SME & family business Stimulus measures

COVID-19 financial support for households and businesses

By Robyn Jacobson, CTA, Senior Advocate

   

small business concept

A significant COVID-19 support package for households and businesses valued at $5.1 billion was jointly announced by the Prime Minister, Scott Morrison, the NSW Premier, Gladys Berejiklian and the NSW Treasurer, Dominic Perrottet, on 13 July 2021.

Following on from our blog article released on 19 July 2021, the Federal and State governments of NSW, Victoria, South Australia and Queensland have made various announcements (see Appendix B of this article) to provide further details about the raft of financial support measures available to households and businesses affected by the ongoing lockdowns.

The continuing outbreak in NSW that has led to lockdowns in Greater Sydney and surrounds (Central Coast, Blue Mountains, Wollongong and Shellharbour)1 extended into Victoria and South Australia, leading to swift lockdowns in those states, which have since been eased in South Australia but reimposed in Victoria.2

Meanwhile, due to the escalating situation in Queensland, a lockdown was imposed in 11 Local Government Areas (LGAs) in South East Queensland from 31 July 2021 to Sunday 8 August 2021, and is now imposed in the Cairns region from 8 August 2021 to 11 August 2021.

Given the fast-moving nature of the announcements, we have split this article into:

  1. Commonwealth support measures;
  2. State support measures;
  3. Common observations and matters; and
  4. Appendices setting out further information.

This article is designed to be a one-stop shop, containing extensive summaries, tables, hyperlinks and analysis on the 2021 COVID-19 support measures. We will provide further guidance and information as it becomes available.

Overview

The extensive support package takes the form of:

Commonwealth support measures

  • COVID-19 Disaster Payment (Disaster Payment)
  • JobSaver payment (JobSaver)
  • Commonwealth business tax relief
  • Childcare gap-fee waiver
  • Mental health support.

NSW support measures

  • 2021 COVID-19 Business Grant (CB Grant)
  • 2021 Micro-business Grant (MB Grant)
  • Small business fees and charges rebate (Rebate)
  • Hospitality and Tourism COVID-19 Support Grant
  • payroll tax relief
  • land tax relief
  • an eviction moratorium for residential tenants
  • changed rules for commercial and retail tenants
  • Gaming tax assessments.

QLD support measures

  • 2021 COVID-19 Business Support Grant.

SA support measures

  • COVID-19 Business Support Grant — July 2021
  • COVID-19 Disaster Support Payments (for regional South Australia).

VIC support measures

  • 21 July 2021 Top-Up Payment
  • $450 Test Isolation Payment
  • $1,500 Pandemic Leave Disaster Payment.

Commonwealth co-funded measures and declared hotspots

Two measures — COVID-19 Disaster Payments and JobSaver payments — will be:

  • funded under a 50/50 cost sharing arrangement between the Commonwealth and the state or territory government; and
  • available nationally to any state or territory in areas that are subject to a declaration of a Commonwealth hotspot and to state or territory lockdown restrictions.

Disaster Payments will be available even where a lockdown is less than seven days. JobSaver payments will be available nationally to any state or territory that experiences an extended lockdown beyond week three following the declaration of a Commonwealth hotspot.

A complete list of current Commonwealth-declared hotspots is set out at Appendix A of this article.

Summary of application dates for key measures

Table 1 below summarises the application dates for the key financial support measures.

TABLE 1: Application dates for key measures

Measure

Application date

Administered by

Disaster Payment

Payments will start to be paid the day after application

Claims open and close dates vary across locations

Services Australia

CB Grant

Open from 19 July 2021 and closes on 13 September 2021

Service NSW

JobSaver

Open from 26 July 2021 and closes on 18 October 2021

Service NSW

MB Grant

Open from 26 July 2021 and closes on 18 October 2021

Service NSW

Rebate

Open from 19 July 2021 (back to 1 March 2021 and closes on 30 June 2022)

Service NSW

At a glance: Key support measures

Table 2 and Table 3 below provide a brief overview and summary of the key financial support measures of interest to most households and businesses. Please refer to the relevant sections further below for additional details on each measure.

TABLE 2: Overview of key 2021 COVID-19 financial support measures

 

Disaster Payment

CB Grant

JobSaver

MB Grant

Rebate

 

Details

Details

Details

Details

Details

Conditions

Link

Link

Link

Link

Link

Amount of payment

Lost hours of work per week:

  • ≥ 20 hours —
    up to $750
  • 8 to < 20 hours — up to $450

Where DIT is:
$7,500 where
DIT ≥ 30%

$10,500 where
DIT ≥ 50%

$15,000 where
DIT ≥ 70%

40% of NSW Weekly Payroll

Employing entities: $1,500 to $100,000 per week

Non-employing entities: $1,000 per week

$1,500 per fortnight of Greater Sydney lockdown

$1,500 digital voucher

Regularity

Weekly in arrears

Lump sum grant

Fortnightly

Fortnightly

Single voucher

Program open

Varies by hotspot

19 Jul 2021 to 13 Sep 2021

26 Jul 2021 to
18 Oct 2021

26 Jul 2021 to
18 Oct 2021

Apr 2021 to
30 Jun 2022

National aggregated
annual turnover

$75,000 to
$50 million

$75,000 to
$250 million

> $30,000 to
< $75,000

Business operating
in NSW

Decline in turnover ≥ 30%

Yes

Yes

Yes

Decline in turnover period

26 Jun 2021 to
17 Jul 2021

26 Jun 2021 to
28 Aug 20213

26 Jun 2021 to
28 Aug 20213

Maintain employee headcount as of
13 July 2021

Yes

Yes


Yes (if employing entity)

 

Wages

≤ $10 million

≤ $1.2 million

Business costs incurred

1 Jun 2021 to 17 Jul 2021 (first 3 weeks
of lockdown)

From 18 Jul 2021
(from week 4
of lockdown)

From 1 Jun 2021

Fees and charges due and paid from
1 Mar 2021 to
30 Jun 2022

Administered by

Services Australia

Service NSW

Service NSW

Service NSW

Service NSW

Tax treatment

Tax-free4

Tax-free5 where aggregated turnover less than $50 million

Tax-free5 where aggregated turnover less than $50 million

Tax-free5 where aggregated turnover less than $50 million

Tax-free5 where aggregated turnover less than $50 million

TABLE 3: Interaction between key COVID-19 financial support measures

If claiming this -->
can the business claim the below

Disaster Payment

CB Boost

JobSaver

MB Grant

Rebate

Disaster Payment

Sole traders can choose one, but not claim both

Yes

CB Grant

Sole traders who claim DPs cannot also claim these measures

However, employing entities whose employees receive DPs may be eligible for these measures

Yes

No

Yes, but not for those expenses covered by Rebate

JobSaver

Yes

No

Yes

MB Grant

No

No

Yes, but not for those expenses covered by Rebate

Rebate

Yes

Yes, but not for those expenses covered by Rebate

Yes

Yes, but not for those expenses covered by Rebate

The following pages provide detailed explanations of each of these measures, as well as discussions about the other relevant measures as listed on page 4.

Details of Commonwealth support measures

COVID-19 Disaster Payments

The COVID-19 Disaster Payment (Disaster Payment) is a lump sum payment to support workers unable to earn income due to a COVID-19 lockdown, hotspot or period of restricted movement.6

These payments are administered by Services Australia, not the ATO.

APPLIATIONS OPEN

Applications for the Disaster Payment should be made directly with Services Australia. There are strict open and close dates for each relevant period and geographical location.

Although payments will be paid even where the lockdown has been imposed by a state or territory government for a period of less than seven days, payment will be made in arrears on application to Services Australia seven days after the commencement of the lockdown.

In a media statement on 28 July 2021, the Prime Minister advised that the Disaster Payment:

… will be available from day one of any potential lockdown in the future, with claims made from day eight in arrears for the previous seven days. A weekly payment will then be made for the duration of the hotspot declaration.

A new claim does not need to be submitted for each additional week of lockdown or restricted movement. Payments will continue to be automatically deposited into the applicant’s bank account within seven days of the start of each claiming period. Applicants should contact Services Australia if they have not received their payment after more than seven days of the start of the relevant claim period.

TABLE 4: Amount of COVID-19 Disaster Payment

Status of recipient

Lost less than 20 hours of work per week

Lost 20 hours or more of work per week

Recipient does not receive an eligible income support payment

Up to $450 per week

Up to $750 per week

Recipient receives an eligible income support payment

$200 per week on top of the
regular Centrelink payment

Eligibility for Disaster Payments

A worker may be eligible for a Disaster Payment if they:

  • are an Australian resident or hold an eligible working visa;
  • are aged 17 years or older;
  • are not receiving income support payment, ABSTUDY Living Allowance, Dad and Partner Pay or Parental Leave Pay;
  • are not receiving a state or territory pandemic payment, Pandemic Leave Disaster Payment or state small business payment for the same period;
  • live in, work from or have visited a Commonwealth-declared COVID-19 hotspot;
  • live in, work from or have visited a location subject to a state or territory restricted movement order;
  • had paid employment and because they were in the COVID-19 hotspot or are subject to restricted movement, cannot attend work because of a COVID-19 restriction of movement event;
  • lost income due to a lockdown; and
  • do not have access to appropriate paid leave entitlements through their employer.

The $10,000 liquid assets test applies for claims for the period from 4–10 July 2021 but has been removed for periods starting on or after 11 July 2021.

According to an announcement by the Commonwealth on 28 July 2021, eligible workers who have lost between 8 and 20 hours (or one full day) of work per week will receive $450 per week, while eligible workers who have lost 20 or more hours of work per week will receive $750 per week.

These new payment rates will be effective from the payment period starting 2 August 2021 and automatically applied to individuals who are already registered with Services Australia.

In addition, individuals who currently receive income support payments from the Commonwealth will be eligible to receive an extra $200 per week on their existing entitlements if they are able to demonstrate that they have lost 8 or more hours of work per week.

Tax treatment of Disaster Payments

The Services Australia website previously advised that COVID-19 Disaster Payments are Taxable Centrelink Payments so they would need to be included in the recipient’s assessable income. It further advised that arrangements could be made to set up a deduction for tax to be withheld from the payment.

The ATO website previously advised that most one-off assistance payments are tax-free, but that regular Centrelink payments remain taxable, unless exempted by the government.

However, following remarks made by the Prime Minister in two interviews on 29 July 2021 (see Appendix C), the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 was introduced into Parliament on 3 August 2021. The Bill was passed by both Houses on 9 August 2021 and, at the time of writing, awaited Royal Assent.

Schedule 5 to the Bill inserts new s 59-96 into the ITAA 1997 to treat Disaster Payments as non-assessable non-exempt income for the 2020–21 and later income years.

The effect of this legislative amendment — which was not previously announced — is to make these payments tax-free, with retrospective application from the 2020–21 income year.

