Most businesses have obviously been affected by the latest Alert Level changes. You may still be eligible for financial assistance. Below is some information on the latest round of both the Wage Subsidy and the Resurgence Support Payment, and the criteria you need to meet for both.
Wage Subsidy Scheme
Wage Subsidy August 2021 #2: Applications for the second round, Wage Subsidy August 2021 #2, opened on Friday 3rd September and will remain open until 11:59om on Thursday 16th of September.
On 10th of September, the Government clarified that the revenue decline test for the Wage Subsidy August 2021 #2 includes the effect of Alert Level 2 on businesses as well as the continuation of Alert Levels 3 and 4 from 17th of August 2021. The revenue test period is 31st of August to the 13th of September.
Wage Subsidy August 2021 #3: Applications for the third round, Wage Subsidy August 2021 #3 will open at 9am on Friday 17th of September and will remain open until 11:59pm on Thursday 30th of September. The revenue test period is 14th to 27th of September.
You can apply on the Work and Income website.
You can apply for more than one round of the wage subsidies, two weeks after you previous application, if you meet eligibility criteria. If you applied for a previous round and were eligible, Work and Income will email you to let you know when to apply for the next round. Don’t send in early applications, they won’t be accepted as each payment is for a two-week period. If you didn’t apply for the initial Wage Subsidy you can apply for Wage Subsidy #2 or Wage Subsidy #3, if you meet eligibility criteria.
Eligibility for the COVID-19 Wage Subsidy
Businesses that experience or predict a 40% revenue drop due to a combination of the effects of Alert Levels 4, 3 and 2 on their business (but not the effects of Alert Level 2 alone) are able to apply for the second wage subsidy payments, if they meet all the eligibility criteria.
Decline in your revenue
Your business must meet the revenue decline test:
- your business is being or will be affected by the continuation of Alert Level 2, 3 or 4 from the 17th of August 2021, and
- your business has had, or you predict will have, a decline in revenue that can be attributed to the effect the continuation of Alert Levels 2, 3 and 4 from 17th of August 2021 has had on your business, and that is:
- at least 40% decline over a period of 14 consecutive days between 14th – 27th of September inclusive (this is the revenue test period), compared to a typical 14 consecutive days of revenue in the six weeks immediately before to the move to Alert Level 4 on the 17th of August 2021 (this is the default comparator period), or
- if your business has highly seasonal revenue, you must have at least 40% decline over the revenue test period compared to the same 14 consecutive days in 2020 or 2019 (this is the seasonal comparator period), provided you can demonstrate that the seasonal nature of your business makes it harder to meet the 40% revenue decline using the default comparator period than if your business was not of a seasonal nature.
Resurgence Support Payment
A second resurgence Support Payment has also been announced. Applications for this second payment will open from 8am on Friday 17th of September. Businesses and organisations will be able to apply for the second payment, even if they have received the first payment.
Applications for both payments will remain open for one month after a nationwide return to Alert Level 1.
Businesses and organisations will be eligible if they experience a 30% drop in revenue over a seven day period after an alert level increase and meet other eligibility criteria. For the first payment the seven-day period must start on or after 17th of August. For the second payment the seven-day period must start on or after 8th of September. This drop is compared to a typical seven-day period in the six weeks before the increase in alert level. Seasonal businesses should show a 30% revenue drop compared with a similar week the previous year.
The decline in revenue must be a result of the specific alert level change, not just COVID-19 in general. You must have been in business for at least one month prior to the alert level change on 17th of August 2021 to be eligible to apply.
Eligibility for the Resurgence Support Payment (RSP)
To be eligible for the Resurgence Support Payment, you business or organisation must meet all the following criteria.
- Applicants must have experienced a decrease of revenue of at least 30% due to the increase in alert level. (If the applicant us part of a commonly owned group, this 30% decrease also needs to be satisfied across the group as a whole.)
- Businesses and organisations (including sole traders) must have been in business for at least 6 months. From the 9th of September 2021, if you have been in business for at least 1 month before the alert level increase on the 17th of August 2021 you can apply for the payment.
- The business or organisation must be considered viable and ongoing.
- 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.
- Applicants must be 18 years or older.
- Businesses and organisations (including sole traders) must have a New Zealand Business Number.
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.
Make sure to keep a record of your calculations so you can provide it if requested by IRD. 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 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.
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 Electrical can apply for the RSP as their drop in revenue is more then 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 hasn’t experienced a 30% reduction in its income generating activity.
Please note that standard accounting principles for income recognition apply. For business whose revenue is not consistent over each week, income needs to be spread over the relevant period.