…whichever is the lowest.

What can it be used for?

The RSP scheme was created to recognise that businesses still face fixed costs during lockdown periods.

For this reason, the RSP is to be used for wages and fixed operating costs.

Are there any GST or income tax obligations?
  • The payment is designed to be “tax-neutral” for the recipient:
    • If your business receives an RSP, it is not considered to be taxable income, and
    • Any expenses paid from the RSP (wages, for example) are non-deductible for income tax purposes

It may get a little tricky if you receive a payment before 31 March (tax year-end) but start paying it out after that date. If you’re with Beany, we’ll take care of this when preparing your financial statements.

  • The RSP is subject to GST, so if your business is GST-registered, you need to declare this as GST-able income
    • In Xero, or your other accounting system, make sure you tick the box for GST on income
How do I apply?

You can apply through Inland Revenue, via myIR.

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Short-Term Absence Payment (STAP)

What is it?

This is a one-off payment where workers may not be paid while waiting for the results of a Covid-19 test.

When does it apply?

Applications opened on 9 February 2021.

Who is eligible?

The payment can be claimed if:

  • The employee (or you as a sole trader) needs to miss work to stay at home while waiting for a Covid-19 test, and
  • The employee (or you as a sole trader) is unable to work from home
How much is it?

There is a one-off payment of $350 to employers (to be passed on to the employee).

How do I apply?

Applications should be made via WINZ.

Additional information

Our separate blog provides additional information on how the payment is to be treated in the pay run, financial statements, and tax returns.

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COVID-19 Wage Subsidy March 2021

The Government has announced an additional wage subsidy for those affected by the rise in alert level on 28 February.

Conditions
  • Businesses must experience or expect a decline in revenue over a consecutive 14-day period between 28 February and 21 March. You need to compare this revenue against a typical 14-day period between 4 January and 14 February 2021.
  • Employees must continue to be employed by the business
Who can get it?
  • Employers of businesses
  • Self-employed people
  • Businesses throughout New Zealand
How much is it?
  • $585.80 per week, for each full-time employee (20 hours a week or more)
  • $350.00 per week, for each part-time employee (more than 20 hours a week)

There is no GST on these transactions. You don’t need to pay GST on the amounts received and you cannot claim GST on the wages paid to employees (or yourself, if a sole trader).

How do I apply?

Applications opened on 8 March 2021 and can be made via the Work and Income website.

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Covid-19 Leave Support Scheme

This is now covered by the Short-Term Absence Payment.

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What about all of the other Covid relief packages?

You’re allowed to apply for all of these packages once, assuming you meet the conditions for each.

  • Resurgence Support Payment (15 February lockdown) – applications closed 22 March
  • Resurgence Support Payment (28 February lockdown) – applications opened 8 March
  • COVID-19 Wage Subsidy Support March 2021 – applications opened 8 March
  • Short-Term Absence Payment – applications opened 9 February
  • COVID-19 Small Business Cashflow (Loan) Scheme – applications close 31 December 2023

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