The ATO updated their website on 2 August 2021 to advise that:

We are aware of the Government’s plans to treat the COVID-19 Disaster Payment as non-taxable. This is subject to the passage of legislation. The ATO will provide further guidance if this becomes law.

In the meantime, the ATO webpage continues to advise that:

These payments are assessable income. Individuals need to report this income in their tax return in the income year the amounts are received.

Applying for Disaster Payments

Applicants should apply for the Disaster Payment through the Services Australia website. Automatic recurring payments will start to be paid the day after application.

The amount of the payment depends on:

  • the period of the lockdown;
  • the location (there are specific webpages for each state and location); and
  • the applicant’s individual circumstances, including hours of work lost and whether the applicant is receiving a Centrelink payment.

Cancelling Disaster Payments

Services Australia advises7 that to continue receiving Disaster Payments, recipients need to advise any changes to their circumstances within 14 days, including if they want to cancel their Disaster Payments and if there are changes to any of the following:

  • employment
  • hours of work compared to the last claiming period
  • bank account details
  • residence status
  • where they live or work
  • if they are no longer subject to a second Public Health Order as a result of being present in a COVID-19 hotspot.

Recipients also need to advise Services Australia if they start receiving any of the following:

  • Pandemic Leave Disaster Payment
  • any state based pandemic payment
  • employer funded pandemic-related leave entitlements
  • an income support payment for any days in the same claiming period as the Disaster Payment.

JobSaver payments

JobSaver payments provide small and medium businesses with support payments to help maintain their employee headcount (as at 13 July 2021) and provide cash flow support from the fourth week of a lockdown.

Fortnightly payments will continue until the program ends (as notified on the Service NSW website).

APPLIATIONS OPEN

Applications for JobSaver opened on 26 July 2021 and close at 11:59pm on 18 October 2021

The detailed eligibility Guidelines (Guidelines) and Terms and Conditions (T&Cs) for JobSaver are available from Service NSW. This guidance continues to be updated.8

TABLE 5: Amount of weekly JobSaver payments

Type of entity

Minimum weekly payment

Maximum weekly payment

Employing entities — 40% of NSW Weekly Payroll

$1,500

$100,0009

Non-employing entities

$1,000

Although equally funded by the Commonwealth and the state or territory government, in the case of businesses affected by the NSW lockdown, the JobSaver program is implemented and administered by the NSW Government (Service NSW).

Eligibility for JobSaver

A business may be eligible for JobSaver if it:

  1. Has an active ABN registered in NSW, or can demonstrate that it is operating a business in NSW, as of 1 June 2021.
  2. Has a national aggregated annual turnover for the year ended 30 June 2020 of between $75,000 and $250 million (inclusive).
  3. Experiences a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period from 26 June 2021 to 28 August 202110 compared to:
    • the same period in 2019;
    • ¡    the same period in 2020; or
    • ¡    the 2-week period immediately before the lockdown commenced (12 June 2021 to 25 June 2021).
  4. For an employing business11:
    • Maintains its employee headcount as of 13 July 2021 while the business continues to receive JobSaver payments; and
    • Agrees to notify Service NSW if its headcount is not maintained.
  5. For a non-employing business12 — is the primary income source for the associated person/business owner.

NOTE

If a business becomes eligible for JobSaver at a later date (i.e. because it experiences a DIT of 30% or more during a minimum 2-week period sometime in the DIT period from 26 June 2021 to 28 August 2021), it will receive weekly payments back to 18 July 2021, not from when they became eligible.

Eligible business costs for which JobSaver payments may be used

Eligible businesses are required to use JobSaver payments to cover business costs incurred from 18 July 2021 onwards.

These costs may include, but are not limited to:

  • salaries and wages
  • utilities and rent
  • financial, legal or other advice
  • marketing and communications
  • perishable goods
  • other expenses.

Entities ineligible for JobSaver

Although an entity may satisfy all the criteria described above, it will not be eligible for JobSaver if:

  • the entity, or a member of its consolidated group, was subject to the Major Bank Levy; for any quarter before 1 July 2021;
  • the entity is an Australian government agency (within the meaning of the ITAA 1997);
  • the entity is a State or local governing body;
  • the entity is a wholly owned by an Australian government agency or local governing body;
  • the entity is a sovereign entity or owned by a sovereign entity;
  • the entity is a company in liquidation or provisional liquidation;
  • the entity is an individual who has entered bankruptcy;
  • the entity has been found to have been engaged in fraud;
  • the entity primarily earns passive income (rent, interest, dividends);
  • the business is a Table A provider (within the meaning of the Higher Education Support Act 2003 (Cth)); or
  • the business registered its ABN after 1 June 2021 (including backdating ABN to before 1 June 2021).

Calculating NSW weekly payroll for JobSaver

The NSW Weekly Payroll of a business should generally be determined by referring to the calculations underlying the amount reported at label W1 in the most recent BAS lodged with the ATO prior to 26 June 2021 in respect of the 2020–21 income year.

The amount reported at label W1 of the BAS:

  • includes wages, salaries and other payments that are subject to PAYGW, such as allowances, leave loading, director’s fees and termination payments; and
  • excludes payments such as superannuation contributions, amounts subject to salary sacrifice, interest or dividends.

In working out the NSW Weekly Payroll amount of a business, any amounts withheld from contractors under voluntary withholding agreements should be subtracted from the amount reported at label W1 of the BAS.

The following table summarises the steps for calculating the NSW Weekly Payroll amount for different types of businesses:

TABLE 6: Calculating the NSW Weekly Payroll for JobSaver payments

Business

Calculation of NSW Weekly Payroll

Operates only within NSW

Step 1

Identify the amount reported at W1 in the relevant BAS

Step 2

Deduct any amounts voluntarily withheld on behalf of contractors

Step 3

Step 2 amount × (7/Number of days in the BAS period) 13

Also operates in other states or territories

Step 1

As per Step 1 above, but confine to amounts paid to employees who usually worked, or were based, in NSW during the relevant BAS period

Step 2

As per Step 2 above, but confine to contractors in NSW

Step 3

Apply the formula in Step 3 above to the Step 2 amount

Does not submit a BAS or has no W1 amount

Step 1

Use the ATO definition of W1 to calculate the total wages, salaries and other amounts, excluding amounts voluntarily withheld on behalf of contractors, for employees who usually worked, or were based, in NSW during April 2021 or May 2021

Step 2

Apply the formula in Step 3 above to the Step 1 amount

Evidence requirements for JobSaver

The level of evidence a business needs to provide depends on whether it operates in one of the industries on the highly impacted industries list14.

Business on highly impacted industries list

Businesses operating in an industry that are on the highly impacted industries list will need to:

  1. Declare that the business has experienced a DIT of 30% or more due to the Public Health Order over a minimum 2-week period between 26 June 2021 and 28 August 202115 compared to:
    • the same period in 2019;
    • the same period in 2020; or
    • the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021).
  2. Declare the employee headcount as of 13 July 2021.
  3. If the business has employees — declare that the business will maintain their employee headcount on 13 July 2021 for the period for which the business is receiving JobSaver payments.
  4. If business does not have employees — declare that the business is the primary income source for the owner of the business.
  5. Submit an Australian income tax return (or Notice of Assessment) or other documentation to demonstrate the business satisfies the aggregated annual turnover condition for the year ended 30 June 2020.
  6. Provide details of their qualified accountant, registered tax agent or registered BAS agent for compliance checking.
  7. Provide evidence of the NSW Weekly Payroll amount in the form of:
    • for businesses that submit a BAS with an amount at W1 — the most recent BAS lodged with the ATO prior to 26 June 2021 within the 2020–21 financial year;
    • for businesses that submit a BAS without an amount at W1 — their 2019–20 NSW payroll tax reconciliation return;
    • for businesses that do not submit a BAS — Contact Service NSW to discuss alternate evidence of salaries and wages.
  8. Lodge other supporting documents as required to demonstrate the eligibility criteria has been met.
Business not on highly impacted industries list or applying for a JobSaver payment of more than $10,000

Businesses operating in industries that are not included on the highly impacted industries list, or applying for a weekly JobSaver payment of more than $10,000, will need to:

  1. Declare the employee headcount as of 13 July 2021.
  2. If the business has employees — declare that the business will maintain their employee headcount on 13 July 2021 for the period for which the business is receiving JobSaver payments.
  3. If the business does not have employees — declare that the business is the primary income source for the owner of the business.
  4. Submit an Australian income tax return (or Notice of Assessment) or other documentation to demonstrate the business satisfies the aggregated annual turnover condition for the year ended 30 June 2020.
  5. Provide evidence of the NSW Weekly Payroll amount in the form of:
    • for businesses that submit a BAS with an amount at W1 — the most recent BAS lodged with the ATO prior to 26 June 2021 within the 2020–21 financial year;
    • for businesses that submit a BAS without an amount at W1 — their 2019–20 NSW payroll tax reconciliation return;
    • for businesses that do not submit a BAS — Contact Service NSW to discuss alternate evidence of salaries and wages.
  6. Submit evidence (rather than just declare) that the requisite DIT has been experienced by the business in the prescribed period. This evidence is required to be provided in the form of a letter from one of the following:
    • a qualified accountant (as defined in the Corporations Act 2001 (Cth));
    • a registered tax agent (RTA) (as defined in the TASA); or
    • a registered BAS agent (RBA) (as defined in the TASA).

Accountant’s letter to support applications for JobSaver

All applicants who fall outside the list of highly impacted areas and industries must provide a qualified accountant, registered tax agent or registered BAS agent with all the information they need to determine whether their business has experienced the minimum 30% DIT requirement.

Service NSW has provided a template letter which is available on its website.

Where a business is required to provide an accountant’s letter, the accountant must confirm/certify that:

  • they are a qualified accountant, RTA or RBA who is independent from the applicant — this means that they are not an employee or director of the applicant, an associated entity of the applicant, or a director or employee of an associated entity of the applicant;
  • they are providing the letter in respect of the applicant’s business;
  • if the applicant operates the business through a trust — the trust is operating the business and does not receive passive income from the business;
  • the business has experienced a DIT of 30% or more over a minimum 2-week period — reported as a minimum 14-day consecutive period — between 26 June 2021 and 28 August 2021, compared to the same period in 2019 or 2020, or the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021);
  • the business has informed [the accountant] that their invoice dates are consistent with normal business practice and have not been manipulated for the purpose of receiving [JobSaver]; and
  • they have not conducted an audit or assurance engagement to verify the reliability, accuracy or completeness of the information provided to them and they do not express an audit opinion or a review conclusion on the turnover.

Alternative arrangements for supporting evidence requirements for JobSaver

There may be circumstances where a business may not be able to meet the eligibility criteria and supporting evidence requirements.

In the first instance, these businesses should contact Service NSW to check whether an alternative comparison period can be applied or alternative supporting evidence may be provided.

