The saying that “the only constant in life is change” is particularly due when it comes to tax. Tax legislation is constantly changing, and depending on your perspective, it could be either good or bad. But either way, it will impact on you as a business owner....
We at JZR Accountants & Consultants hope everyone is keeping safe during this lockdown period. Things have certainly changed very fast as we go into alert level 3 again here in Auckland.
To do our part for the community, we would like to let you know the latest developments in terms of government support payments for businesses, so that you are taking advantage of most of the government support available. There are two main support payments which might be relevant to you.
Resurgence Support Payment (RSP)
The Resurgence Support Payment (RSP) is a payment to help support viable and ongoing business or organisations due to a COVID-19 alert level increase to level 2 or higher.
Each time the COVID-19 alert level is increased from level 1, the Government may decide to activate the Resurgence Support Payment. It will generally be activated when the period of increased alert level is 7 days or longer
Auckland went into alert level 3 at 11.59pm on 14 February 2021, and came back down to alert 1 at 11.59pm on 22 February 2021. A total period of more than 7 days. As such, the RSP was activated for this lockdown period and eligible businesses can now apply. The last day to apply for the RSP is 22 March 2021.
Auckland again when into alert level 3 at 6am on 28 February 2021. Assuming that this lockdown is for 7 days or more, the RSP should also be available for the second lockdown period, in addition to any wage subsidies. Applications for this lockdown period is not yet available.
Your business must have experienced at least a 30% drop in revenue compared between:
- The 7 day period, 15 February 2021 to 21 February 2021 (inclusive), VS
- A regular 7 day revenue period that starts and ends in the 6 weeks prior to the increased alert level.
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 the calculations in case it is 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.
How Much Can You Receive?
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 full-time (1.0 FTE)
Businesses 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.
Payments received under the RSP are not subject to income tax. Expenditure funded by payments under the RSP is not deductible.
GST-registered businesses will return GST on payments received under the RSP. These businesses will be able to claim input tax deductions for expenditure funded by payments under the RSP.
How Can You Apply?
You will be able to apply for this directly through your business’ MyIR. Click here for more information
Alternatively, JZR as your tax agent can also apply for this on your behalf through our tax agent’s MyIR login. Can you please get in touch with us if you would like our assistance with this.
Wage Subsidy Scheme
The Wage Subsidy Scheme will be available nationwide if any part of the country moves to Alert Level 3 or above for seven days or more.
Businesses and the self-employed will be eligible if they experience a 40% drop in predicted or actual revenue over a consecutive 14-day period, compared to a typical fortnightly revenue in the six weeks before the rise in alert level. You would need to be able to show that the revenue drop is due to the change in alert level, not just COVID-19 in general.
More detailed information regarding this wage subsidy is coming soon from the government. In the meantime, you can register here for updates, for when the details are announced and applications are open.
You will be able to apply and receive both the RSP and the Wage Subsidy at the same time once the applications are open for the second lockdown period.
We are here to support you through this time. Please do not hesitate to contact one of the team if you have any questions.
JZR Accountants & Consultants
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