Alert Level 2 again: What this means
29 June 2021
By Robyn Walker
With Wellington moving to COVID-19 Alert Level 2 from Wednesday 23 June through to Tuesday 29 June, another round of the Resurgence Support Payment was triggered. In this article we explain the eligibility criteria for this payment as well as providing a reminder of other government support available.
What is available at COVID-19 Alert Level 2
A “Resurgence Support Payment” (RSP) is available when New Zealand, or any region/s within the country, moves to COVID-19 Alert Level 2 (or higher) for seven days or more. As Wellington entered Alert Level 2 on Wednesday 23 June 2021, once it was decided to extend this through to Tuesday 29 June the seven-day threshold was reached.
This payment will be available to businesses which see a 30% or greater reduction in revenue as a consequence of the change in Alert Level.
To determine whether this criterion is met, businesses will need to show an actual 30% reduction over a seven-day period following the change in COVID-19 Alert Level, as compared with typical seven days of revenue in the six weeks immediately before the change in levels. The RSP will be available to all businesses (including sole traders) that have been operating for six months or more. Full eligibility criteria can be found here.
The value of the payment will depend on the size of the organisation; individual businesses will receive a payment of $1,500, plus an additional $400 per employee, up to a total of 50 FTEs. This means the maximum payment available will be $21,500. There is also a ‘lesser of’ test, meaning that the amount of the payment is the lesser of the amount calculated using the previously mentioned formula and four times the actual revenue decline.
As compared with previous iterations of the RSP, the government is now taking a more lenient approach to groups of businesses. Previously it only a commonly owned group of companies could only claim up to the maximum amount of $21,500. Under the latest RSP, the settings have been adjusted to allow group members within a commonly owned group to each receive the RSP if the 30% revenue drop test is met both across the group and at the individual entity level. The $21,500 cap on payments will apply across each individual qualifying member. However, each entity must be a separate legal entity, branches within a single business will still remain restricted to a total payment of $21,500.
It is worth noting that the RSP is subject to GST therefore GST registered businesses will need to return 3/23rds of the payment to Inland Revenue. However, input tax credits can then be claimed when the RSP is spent.
The RSP is administered by Inland Revenue and at this stage applications can be made in relation to the 23 June – 29 June increased Alert Level from 8am 1 July. Applications will remain open for one month.
Recipients of the RSP should expect to have their name listed on a public register as has occurred with previous wage subsidies. Applications are required to maintain a full set of documentation supporting their eligibility to make a claim.
Applications for the RSP are made via myIR on the Inland Revenue website.
What is available at all COVID-19 Alert Levels
Businesses are able to utilise the Leave Support Scheme when an employee cannot work from home are required to self-isolate for one of a number of reasons:
- They are sick with COVID-19 and must self-isolate until a doctor tells them they can leave isolation
- They are identified as someone who is a “close contact” of someone who has COVID-19 and have been told to self-isolate for a period by a health official through the National Contact Tracing process (casual and secondary contacts are not covered)
- They are the parent or caregiver of a dependant who has been told to self-isolate for a period by a doctor or health official through the National Contact Tracing process and the dependant needs support to do so safely
- They have been directed to self-isolate, or are the parent or caregiver of a dependant who has been directed to self-isolate, by a Medical Officer of Health in accordance with the Health Act 1956
- They are considered 'higher risk' if they contract COVID-19 and a doctor has told them to self-isolate while there's active community transmission, or
- They have household members who are considered 'higher risk' if they contract COVID-19 and a medical practitioner has told them to self-isolate, to reduce the risk of transmitting the virus to vulnerable household members.
The Leave Support Scheme provides a fortnightly payment of $1,171.60 or $700 respectively for a full-time or part-time employee who is isolating.
Earlier this year the Leave Support Scheme was supplemented by the Short-Term Absence Payment (STAP). This payment of $350 per eligible employee is available to support employees who are required to stay at home while they await the results of a COVID-19 test but are unable to work from home. The payment also applies to parents or caregivers who have dependents awaiting a test result, as well as self-employed workers.
The STAP will be of most assistance for those employees who have used their sick leave entitlements. Employers can apply for the STAP once in any thirty-day period per eligible worker (unless a health official or medical practitioner advises or requires the worker to re-test during that period). If the employee subsequently tests positive, they will be eligible for the Leave Support Scheme.
Businesses with 50 or fewer employees can be eligible to apply for a Small Business Cashflow Loan. This scheme, administered by Inland Revenue, allows certain businesses to apply for a loan of up to $100,000. The maximum value of the loan available is $10,000 plus $1,800 per full time equivalent employee. Loans are interest free for a period of up to two years (if fully repaid in that time).
If you have any questions in relation to the issues discussed above, please consult your usual Deloitte advisor.
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