A business may still be able to apply for JobSaver in circumstances such as where:

  • the business has not operated for the full year to 30 June 2020 (e.g. a new business);
  • the business was affected by drought, bushfires or other natural disasters;
  • a business acquisition, disposal or business restructure has impacted the business’ turnover; or
  • the sole trader or small partnership was impacted by sickness, injury or leave.

NOTE

Trust structures will be required to provide additional information to demonstrate the trust has derived an aggregated annual turnover of between $75,000 and $250 million.

The entity operating the business is eligible for JobSaver, not other entities that are receiving passive income from the business.

It is unclear what additional information is required to be provided.

Commonwealth business tax relief

The Federal Government will provide additional support through the tax system by:

  • making small to medium business grants, including JobSaver payments, tax exempt; and
  • providing administrative relief to taxpayers facing hardship, including reduced payment plans, not charging interest on late payments and varying PAYG instalments on request.

Childcare gap-fee waiver

On 15 July 2021, the Prime Minister, Scott Morrison, and the Minister for Education and Youth, Alan Tudge, jointly announced that the Federal Government will provide additional support for NSW by allowing childcare services to waive gap-fees for parents keeping their children at home due to current COVID-19 restrictions.

From 19 July 2021, childcare centres in NSW LGAs subject to stay at home orders (see Appendix A) can waive gap-fees on the days that parents choose to keep their children at home. The gap fee is the difference between the Child Care Subsidy (CCS) the Government pays to a service and the remaining fee paid by the family.

The waiving of gap-fees ensure that families will not have to pay any out-of-pocket costs for those days that their children are at home during the current stay at home period. The measure builds on the existing gap fee waiver that is currently in place until 31 December 2021, where gap fees can be waived if a service is directed to close due to public health advice.

Mental health support

The Commonwealth and the NSW Government will deliver a $17.35 million mental health support package for NSW (the NSW Government will provide $5.1 million) including:

  • a boost for crisis and mental health services including for Lifeline, free 24-hour support via Sonder and counselling for perinatal depression and anxiety;
  • funding for mental health support for vulnerable and culturally and linguistically diverse communities;
  • assistance for young people through headspace, Kids Helpline and the Butterfly Foundation.

Details of NSW support measures

2021 COVID-19 Business Grant

The NSW Government announced on 13 July 2021 that businesses, including sole traders and not-for-profits impacted by the current Greater Sydney COVID-19 restrictions may be able to apply for a tax-free 2021 COVID-19 Business Grant (CB Grant) of up to $15,000 from 19 July 2021. Businesses can expect to start receiving funds from the CB Grant from the end of July.

The CB Grant provides cash flow support for the first three weeks of a lockdown until the JobSaver program commences by helping eligible businesses and not-for-profit organisations with business costs incurred from 1 June 2021 to 17 July 2021 (when JobSaver commences).

APPLIATIONS OPEN

Applications for the CB Grant opened on 19 July 2021 and close at 11:59pm on 13 September 2021

The detailed eligibility Guidelines (Guidelines) and Terms and Conditions (T&Cs) for the CB Grant are available from Service NSW. This guidance continues to be updated.

Amount of the CB Grant

The amount of the CB Grant will depend on:

  • the decline in turnover experienced based on the applicable comparison period (a different comparison period applies to Southern Border businesses);
  • in some cases, whether evidence in the form of an accountant’s letter is submitted — this evidence is required to receive the full amount of the $15,000 CB Grant for businesses on the ‘highly impacted industries list (Appendix A of the CB Grant Guidelines) or for businesses not on the highly impacted industries list.

The amount of the CB Grant is set out in Table 7 below.

TABLE 7: Amount of 2021 COVID-19 Business Grant

Decline in turnover

Amount of CB Grant announced on 29 June 2021

Amount of CB Grant announced on 13 July 2021

At least 30% to less than 50%

$5,000

$7,500

At least 50% to less than 70%

$7,000

$10,500

70% or more

$10,000

$15,000

Eligibility for the CB Grant

An entity will be eligible for the tax-free CB Grant if:

  1. It has an active ABN.
  2. It was operating a business in NSW as at 1 June 2021.
  3. Its total annual Australian wages16 are no more than $10 million, as of 1 July 2020.17
  4. Its national aggregated annual turnover is between $75,000 and $50 million (inclusive) for the year ended 30 June 2020.
  5. It has eligible business expenses for which there is no other government support available.
  6. It experiences a decline in turnover— the level of support depends on the decline in turnover experienced during the restrictions (see Table 7 below).
  7. For an employing business18:
    • It maintains its employee headcount as of 13 July 2021 while the business continues to receive payments under the CB Grant and the JobSaver program;
    • Agrees to notify Service NSW if its headcount is not maintained.
  8. For a non-employing business19 — it is the primary income source for the associated person/business owner.

Decline in turnover

The business must be able to demonstrate a decline in turnover across a minimum 2-week period after the commencement of major restrictions on 26 June 2021.

The comparison period applicable to the business is set out in Table 8 below.

TABLE 8: Comparison periods

Decline in turnover

Period in 2021

Comparison period in 2019

Southern Border businesses20

Decline in turnover over a minimum 2-week period from 27 May 2021 to 17 July 202121

  • Same period in 2019;
  • Same period in 2020; or
  • The 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021)

Other businesses

Decline in turnover over a minimum 2-week period from 26 June 2021 to 17 July 202122

  • Same period in 2019;
  • Same period in 2020; or
  • The 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021)

Entities ineligible for the CB Grant

Appendix B of the Guidelines sets out when an entity is ineligible for the CB Grant. A business is ineligible if the entity:

  • or a member of its consolidated group, was subject to the Major Bank Levy for any quarter before 1 July 2021;
  • is an Australian government agency (within the meaning of the ITAA 1997);
  • is a local governing body;
  • is wholly owned by an Australian government agency or local governing body;
  • is a sovereign entity or owned by a sovereign entity;
  • is a company in liquidation or provisional liquidation;
  • is an individual who has entered bankruptcy;
  • has been found to have been engaged in fraud23; or
  • primarily earns passive income (rent, interest, or dividends).

This list of ineligible entities is identical to the list of entities which were ineligible for JobKeeper24, except for the last two items; fraud and passive income.

An entity that derives passive income was not excluded from JobKeeper for that reason alone, as long as it was carrying on a business and met the other conditions. Accordingly, this exclusion that prevents entities that primarily earn passive income from being eligible for the Grant goes further than the exclusions in the JobKeeper rules, and will affect a number of businesses that derive primarily rent. There is currently no guidance available on the meaning of ‘rent’ for this purpose.

Eligible expenses

Clause 3.3(f) of the T&Cs provides that one of the eligibility conditions is that the business:

… incurred Eligible Expenses due to the Public Health Order or Stay at Home Directions (Victoria), for which there was or is no other government support available.

Accordingly, the CB Grant must be used for eligible business expenses for which no other government support is available, including the small business fees and charges rebate (see 4. How funding may be used in the Guidelines).

‘Eligible expenses’ is defined to mean:

… costs that business and not-for-profit organisations incurred in meeting unavoidable business costs from 1 June 2021 to 17 July 2021.

Eligible expenses include (but are not limited to) the following (set out at clause 1.1 of the T&Cs):

(a) unavoidable business operating expenses, such as utilities, wages or rent;

(b) the cost of perishable goods that can no longer be used;

(c) financial, legal or other advice to support business continuity planning;

(d) marketing and communications activities to develop the business; and

(e) other activities to support the operation of the business.

The T&Cs do not specify a minimum amount of expenses that must be incurred to be eligible for the CB Grant. The CB Grant is designed to cover these types of expenses, but it is unclear what the situation is where the expenses incurred from 1 June 2021 to 17 July 2021 are less than the amount of the CB Grant to which the business is otherwise entitled.

Service NSW has advised in webinars conducted on 5, 6 and 9 August 2021 that it is expected that, over time, businesses will incur sufficient expenses to match the amount of the Grant.

Evidence requirements for the CB Grant

The Guidelines explain that businesses will need to evidence their eligibility. The requirements vary depending on the level of the Grant, as set out in Table 9 below.

TABLE 9: Summary of eligible conditions for the CB Grant and evidentiary requirements

 

Tier 1

Tier 2

Tier 3

Amount of CB Grant

$7,500

$10,500

$15,000

NSW business

Must have an ABN and be operating in NSW on 1 June 2021

Amount of wages

Total annual Australian wages are no more than $10 million as of 1 July 2020

National aggregated annual turnover

Between $75,000 and $50 million (inclusive) for the year ended 30 June 2020

Business costs

Has business costs for which there is no other government support available (see discussion above)

Employee headcount

The business must maintain its employee headcount as of 13 July 2021 for the period for which the business is receiving payments under the CB Grant and the JobSaver program.

This means the number of persons who are employed in NSW and who are permanent (full-time or part-time), or casual staff who have been employed by the business for more than 12 months.

Decline in turnover (DIT) due to the Public Health Order

Experiences a DIT
of 30% or more

Experiences a DIT
of 50% or more

Experiences a DIT
of 70% or more

Business on the highly impacted industries list

  1. Declare they experienced the requisite DIT in the relevant period
  2. Declare they have eligible expenses for which no other government support is available.25
  3. Declare their employee headcount as of 13 July 2021.
  4. Declare they will maintain their employee headcount as of 13 July 2021 for the period for which the business is receiving payments under the CB Grant and the JobSaver program.
  5. Provide details of their qualified accountant, RTA or RBA.26
  6. Submit an Australian income tax return (or Notice of Assessment) or other documentation to demonstrate their business satisfies the aggregated annual turnover condition.
  7. Lodge other supporting documents as required to demonstrate that they meet the eligibility criteria.

Up to $10,500, the business will need to satisfy conditions
1 to 7 in the column to the left.

For the remaining $4,500, the business will be required to submit evidence that they experienced a DIT of 70% or more in the prescribed period.

This evidence takes the form of a letter from a:

  • qualified accountant27; or
  • RTA or RBA28.

Business outside the highly impacted industries list

The business will need to:

  • satisfy conditions 2, 3, 4, 6 and 7 in the row above; and
  • submit evidence that they have experienced the requisite DIT in the relevant period (a letter from accountant is required).

Supporting evidence — letter from accountant

A template is available on the Service NSW website detailing what the accountant or tax professional’s letter must include.

All applicants must provide a qualified accountant, registered tax agent or registered BAS agent with all the information they need to determine whether business has experienced the requisite decline in turnover. If an applicant cannot provide a letter from an accredited accountant or tax professional to verify their decline in turnover, they should contact Service NSW on 13 77 88.

Where an accountant’s letter is required, the accountant must confirm/certify that:

  • they are a qualified accountant, registered tax agent or registered BAS agent who is independent from the applicant — this means that they are not an employee or director of the applicant, an associated entity of the applicant, or a director or employee of an associated entity of the applicant — and are providing the certificate with respect to the applicant’s business;
  • the applicant’s business has experienced the requisite decline in turnover for a minimum of two weeks during the prescribed period, compared to the same period in 2019 or 2020, or the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021);
  • the business has informed [the accountant] that their invoice dates are consistent with normal business practice and have not been manipulated for the purpose of receiving the [CB] Grant; and
  • they have not conducted an audit or assurance engagement to verify the reliability, accuracy or completeness of the information the applicant has provided to them and they do not express an audit opinion or a review conclusion on the applicant’s turnover.

Alternative circumstances

There may be circumstances where a business may not be able to meet the eligibility criteria and supporting evidence requirements.

In the first instance, these businesses should contact Service NSW to check whether an alternative comparison period can be applied or alternative supporting evidence may be provided.

A business may still be able to apply for the CB Grant in circumstances such as where:

  • the business has not operated for the full year to 30 June 2020 (e.g. a new business);
  • the business was affected by drought, bushfires or other natural disasters;
  • a business acquisition, disposal or business restructure has impacted the business’ turnover; or
  • the sole trader or small partnership was impacted by sickness, injury or leave.

NOTE

Trust structures will be required to provide additional information to demonstrate the trust has derived an aggregated annual turnover of between $75,000 and $50 million.

The entity operating the business is eligible for the CB Grant, not other entities that are receiving passive income from the business.

It is unclear what additional information is required to be provided.

Documentation to support determination of eligibility

Service NSW can request a combination of the following documents to support a determination of eligibility:

  • accountant’s letter
  • prior business activity statements
  • income tax declarations
  • audited profit and loss statements
  • receipts and invoices from purchases.

Where a business is unable to provide these documents, or where Service NSW is satisfied it has other suitable methods to determine eligibility, Service NSW may accept another form of documentation.

2021 COVID-19 Micro-business Grant

As the COVID-19 Business Grant is available only for businesses with an aggregated annual turnover of $75,000 to $50 million, a separate 2021 COVID-19 Micro-business Grant (MB Grant) is available for micro-businesses with a turnover of between $30,000 and $75,000 (exclusive) that experience a decline in turnover of 30% or more.

These businesses are eligible for a $1,500 payment per fortnight for the duration of the Greater Sydney lockdown. These payments are made in arrears and backdated to 26 June 2021.

APPLIATIONS OPEN

Applications for the MB Grant opened on 26 July 2021 and close at 11:59pm on 18 October 2021

The detailed eligibility Guidelines (Guidelines) and Terms and Conditions (T&Cs) for the MB Grant are available from Service NSW. This guidance continues to be updated.

Eligibility for the MB Grant

A business is eligible to apply for and receive the MB Grant if it:

  1. Has an active ABN as of 1 June 2021 registered in, or can demonstrate primarily operating a business in, NSW.
  2. Has a national aggregated annual turnover for the year ended 30 June 2020 of more than $30,000 and less than $75,000.
  3. Experiences a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period from 26 June 2021 and 28 August 202129 compared to:
    • the same period in 2019;
    • the same period in 2020; or
    • the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021).
  4. Has eligible business expenses for which no other government support is available.
  5. Has not applied for the CB Grant or JobSaver.
  6. For an employing business30
    • It maintains its employee headcount as of 13 July 2021 while the business continues to receive payments under the MB Grant;
    • Agrees to notify Service NSW if its headcount is not maintained.
  7. For a non-employing business31 — it is the primary income source for the associated person/business owner. Individuals with more than one non-employing business may only claim payments for one business.

Eligible expenses under the MB Grant

Eligible expenses are costs that businesses and not-for-profit organisations incurred in meeting unavoidable business costs from 26 June 2021.

These eligible costs include, but are not limited to the following:

  • unavoidable business operating expenses, such as salaries, wages, utilities or rent
  • the cost of perishable goods that can no longer be used
  • financial, legal or other advice to support business continuity planning
  • marketing and communications activities to develop the business
  • other activities to support the operation of the business.

Entities ineligible for the MB Grant

Even if an entity satisfies all the eligibility requirements described above, it will not be eligible to apply for or receive the MB Grant if it:

  • is a company in liquidation or provisional liquidation;
  • is an individual who has entered bankruptcy;
  • has been found to have been engaged in fraud;
  • primarily earns passive income (rent, interest, dividends); or
  • is a business that registered its ABN after 1 June 2021.

Evidence requirements for the MB Grant

To evidence that it is eligible for the MB Grant, a business will need to:

  1. Declare and submit evidence that the business has experienced a DIT of 30% or more due to the Public Health Order over a minimum 2-week period between 26 June 2021 and 28 August 202132 compared to the same period in 2019 or 2020, or the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021) — the evidence must in the form of either:
    • a letter from a qualified accountant, RTA or RBA; or
    • a business bank account statement (separate from any personal accounts).
  2. Declare and submit evidence that the business had an aggregated annual turnover of more than $30,000 and less than $75,000 for the year ended 30 June 2020 — the evidence can be in the form of:
    • a letter from a qualified accountant, RTA or RBA;
    • a BAS;
    • a business bank account statement (separate from any personal accounts); or
    • an Australian income tax return (or Notice of Assessment).
  3.  If business does not have employees — declare the business is the primary income source for the owner of the business.
  4. If the business has employees — declare the business will maintain their employee headcount on 13 July 2021 for the period for which the business is receiving MB Grant payments.
  5. Declare the business has incurred eligible expenses for which no other government support is available.
  6. Provide details of its qualified accountant, RTA or RBA for possible compliance checking.
  7. Lodge other supporting documents as required to demonstrate that the eligibility criteria have been met.

Accountant’s letter to support applications for the MB Grant

All applicants for the MB Grant must provide a qualified accountant, registered tax agent or registered BAS agent with all the information they need to determine whether their business has experienced the 30% or more DIT requirement.

Service NSW has provided a template letter which is available on their website.

Where a business is required to provide a letter to support an application for the MB Grant, the accountant must confirm/certify that:

  • they are a qualified accountant, registered tax agent or registered BAS agent who is independent from the applicant — this means that they are not an employee or director of the applicant, an associated entity of the applicant, or a director or employee of an associated entity of the applicant;
  • they are providing the letter in respect of the applicant’s business;
  • the business has experienced a DIT of 30% or more over a minimum 2-week period — reported as a minimum 14-day consecutive period — between 26 June 2021 and 28 August 2021, compared to the same period in 2019 or 2020, or the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021);
  • the business has informed [the accountant] that their invoice dates are consistent with normal business practice and have not been manipulated for the purpose of receiving [the MB Grant]; and
  • they have not conducted an audit or assurance engagement to verify the reliability, accuracy or completeness of the information provided to them and they do not express an audit opinion or a review conclusion on the turnover.

Small business fees and charges rebate

Sole traders, small business owners or a not-for-profit organisation in NSW may be eligible for a Small business fees and charges rebate (the Rebate) of $1,500.

Small businesses (including non-employing sole traders) and not-for-profit organisations are eligible for the $1,500 Rebate if:

  • their total Australian wages are less than the NSW Government 2020–21 payroll tax threshold of $1.2 million; and
  • they have their own ABN registered and/or are physically located and operating in NSW.

APPLIATIONS OPEN

Applications for the Rebate opened in April 2021 and close on 30 June 2022

The detailed eligibility Guidelines (Guidelines) and Terms and Conditions (T&Cs) for the Rebate are available from Service NSW. This guidance continues to be updated.

Eligible fees and charges

Eligible businesses or not-for-profits need only apply for the Rebate once but can submit multiple claims until the full value of $1,500 is reached. Only one Rebate of $1,500 is available for each ABN holder, but multiple claims can be made as each eligible fee or charge must be claimed separately and only one receipt per claim can be uploaded at a time.

The Rebate can be used to offset the costs of eligible NSW and local government fees and charges due and paid from 1 March 2021 to 30 June 2022, which include, but are not limited to:

  • food authority licences
  • liquor licences
  • tradesperson licences
  • event fees
  • outdoor seating fees
  • council rates.

A full list of eligible small business fees and charges is available here. The Rebate cannot be used for fines or penalties, fees and charges that have the key purpose of discouraging behaviours or inducing behaviour changes, Commonwealth government charges, rent on government premises, or taxes.

A letter from a qualified accountant, RTA or RBA is required to determine whether the applicant has total Australian wages below the NSW Government 2020–21 payroll tax threshold of $1.2 million.

A template is available on the Service NSW website detailing what the accountant or tax professional’s letter must include.

Hospitality and Tourism COVID-19 Support Grant

A separate business grant — the Hospitality and Tourism COVID-19 Support Grant — will be available to tourism or hospitality businesses that have a turnover of more than $75,000 and an annual Australian wages bill of less than $10 million, as of 1 July 2020.

These businesses must have an ABN registered in NSW or be able to demonstrate they are physically located and primarily operating in NSW.

Payroll tax relief

Payroll tax relief will be available in the form of:

  • payroll tax waivers of 25% (i.e. a 25% reduction in 2021–22 payroll tax) for businesses with Australian wages of more than $1.2 million and no more than $10 million that have experienced a 30% decline in turnover;
  • a deferral of the 2020–21 payroll tax reconciliation (due by 28 July 2021) and payroll tax payments due on 7 August and 7 September until 7 October 2021; and
  • interest-free repayment plans of up to 12 months on a case-by-case basis.

Further information on the payroll tax relief is available from NSW Revenue.

Land tax relief

Land tax relief will be available equal to the value of rent reductions provided by commercial, retail and residential landlords to financially distressed tenants, up to 100% of the 2021 land tax year liability.

Eviction moratorium for residential tenants

Legislative amendments will be made to introduce a short-term eviction moratorium for rental arrears where a residential tenant suffers loss of income of 25% due to COVID-19 and meets a range of criteria.

Additionally, residential landlords who reduce rent for tenants will be eligible for a grant of up to $1,500 where they are not liable to pay land tax.

Changed rules for commercial and retail tenants

Commercial and retail landlords will be required to attempt mediation before recovering a security bond, or locking out or evicting a retail or commercial tenant impacted by the Public Health Order.

Gaming tax assessments

The NSW Government will defer gaming tax assessments for:

  • clubs until 21 December 2021; and
  • hotels until 21 January 2022.

Key Queensland support measures

2021 COVID-19 Business Support Grant

In response to the current lockdown33 in South East Queensland, the Queensland Government will provide a 2021 COVID-19 Business Support Grant of $5,000 (excluding GST) to eligible businesses across all industries across all of Queensland. The grant may be used for business expenses.

APPLIATIONS OPEN

Online applications for the 2021 COVID-19 Business Support Grant will open in mid-August 2021

More information on eligibility criteria, how to apply, and the opening date for applications will be available soon.

Applying for the grant

  • Supporting evidence will be required and applications for grants will be processed in the order received.
  • Grant funds will be paid within two weeks of being notified that an application has been approved.

Eligibility criteria

A business is eligible for the 2021 COVID-19 Business Support Grant if it has:

  • experienced at least a 30% reduction in turnover as a result of the lockdown — there is no requirement that the business be located in South East Queensland;
  • a turnover of more than $75,000 per annum; and
  • an annual payroll in Queensland of up to $10 million.

Grants for hospitality and tourism sector

Grants will also be available for large businesses in the hospitality and tourism sector that operate in the following 11 LGAs in the lockdown, subject to meeting eligibility criteria:

  • Brisbane City Council
  • Gold Coast City Council
  • Ipswich City Council
  • Lockyer Valley Regional Council
  • Logan City Council
  • Moreton Bay Regional Council
  • Noosa Shire Council
  • Redland City Council
  • Scenic Rim Regional Council
  • Somerset Regional Council
  • Sunshine Coast Regional Council.

Key South Australian support measures

COVID-19 Business Support Grant — July 2021

The South Australian Government will provide a July 2021 COVID-19 Business Support Grant Program to support South Australian small and medium-sized businesses experiencing a significant loss of income or forced to close as a result of the restrictions imposed from 20 July 2021.

Grants of $3,000 for employing businesses and $1,000 for non-employing businesses are available for eligible businesses whose turnover has declined by 30% or more as a result of the COVID‑19 health restrictions in the week commencing 20 July 2021.

The South Australian grants are modelled on similar schemes in Victoria, New South Wales and Western Australia, and apply to those businesses with a payroll of less than $10 million, with an annual turnover of $75,000 or more (in 2020–21 or 2019–20) and whose turnover is reduced by at least 30% over the seven days from 20 July 2021 as a result of the lockdown.

APPLIATIONS OPEN

Online applications for the Business Support Grant are now open through the Department of Treasury and Finance application portal and close at 11:59pm on 30 September 2021

Eligibility Guidelines and Frequently Asked Questions are available to assist in completing the application.

Queries on the Business Support Grant should be directed to BusinessSupportGrant@sa.gov.au.

Eligibility for the $3,000 grant — employing businesses

A business is eligible for a $3,000 grant if, at the start of the restriction period of 12:01am on 20 July 2021, it:

  • is located within South Australia;
  • has an annual turnover of $75,000 or more in either 2020–21 or 2019–20;
  • is registered for GST;
  • has a valid and active ABN;
  • employs people in South Australia;
  • has an Australia-wide payroll of less than $10 million in the 2019–20 financial year; and
  • experienced at least a 30% reduction in turnover in the week of Tuesday, 20 July 2021 – Monday, 26 July 2021 (inclusive) (compared to the prior week) due to restricted trading conditions.

Eligibility for the $1,000 grant — non-employing businesses

A business is eligible for a $1,000 grant if, at the start of the restriction period of 12:01am on 20 July 2021, it:

  • is located within South Australia;
  • has an annual turnover of $75,000 or more in either 2020–21 or 2019–20;
  • is registered for GST;
  • has a valid and active ABN;
  • has an Australia-wide payroll of less than $10 million in the 2019–20 financial year; and
  • experienced at least a 30% reduction in turnover in the week of Tuesday, 20 July 2021 – Monday, 26 July 2021 (inclusive) (compared to the prior week) due to restricted trading conditions.

NOTE

  • Where multiple non-employing businesses meeting the eligibility criteria are controlled by one individual, company, partnership, or trustee, funding will be restricted to one grant for all non-employing businesses controlled by that individual, company, partnership, or trustee.
  • Non-employing businesses are not eligible to apply if persons associated with the business, and who derive income from it, have applied for, or are receiving, the Commonwealth COVID-19 Disaster Payment.

Evidentiary requirements

Businesses will be required to declare that they have experienced a loss or reduction in turnover due to restricted trading conditions.

They will not be required to provide any supporting information at the time of application however they will be required to retain supporting information for two years that could be made available for audit and compliance purposes such as:

  • Turnover comparison data for the week prior to the assessment period
  • Emails or texts to or from clients or suppliers detailing cancelled orders or appointments
  • Receipts for refunds provided
  • Invoices or delivery dockets
  • Appointment/scheduling platform, demonstrating cancelled appointments or bookings
  • Screenshots of cancelled events.

COVID-19 Disaster Support Payments (for regional SA)

The South Australian Treasurer, Rob Lucas, announced on 21 July 2021 that the South Australian Government would fully fund income support payments of up to $600 per week for eligible34 workers in regional South Australia, who live or work outside of the Commonwealth-declared hotspot LGAs (and, therefore, are not entitled to the Commonwealth Disaster Payments).

The South Australian Government will match the income support payments for workers outside the declared Commonwealth-declared hotspots of metropolitan Adelaide, and the Hills and Gawler areas.

Key Victorian support measures

The Victorian Government is offering a range of grants and programs to support businesses following the recent lockdowns.

21 July 2021 Top-Up Payment

The 21 July 2021 Top-up Payment provides additional support to eligible small to medium businesses in sectors affected by the current restrictions in metropolitan and regional Victoria.

This payment is in addition to the ‘16 July 2021 Top-Up Payments’.

Successful recipients of the Business Costs Assistance Program Round Two will receive an additional $2,800, and successful recipients of the Licensed Hospitality Venue Fund 2021 will receive an additional $4,200. These payments will be processed automatically in July 2021.

$450 Test Isolation Payment

The $450 Test Isolation Payment supports Victorian workers, including parents and guardians, who are required to self-isolate while they wait for the results of a COVID-19 test.

$1,500 Pandemic Leave Disaster Payment

The $1,500 Pandemic Leave Disaster Payment is a one-off payment to help Victorian workers who have been directed to self-isolate or quarantine for 14 days, or care for someone who has been directed to self-isolate or quarantine.

Common observations and matters

Details on the various measures continue to emerge, often at late hours and over the weekend, making it challenging to keep up with the constant changes to the rules. This is compounded by the fact that the some of the measures are that draw on Federal tax law concepts are co-funded by the Commonwealth and state governments but being administered almost entirely at a state level by various agencies, this time without the direct assistance or involvement of the ATO.

Below are various observations and issues common to the support measures (or specific to a particular measure where indicated). Given the fluid nature of the issued guidance, it is important that practitioners continue to monitor the web guidance as information can be withdrawn, changed or issued without notice.

Aggregated annual turnover

The following guidance may assist in working out the aggregated annual turnover of a business:

  1. The Guidelines and T&Cs explain that, when assessing whether an applicant had national aggregated annual turnover of between $75,000 and $50 million35 (inclusive), ‘aggregated annual turnover’ means ‘aggregated turnover’ as defined in s 328-115 of the ITAA 1997.36
  2. In working out the aggregated turnover of a business, the aggregation rules in s 328-125 (about entities connected with the entity) and s 328-130 (about affiliates of the entity) apply.
  3. The use of the term ‘national aggregated annual turnover’ in the Guidelines and T&Cs, together with the guidance in the Communication toolkit for accounting and tax practitioners — which states that ‘aggregated annual turnover’  means the annual Australian turnover of your business, as well as the annual Australian turnover of any business that is ‘connected with you’ or any business that is your ‘affiliate’ for the year ended 30 June 2020 — indicates that the turnover should be confined to Australian turnover and does not include the annual turnover of any foreign entities that may be connected with, or an affiliate of, the business. This issue has been escalated for clarification.
  4. Aggregated turnover is exclusive of GST.37
  5. The ATO advised in 2020 that JobKeeper payments are ordinary income, but they are not derived in the ordinary course of carrying on a business. Accordingly, JobKeeper payments are not included in aggregated turnover.
  6. It is unclear how the rules will apply to consolidated groups, service entity arrangements and those who are substantially foreign owned. Issues specific to these types of business structures that arose during JobKeeper were generally addressed by modifications to the JobKeeper Rules.

GST registration not required for the CB Grant and/or JobSaver

A business does not have to be registered for GST to apply for the CB Grant and/or JobSaver.38 The minimum aggregated turnover threshold of $75,000 is calculated very differently to GST turnover which determines whether a business is required to be registered for GST.

A business that registers for GST after 1 June 2021 may still apply for the CB Grant and/or JobSaver, but Service NSW may request further documents to assess the application.

Decline in turnover

The Guidelines explain that:

the concept of ‘current Goods and Services Tax (GST) turnover’ as defined in A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act) will be applied when assessing whether an applicant experienced a 30 per cent or more decline in turnover over the minimum two-week period.  If an entity is part of a GST group, the entity calculates its GST turnover as if it wasn’t part of the group. This means that supplies made by one group member to another will be included in GST turnover for the purposes of the decline in turnover test. As far as they are relevant, the modifications made to the GST Act definition of ‘current GST turnover’ for the purposes of the JobKeeper test will apply.

‘Turnover’ means the ‘GST turnover’ as defined in s 188-10 of the GST Act.39 ‘Current GST turnover’ is defined in s 188-15 and ‘Projected GST turnover’ in s 188-20.

The above statement that: ‘As far as they are relevant, the modifications made to the GST Act definition of “current GST turnover” for the purposes of the JobKeeper test will apply’ requires further clarification. It is not clear whether all the ATO guidance on the calculation of DIT for JobKeeper purposes — including that relating to consolidated groups, service entity arrangements and those who are substantially foreign owned groups — applies in the same way for the purposes of the CB Grant and/or JobSaver.

Also, while the guidance now clarifies the position for GST groups (see above), the Guidelines and T&Cs are still silent on whether NFPs need to include donations or government grants in their DIT calculation.

Cash basis versus accrual basis

To provide guidance on the calculation of the DIT for JobKeeper purposes, the ATO issued Law Companion Ruling, LCR 2020/1 JobKeeper payment – original decline in turnover test.

On 28 July 2021, Service NSW issued a Communication toolkit for accounting and tax practitioners that explains whether a business should calculate the DIT on a cash or accrual basis.40

The guidance explains that:

Decline in turnover will be measured based on the Goods and Services Tax (GST) turnover of your business. As such, if your business accounts for GST on an accrual basis, you should use this method. If your business accounts for GST on a cash basis, you should use this method.

The guidance issued to date does not consider:

  • the accounting or income tax method adopted by the business (i.e. cash or accruals);
  • the GST attribution rules (in s 29-5 of the GST Act);
  • the making of a supply (in Div 188 of the GST Act);
  • whether there is any flexibility for an entity to choose a method that differs from how it usually reports its GST (see discussion below).

Small businesses who report GST on cash basis

Many small businesses are closed due to the lockdown. Some are still collecting outstanding debts from their debtors even though their turnover has declined partially or fully. Many of these small businesses report GST on a cash basis, so those who are still collecting debts but not making sales may not qualify for financial support.

If the Guidelines were amended to make it clear that that a business could use either the cash basis or the accrual basis to calculate their DIT, irrespective of which method they use to report their GST, many more small businesses affected by the lockdown would be able to qualify.

2-week period

The key points in relation to the minimum 2-week period are as follows:

  • The minimum 2-week period in 2021 must be compared to either:
    • exactly the same period in 2019 or 2020; or
    • the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021).
  • The period must constitute at least two consecutive weeks.
  • The minimum 2-week period may start on any day of the week.
  • The DIT calculation does not have to be confined to a 2-week period — a longer period can be used (such as a 3- or 4-week period) as long as the start and end of the period is within the DIT period specified by the Guidelines and T&Cs.
  • An earlier version of the online application process for the CB Grant asked: ‘What was your business’ lowest fortnightly turnover between 26 June 2021 to 17 July 2021?’ and for JobSaver: ‘What was your business’ lowest fortnightly turnover between 26 June 2021 to 30 July 2021?41 The word ‘lowest’ no longer appears in the online application process for the CB Grant and JobSaver.

New businesses

Until 3 August 2021, it was unclear how a new business — one that began operating after 30 June 2020 — could demonstrate the minimum $75,000 aggregated annual turnover requirement was met in the year ended 30 June 2020. These businesses were asked to contact Service NSW for further guidance.

The updated Common questions for the CB Grant and JobSaver now advise new businesses of the evidentiary requirements as set out in Table 10 below.

NOTE

Businesses must have been operating before 1 January 2021 to access financial support.

TABLE 10: Rules for new businesses

Measure

Business opened in 2020 and does not have 2019 turnover figures

Business not operational for
the full 2019–20 financial year

CB Grant

The business will need to:

  • Provide one quarterly BAS, or three individual monthly BAS to demonstrate turnover between $75,000 and $50 million (inclusive) — the reported turnover will be annualised.
  • Show that it experienced a DIT of 30% or more over a minimum
    2-week period between 26 June 2021 and 17 July 2021 compared to a comparable period during the first 3 quarters of the 2020–21 financial year.
  • If it is in a highly impacted industry — declare it has experienced the 30% or more DIT.
  • If it is not in a highly impacted industry — provide an accountant’s letter, using the template provided.

The business will need to:

  • Show that it experienced a DIT of 30% or more due to the Public Health Order over a minimum
    2-week period between 26 June 2021 and 17 July 2021 compared to:
    • the same period in 2019;
    • the same period in 2020; or
    • the 2-week period immediately before the Greater Sydney lockdown commenced (12 June 2021 to 25 June 2021).
  • If it is in a highly impacted industry — declare it has experienced the 30% or more DIT.
  • If it is not in a highly impacted industry — submit evidence that it has experienced the required DIT.

JobSaver

The business will need to provide one quarterly BAS, or three individual monthly BAS to demonstrate turnover of between $75,000 and $250 million — the reported turnover will be annualised.

The business will need to:

  • Provide one quarterly BAS, or three individual monthly BAS to demonstrate turnover between $75,000 and $250 million (inclusive) — the reported turnover will be annualised.
  • Show that it experienced a DIT of 30% or more over a minimum
    2-week period between 26 June 2021 and 17 July 2021 compared to a comparable period during the first three quarters of the 2020–21 financial year.
  • If it is in a highly impacted industry — declare it has experienced the 30% or more DIT.
  • If it is not in a highly impacted industry — provide an accountant’s letter, using the template provided.

Alternative DIT tests

While complex, the JobKeeper Rules provided for alternative DIT tests designed to cater for circumstances such as:

  • the commencement of a business after 2019;
  • the acquisition or disposal of a business;
  • the restructure of a business;
  • a substantial increase in turnover;
  • a drought or natural disaster (albeit unlikely in metropolitan Sydney);
  • irregular turnover; or
  • a sole trader or small partnership where the sole trader or partner was unable to work in 2019 due to sickness, injury or leave.

While the Guidelines include some of these circumstances, they are not as comprehensive as the JobKeeper alternative DIT tests, and they do not cater to private companies or small businesses carried on through trusts where the directors or trustees were ill, injured or on leave in the comparable period in 2019.

Maintain employee headcount

  1. An entity’s employee headcount means the number of persons who are employed in NSW and who are permanent (full-time or part-time), or casual staff who have been employed by the business for more than 12 months – it is not the full-time equivalent42 number of employees.
  2. Maintain their employee headcount means that the employer will not take active steps to end the employment relationship with their employees. Employees who have been stood down under the Fair Work Act 2009 or take leave without pay are considered employees for the purpose of the headcount.
  3. Unlike JobKeeper, there is no wage condition or requirement for the employer to pass the JobSaver amount onto the employee. The employer is taken to maintain their employee headcount even where employees are stood down or take leave without pay.
  4. Increasing the headcount without ending any employment relationship will not result in a business becoming ineligible.
  5. An employee headcount on 13 July 2021 is not taken to be reduced if the reduction in a business’ employee headcount results from circumstances outside the control of the employer — this includes, but is not limited to, voluntary resignation, retirement and death.

Tax treatment of COVID-19 support payments

On 3 August 2021, the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 was introduced into Parliament. The Bill was passed by both Houses on 9 August 2021 and, at the time of writing, awaited Royal Assent.

Tax-free treatment of payments from COVID-19 business support programs

Schedule 3 to the Bill inserts new s 59-9843 into the ITAA 1997 to treat payments received by eligible businesses under certain business support programs administered by the Commonwealth as non-assessable non-exempt (NANE) income.

An entity is eligible for the concessional tax treatment if:

  • the payment was received by the entity in the 2021–22 financial year;
  • the entity carries on a business; and
  • the entity has an aggregated turnover of less than $50 million for the year in which the entity receives the payment.

OBSERVATIONS — Tax-free treatment of payments

  • To determine its eligibility for JobSaver or the CB Grant, an entity will need to work out its aggregated turnover for the year ended 30 June 2020. However, to determine whether the JobSaver payment or CB Grant is NANE income, the entity will need to work out its aggregated turnover for the income year in which it received the payments (i.e. the
    2021–22 income year)
  • The treatment of these payments as NANE income is limited to those entities with an aggregated turnover of less than $50 million. This means that those JobSaver recipients with an aggregated turnover of $50m to $250m (inclusive) in 2021–22 will not be able to treat the JobSaver payments received as NANE income. We have been advised by Treasury that this is deliberate policy intent.
  • These payments are tax-free when distributed by a trust (including a unit trust due to an exemption from CGT event E4 in s 104-71 of the ITAA 1997). However, they constitute an unfranked (but frankable) dividend if distributed by a company to its shareholders. This may also impose a requirement on companies to lodge a franking return (see our related blog) under the benchmark rules.

Tax-free treatment of COVID-19 Disaster Payments

Schedule 5 to the Bill inserts new s 59-96 into the ITAA 1997 to treat Disaster Payments received in the 2020–21 and later income years as NANE income.

Without this amendment, the Disaster Payment would be a taxable payment (i.e. included in assessable income).

Accountant’s letter

Accountant’s own business

The Guidelines and T&Cs require an accountant’s letter to be issued by an ‘Independent Practitioner’ as defined. We are seeking clarification on who can issue an accountant’s letter when a qualified accountant, RTA or RBA requires an accountant’s letter for their own business.

Accountants applying on behalf of businesses

The Common questions for each measure now advise that an accountant can apply on behalf of a business. The accountant needs to provide a letter of authority from the business to show that they are authorised to act on behalf of the business if they are not listed as an associate on the Australian Business Register.

Meaning of ‘associated entity’

An accountant cannot provide a letter in respect of an applicant if, among other exclusions, they are an associated entity of the applicant, or a director or employee of an associated entity of the applicant.

It is unclear what is meant by the meaning of ‘associated entity’ for this purpose. This could refer to the meaning of ‘associate’ in s 318 of the Income Tax Assessment Act 1936, or various other uses of that term through Commonwealth or state law.

Engagement letter

It would be prudent for any accountant undertaking work where they certify the financial position of an applicant for a support measure to set out the scope of the engagement and client expectations in an engagement letter.

It will be important for accountants to set out the extent of reliance of information provided by an applicant to mitigate any risks they face in undertaking this work and providing the certifications.

Recovery of payments if a business is later found to be ineligible

 NSW Treasury, the Department of Customer Service or Service NSW can recover a payment or part of a payment from a business or NFP (as a debt due to the Crown) if the business or NFP has received a support payment and NSW Treasury, the Department of Customer Service or Service NSW is satisfied that the conditions were, or have been, contravened.

Duplication of administration

The JobSaver package will be implemented and administered by the NSW Government via Service NSW. Should future outbreaks result in lockdowns in other states and territories that continue for at least four weeks, the respective state or territory government would similarly be responsible for implementing and administering the payments in their jurisdiction, unlike the JobKeeper and cash flow boost programs which were administered federally by the ATO.

This separate administration by each state or territory would inevitably lead to duplication and inefficiencies nationally.

DISCLAIMER: The material and opinions in this article should not be used or treated as professional advice and readers should rely on their own enquiries in making any decisions concerning their own interests.

© 1996-2021 The Tax Institute (ABN 45 008 392 372 (PRV14016)). All rights reserved. The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.


Correct as of 11:00am on 10 August 2021

Appendix A

Commonwealth-declared hotspots

New South Wales

The following LGAs in NSW have been declared a Commonwealth hotspot from 26 June 202144 to 28 August 2021:

Commonwealth-declared hotspots in NSW — 26 June 2021 to 28 August 2021

  • Bayside
  • Blacktown
  • Blue Mountains
  • Burwood
  • Camden
  • Campbelltown
  • Canada Bay
  • Canterbury-Bankstown
  • Central Coast
  • City of Parramatta
  • City of Shellharbour
  • City of Sydney
  • Cumberland
  • Fairfield
  • Georges River
  • Hawkesbury
  • Hornsby
  • Hunters Hill
  • Inner West
  • Ku-ring-gai
  • Lane Cove
  • Liverpool
  • Mosman
  • North Sydney
  • Northern Beaches
  • Penrith
  • Randwick
  • Ryde
  • Strathfield
  • Sutherland Shire
  • The Hills Shire
  • Waverley
  • Willoughby
  • Wollondilly
  • Wollongong
  • Woollahra

The following additional LGAs in NSW were declared a Commonwealth hotspot from 21 July 2021 to 28 July 2021:

Commonwealth-declared hotspots in NSW — 21 July 2021 to 28 July 2021

  • Orange
  • Blayney
  • Cabonne

The following additional LGAs in NSW have been declared a Commonwealth hotspot from 5 August 2021 to 12 August 2021:

Commonwealth-declared hotspots in NSW — 5 August 2021 to 12 August 2021

  • City of Cessnock
  • City of Lake Macquarie
  • Dungog Shire
  • Maitland
  • Muswellbrook Shire
  • Newcastle
  • Port Stephens Council
  • Singleton Council

The following LGAs in NSW have been declared a Commonwealth hotspot from 9 August 2021:

Commonwealth-declared hotspots in NSW — From 9 August 2021

  • Regional Council of Armidale — from 9 August 2021 to 14 August 2021
  • Regional Council of Tamworth — from 9 August 2021 to 16 August 2021

Queensland

The following LGAs in Queensland were declared a Commonwealth hotspot from 31 July 2021 to 8 August 2021:

Commonwealth-declared hotspots in Queensland — 31 July 2021 to 8 August 2021

  • City of Brisbane
  • Moreton Bay Region
  • Redland City
  • Logan City
  • City of Ipswich
  • Shire of Noosa
  • City of Gold Coast
  • Lockyer Valley Region
  • Scenic Rim Region
  • Somerset Region
  • Sunshine Coast Region

The following LGAs in Queensland have been declared a Commonwealth hotspot from 8 August 2021 to 11 August 2021:

Commonwealth-declared hotspots in Queensland — 8 August 2021 to 11 August 2021

  • Regional Council of Cairns
  • Shire of Yarrabah

South Australia

The following LGAs in South Australia were declared a Commonwealth hotspot from 20 July 2021 to 27 July 2021:

Commonwealth-declared hotspots in South Australia — 20 July 2021 to 27 July 2021

  • Adelaide
  • Burnside
  • Campbelltown
  • Charles Sturt
  • Holdfast Bay
  • Marion
  • Mitcham
  • Norwood Payneham and St Peters
  • Onkaparinga
  • Playford
  • Port Adelaide Enfield
  • Prospect
  • Salisbury
  • Tea Tree Gully
  • Unley
  • West Torrens
  • Gawler
  • Walkerville
  • Adelaide Hills Council

Victoria

The following LGAs in Victoria were declared a Commonwealth hotspot from (generally) 15 July 2021 to 27 July 2021:45

Commonwealth-declared hotspots in Victoria — Generally, 15 July 2021 to 27 July 2021

  • Banyule
  • Bayside
  • Boroondara
  • Brimbank
  • Cardinia
  • Casey
  • Darebin
  • Frankston
  • Glen Eira
  • Greater Dandenong
  • Hobsons Bay
  • Hume
  • Kingston
  • Knox
  • Manningham
  • Maribyrnong
  • Maroondah
  • Melbourne
  • Melton
  • Monash
  • Moonee Valley
  • Moorabool
  • Moreland
  • Mornington Peninsula
  • Nillumbik
  • Port Phillip
  • Stonnington
  • Whitehorse
  • Whittlesea
  • Yarra
  • Yarra Ranges
  • Greater Geelong
  • Borough of Queenscliff, Queenscliff and Point Lonsdale
  • Surf Coast Shire
  • Bass Coast Shire, including Phillip Island
  • Rural City of Mildura

The following LGAs in Victoria have been declared a Commonwealth hotspot from 5 August 2021 to 12 August 2021:

Commonwealth-declared hotspots in Victoria — 5 August 2021 to 12 August 2021

  • Banyule
  • Bayside
  • Boroondara
  • Brimbank
  • Cardinia
  • Casey
  • Darebin
  • Frankston
  • Glen Eira
  • Golden Plains
  • Greater Geelong
  • Greater Dandenong
  • Hobsons Bay
  • Hume
  • Kingston
  • Knox
  • Manningham
  • Maribyrnong
  • Maroondah
  • Melbourne
  • Melton
  • Monash
  • Moonee Valley
  • Moorabool
  • Moreland
  • Mornington Peninsula
  • Nillumbik
  • Port Phillip
  • Stonnington
  • Whitehorse
  • Whittlesea
  • Wyndham
  • Yarra
  • Yarra Ranges

Appendix B

Announcements by the Commonwealth and State Governments

Following the announcement on 13 July 2021 of a comprehensive financial support package, subsequent announcements include the following:

  • 14 July 2021 — Media statement by the Prime Minister providing additional information.
  • 15 July 202146 — Joint media statement by the Prime Minister and the Federal Treasurer, Josh Frydenberg.
  • 15 July 2021 — Joint media statement by the Prime Minister and Treasurer about the Commonwealth support measures available for state lockdowns lasting less than seven days in response to Victoria entering lockdown earlier that day.
  • 17 July 2021 — Further details released by the NSW Treasury on the 2021 COVID-19 Business Grant.
  • 18 July 2021 — Further announcement by the NSW Treasurer on the support package.
  • 18 July 2021 — Joint media release by the NSW Treasurer, the Minister for Digital and Customer Service, Victor Dominello, and the Minister for Finance and Small Business, Damien Tudehope, announcing the acceleration of the 2021 COVID-19 Business Grant.
  • 21 July 2021 — Media release by the Victorian Premier, Daniel Andrews, providing additional information for Victorian businesses.
  • 21 July 2021 — Media release by the Treasurer for South Australia, Rob Lucas, outlining a cash grants ‘lifeline’ to South Australian small businesses and payments to registered workers.
  • 22 July 2021 — Media release by the NSW Treasurer setting out details of the payroll tax reductions and deferrals to support businesses.
  • 28 July 2021 — Joint media release by the NSW Premier and the NSW Treasurer announcing a boost to JobSaver to expand COVID-19 support.
  • 28 July 2021 — Media statement by the Prime Minister announcing an increase in the amount of the COVID-19 Disaster Payment.
  • 29 July 2021 — Transcript of interview with the Prime Minster by Natalie Barr, Sunrise, Seven Network in relation to the COVID-19 Disaster Payments.
  • 2 August 2021 — Joint statement by the Treasurer and Minister for Investment, Cameron Dick, the Minister for Tourism Industry Development and Innovation and Minister for Sport, Stirling Hinchliffe, and the Minister for Employment and Small Business and Minister for Training and Skills Development, Di Farmer, announcing lockdown support for Queensland businesses.

Appendix C

Development of design of the COVID-19 Disaster Payment

Original announcement

The Disaster Payment was first announced by the Prime Minister on 3 June 2021.

The temporary Disaster Payment would be rapid support, paid weekly to those workers who reside or work in a Commonwealth-declared hotspot and are therefore unable to attend work and earn an income as a result of state imposed health restrictions, which last for longer than one week.

Eligible recipients will receive up to $500 per week for losing 20 hours or more of work, and $325 per week for losing under 20 hours. They must not have liquid assets of more than $10,000.

The payment will be made in respect of the second and any subsequent weeks of restrictions.

Update on 8 July 2021

On 8 July 2021, the Prime Minister announced that the $10,000 liquid assets test, which is currently applied to that individual payment of $500 or $325 will be waived from the third week of a lockdown.

Update on 13 July 2021

On 13 July 2021, the Prime Minister announced that the Disaster Payment:

  • would be increased from week four of a lockdown (see Table 5 below); and
  • a recurring payment for approved recipients for as long as the Commonwealth-declared hotspot and lockdown restrictions remain in place — this will remove the need for recipients to reclaim for each seven-day period of a lockdown.

It was also agreed that:

(a) The liquid asset test (see above) will not need to be satisfied if claiming for a period starting from:

  • 8 July 2021 for parts of Sydney
  • 11 July 2021 for Greater Sydney.

(b) From 18 July 2021, the Disaster Payment will be available to those outside Commonwealth-declared hotspots in NSW that meet the criteria for the payment. This allows those affected in regional NSW to also be eligible if the other conditions are met.

(c) The NSW Government will fund any payments outside a Commonwealth-declared hotspot and the Federal Government will continue to fund payments to recipient in a Commonwealth-declared hotspot.

TABLE 5: Amount of previous COVID-19 Disaster Payment

Stage of lockdown

Lost less than 20 hours of work per week

Lost 20 hours or more of work per week

Amount of payment before first period of a restricted movement order
(i.e. first 7 days of a lockdown)

Nil

Nil

Amount of payment in first and second periods of a restricted movement order (i.e. weeks 2 and 3 of a lockdown)

(The $10,000 liquid assets test is removed from the third week of a lockdown)

$325

$500

Amount of payment from third period of a restricted movement order
(i.e. from week 4 of a lockdown)

$375

$600

Update on 15 July 2021

On 15 July 2021, the Prime Minister announced at a press conference that a new arrangement would be taken to National Cabinet on 16 July 2021.

Under the revised arrangement:

  • the Disaster Payment will still be paid from the second week of a lockdown but it will be at the increased amount of $600 or $375 from the second week; and
  • the $10,000 liquid assets test will be waived from the outset rather than from the third week of a lockdown.

Also on 15 July 2021, the Prime Minister and Federal Treasurer issued a joint media statement47 confirming enhancements to the financial support. It was agreed that the Commonwealth will provide income support for those who work or live in the areas declared as a Commonwealth hotspot. The provision of income support outside of these areas will be provided where requested and at the cost of the state or territory government.

Update on 28 July 2021

On 28 July 2021, the Prime Minister announced that increased financial support will be available as part of the Commonwealth Government’s expanded national Disaster Payment.

On 28 July 2021, the Prime Minister, Federal Treasurer, Minister for Emergency Management and National Recovery and Resilience, Bridget McKenzie, Minister for Families and Social Services, the Hon Anne Ruston, and Minister for Government Services, the Hon Linda Reynolds CSC, issued a joint media statement extending the level of support offered to individuals affected by state lockdowns for the current NSW lockdown and all future lockdowns.

Under the further revised arrangement, the Disaster Payment will be increased to $750 or $450 for payments processed from the week commencing 2 August 2021.

Previously, Disaster Payments were paid from the second week of a lockdown48. On 28 July 2021, the Prime Minister advised that:

The new national payment rate will commence for payments processed week commencing 2 August [2021] and will be automatically updated for those already in the Services Australia system.

It will be available from day one of any potential lockdown in the future, with claims made from day eight in arrears for the previous seven days. A weekly payment will then be made for the duration of the hotspot declaration.

Update on 29 July 2021

On 29 July 2021, the Prime Minister made the following remarks in a radio interview with Kim Landers on ABC FM:

We went through several iterations before JobKeeper last year, which was very successful in the same way this year as we’ve been responding to the Delta strain of the virus and how it’s impacting how lockdowns are coming in. We’ve adjusted to that as well. And … we’ve always been prepared to move as we have and these new payments of up to now $750, which is non-taxable, I want to stress, and the other payments of $450 and $200, all of which are non-taxable.

Later that morning, in a television interview with Natalie Barr on Sunrise, the Prime Minister made the following remarks in an exchange:

Barr: So those payments, the $750, will that be subject to tax?
Prime Minister: No, it won’t and I’ve made that very clear this morning, back through the system, they won’t be taxable. JobKeeper, by the way was. And we are treating this as a disaster in these areas where this has befallen people in the same way the payments that we make for bushfires and the payments we made for floods and other natural disasters, we are making these payments under that disaster payment framework. [emphasis added]

Accountants Daily reported on 30 July 2021 that:

Mr Morrison’s position comes despite the Treasury, the ATO and Services Australia all publicly noting that COVID-19 disaster payments are taxable income.
A Treasury official told Accountants Daily that a policy change had indeed been made and that the Treasury was in the process of updating its guidance as of Friday morning.

Appendix D

Abbreviations

Abbreviation

Explanation

ABN

Australian Business Number

BAS

Business activity statement

CA

Corporations Act 2001 (Cth)

CB Grant

(NSW) 2021 COVID-19 Business Grant

Cth

Commonwealth

Disaster Payment

2021 COVID-19 Disaster Payment

DIT

Decline in turnover

GST Act

A New Tax System (Goods and Services Tax) Act 1999 (Cth)

ITAA 1997

Income Tax Assessment Act 1997 (Cth)

JobKeeper Rules

Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) (original rules from 9 April 2020) and Compilation No. 9 (latest version in force)

JobSaver

COVID-19 JobSaver payment

MB Grant

(NSW) 2021 Micro-business Grant

NANE

Non-assessable non-exempt (income)

NFP

Not-for-profit-organisation

PAYGW

Pay As You Go Withholding

RBA

Registered BAS agent

Rebate

NSW Small business fees and charges rebate

RTA

Registered tax agent

TASA

Tax Agent Services Act 2009 (Cth)

DISCLAIMER: The material and opinions in this article should not be used or treated as professional advice and readers should rely on their own enquiries in making any decisions concerning their own interests.

© 1996-2021 The Tax Institute (ABN 45 008 392 372 (PRV14016)). All rights reserved. The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.

 

Footnotes

1 A one-week lockdown was imposed on the NSW LGAs of Orange, Blayney and Cabonne from 21 July 2021 to 28 July 2021. A one-week lockdown was announced on 5 August 2021 for the NSW LGAs of City of Cessnock, City of Lake Macquarie, Dungog Shire, Maitland, Muswellbrook Shire, Newcastle, Port Stephens Council and Singleton Council, in the Hunter and Upper Hunter regions, from 5:00pm on 5 August 2021 to midnight on 12 August 2021.

2 A one-week lockdown for Victoria was announced on 5 August 2021 from 8:00pm on 5 August 2021 and is due to end at 8:00pm on 12 August 2021.

3 The DIT period will extend to 28 August 2021 following the extension of the Greater Sydney lockdown by 4 weeks, although the Guidelines and T&Cs have not yet been fully updated at the time of writing to reflect this (some of the web guidance still states the DIT period ends on 30 July 2021).

4 See new s 59-96 of the ITAA 1997, contained in Schedule 5 to the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 which was passed by the Parliament on 9 August 2021 and, at the time of writing, awaited Royal Assent.

5 See new s 59-98 of the ITAA 1997, contained in Schedule 5 to the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 which was passed by the Parliament on 9 August 2021 and, at the time of writing, awaited Royal Assent, and s 59-97(2) of the ITAA 1997.

6 Following an agreement reached between the Commonwealth and the Victorian Government on 15 July 2021, there is no longer a requirement that the lockdown must last for more than seven days.

7 For each location, there is a webpage titled ‘What you need to do if you get a payment’.

8 At the time of writing, the JobSaver Guidelines and T&Cs have not yet been fully updated to reflect the announcement by the NSW Government on 28 July 2021 to increase the maximum weekly amount from $10,000 to $100,000, and allow JobSaver payments to be available to businesses with an annual turnover of between $75,000 and $250 million (inclusive), up from $50 million. Nor has the extended DIT period of 26 June 2021 to 28 August 2021 (replacing 26 June 2021 to 30 July 2021) been fully reflected at the time of writing in the web guidance.

9 The NSW Government announced on 28 July 2021 that the maximum weekly amount would be increased from $10,000 to $100,000.

10 The previous end date for the DIT period was 30 July 2021 which was based on when the Greater Sydney lockdown was previously due to end. The lockdown has been extended to 28 August 2021, so the end of the DIT period will be consequently extended to 28 August 2021 although the Guidelines and T&Cs have not yet been fully updated at the time of writing to reflect this.

11 Employees can receive Disaster Payments and the business can receive JobSaver payments. One does not preclude the other from being eligible for either form of support.

12 A non-employing business is not eligible to apply for JobSaver if anyone associated with the business, or who derives income from it, has received a Disaster Payment since 18 July 2021.

13 The ATO has produced a Calculate days calculator to assist taxpayers with calculating the number of days between two specified dates, which is useful for calculating the number of days in the relevant BAS period.

14 The list can be found at Attachment A to the JobSaver Guidelines published by Service NSW.

15 The previous end date for the DIT period was 30 July 2021 which was based on when the Greater Sydney lockdown was previously due to end. The lockdown has been extended to 28 August 2021, so the end of the DIT period will be consequently extended to 28 August 2021, although the Guidelines and T&Cs have not yet been fully updated at the time of writing to reflect this.

16 To calculate ‘total annual Australian wages’, businesses already grouped by Revenue NSW should apply these rules. Businesses not already grouped should apply the ownership grouping provisions set out in the Payroll Tax Act 2007 (NSW) (see 3.2 of the Guidelines).

17 The new levels of support replace those announced on 29 June 2021. The CB Grant was previously available to businesses and sole traders with an annual turnover of more than $75,000 but less than the NSW Government 2020–21 payroll tax threshold of $1.2 million as of 1 July 2020.

The announcement on 29 June 2021 advised that eligible businesses must have less than 20 full time equivalent employees and an ABN registered in NSW or be able to demonstrate they are physically located and primarily operating in NSW. The ‘less than 20 employees rule’ has not been retained under the expanded package.

18 Employees can receive Disaster Payments and the business can receive the CB Grant. One does not preclude the other from being eligible for either form of support.

19 A non-employing business is not eligible to apply for the CB Grant if anyone associated with the business, or who derives income from it, has received a Disaster Payment between 26 June 2021 and 17 July 2021.

20 A business that has an ABN registered in, or is physically located and primarily operating in, one of the following LGAs: Albury, Balranald, Berrigan, Bega Valley, Edward River, Federation, Greater Hume Shire, Hay, Murray River, Murrumbidgee, Snowy Monaro, Snowy Valleys and Wentworth.

21 The Guidelines and T&Cs originally advised the DIT period was 27 May 2021 to 26 July 2021. This was corrected on 20 July 2021, when the end date changed from 26 July 2021 to 17 July 2021.

22 The Guidelines and T&Cs originally advised the DIT period was 26 June 2021 to 26 July 2021. This was corrected on 20 July 2021, when the end date changed from 26 July 2021 to 17 July 2021.

23 There is no guidance on how this is defined or the scope of the fraud.

24 See s 7(2) of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (JobKeeper Rules).

25 Businesses will not be required to provide evidence of costs on application (such as invoices) but they will need to keep evidence of costs for a possible future audit.

26 To facilitate possible compliance checking.

27 As defined in the Corporation Act 2001 (Cth).

28 As defined in the Tax Agent Services Act 2009 (Cth).

29 The previous end date for the DIT period was 30 July 2021 which was based on when the Greater Sydney lockdown was previously due to end. The lockdown has been extended to 28 August 2021, so the end of the DIT period will be consequently extended to 28 August 2021, although the Guidelines and T&Cs have not yet been fully updated at the time of writing to reflect this.

30 Employees can receive Disaster Payments and the business can receive the MB Grant. One does not preclude the other from being eligible for either form of support.

31 A non-employing business is not eligible to apply for the MB Grant if anyone associated with the business, or who derives income from it, has received a Disaster Payment.

32 The previous end date for the DIT period was 30 July 2021 which was based on when the Greater Sydney lockdown was previously due to end. The lockdown has been extended to 28 August 2021, so the end of the DIT period will be consequently extended to 28 August 2021, although the Guidelines and T&Cs have not yet been fully updated at the time of writing to reflect this.

33 The lockdown commenced on 31 July 2021.

34 The payments will be paid in arrears for the lockdown and anyone affected can apply through myGOV from 28 July 2021.

35 It is expected that the JobSaver guidance will be updated to reflect the announcement by the NSW Government on 28 July 2021 that the upper threshold would be increased from $50 million to $250 million.

36 An earlier version of the Guidelines advised that in determining whether an applicant has an ‘aggregated annual turnover’ of between $75,000 and $50 million (inclusive), ‘the Australian Taxation Office income assessment concept will be applied’.

37 See s 328-120(2) of the ITAA 1997, which excludes GST amounts under s 17-5 of the ITAA 1997.

38 There was never a condition in the Guidelines or the T&Cs that a business must be registered for GST on or before 1 June 2021 to be eligible for the CB Grant and/or JobSaver, however, an earlier version of the FAQs (now called Common questions) advised that businesses that registered for GST after 1 June 2021 were not eligible to apply for the CB Grant. The FAQs previously advised that businesses must have been registered for GST on or before 1 June 2021 to be eligible for the CB Grant. This question has since been removed from Common questions.

39 An earlier version of the Guidelines advised that ‘the Australian Taxation Office Goods and Services Tax (GST) concept will be applied when assessing whether an applicant experienced a … decline in national turnover’.

40 This could be problematic for a small business that reports GST using the cash basis, is experiencing substantially reduced turnover but continues to collect their outstanding debtors.

41 The Guidelines and T&Cs never specified that the turnover in the minimum 2-week period had to be the ‘lowest’ fortnightly turnover in the requisite DIT period.

42 For example, if an entity employs 10 full-time employees and 10 part-time staff working half the hours of a full-time employee, its employee headcount is 20, rather than the full-time equivalent of 15.

43 This will operate in conjunction with existing s 59-97(2) of the ITAA 1997.

44 The initial seven LGAs locked down on 23 June 2021 — Bayside, City of Sydney, Canada Bay, Inner West, Randwick, Waverley and Woollahra — were declared a Commonwealth hotspot from 23 June 2021 to 9 July 2021.

45 Check the Commonwealth-declared hotspots webpage, as some of the regional LGAs were declared a hotspot at a later date.

46 This followed the announcement on 15 July 2021 by the Victorian Premier, Daniel Andrews, that Victoria would enter a five-day lockdown from 11:59pm on Thursday 15 July 2021 until 11:59pm on Tuesday 20 July 2021.

47 This followed the announcement on 15 July 2021 by the Victorian Premier, Daniel Andrews, that Victoria would enter a five-day lockdown from 11:59pm on Thursday 15 July 2021 until 11:59pm on Tuesday 20 July 2021.

48 Although payments will be paid even where the lockdown has been imposed by a state or territory government for a period of less than seven days, Services Australia previously advised that payment will be made in arrears on application to Services Australia seven days after the commencement of the lockdown.

12 August 2021

  • SME & family business
  • Stimulus measures