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09 Sep 2021 COVID-19 support

Update from Senior Advocate

COVID-19 support measures

Tax-free treatment of state government grants and support payments

Some government support payments received by businesses impacted by the COVID-19 restrictions and lockdowns are not subject to income tax. These payments are non-assessable non-exempt (NANE) payments for tax purposes.

A payment will be NANE income if it meets the following three criteria:

  1. The payment is received under an eligible State or Territory grant or Commonwealth support program.
  2. The business has an aggregated turnover of less than $50 million in the income year in which the payment was received.
  3. The payment was received in the 2020–21 or 2021–22 financial year for eligible State or Territory grants or the 2021–22 financial year for eligible Commonwealth programs.

The NANE income treatment of these payments under s 59-97 of the ITAA 1997 is effected only by a ministerial declaration by legislative instrument. Not all payments may be covered yet by a ministerial declaration.

Deductions for expenses incurred by businesses receiving government support payments that are non-taxable

The ATO has provided guidance for businesses that incur expenses that are related to getting a government grant or payment that is non-taxable. Such expenses may include costs associated with the application process, such as accounting fees charged to apply for a grant, and expenses incurred to satisfy an eligibility requirement of the grant. These expenses are non-deductible under s 8-1(2)(c) because they are incurred in gaining or producing NANE income.

Where an expense is incurred by a business:

  • Solely to get a non-taxable government grant — a deduction cannot be claimed for this expense.
  • Both to gain assessable income and to get a non-taxable government grant — a deduction can be claimed only for the part of this expense that relates to gaining the assessable income. A deduction cannot be claimed for the part that relates to getting the non-taxable government grant. There is no set way to work out the part of the expense that relates to each purpose, but it should be worked out on a fair and reasonable basis.

Further information is available from the ATO website.

Tax Institute summary of State and Territory 2021 COVID-19 business support measures

We have published a useful summary that sets out the key features and conditions of the State and Territory COVID-19 financial support measures currently available to businesses across Australia.

Our summary of these measures will be updated weekly, as the health and economic situation remains very fluid.

Download the summary here.

NSW COVID-19 support measures

The NSW Government COVID-19 support package includes:

Support available What is it? How much Eligibility
COVID-19 Business Grant

A one-off payment to help businesses with cashflow support for the first 3 weeks of lockdown

Helps cover business costs incurred from 1 June 2021 to 17 July 2021

Program closes on 13 September 2021

$7,500 to $15,000 depending on the decline in turnover

  • A decline in revenue of 30% or more in a minimum 2-week period from 26 June 2021 to 17 July 2021
  • Aggregated annual turnover of $75,000 to $50 million (inclusive)
  • Annual Australian wages up to $10 million
  • Employing businesses: must maintain their 13 July 2021 employee headcount
Apply for the 2021 COVID-19 Business Grant here
JobSaver 

Fortnightly payments to help maintain employee headcount (as at 13 July 2021) and provide cashflow support to businesses

Helps cover business costs incurred from 18 July 2021

Program closes on 18 October 2021

  • Employing businesses: 40% of their NSW weekly payroll, with payments between $1,500 and $100,000 per week 
  • Non-employing businesses: $1,000 per week
  • A decline in revenue of 30% or more in a minimum 2-week period from 26 June 2021
  • Aggregated annual turnover between $75,000 and $250 million (inclusive)
  • Employing businesses: must maintain their 13 July 2021 employee headcount
  • Non-employing businesses: Business must be the primary income source for a person associated with the business
Apply for JobSaver here
JobSaver extension for larger businesses in tourism, hospitality and recreation industries

Can apply from 26 August 2021 (backdated to 18 July 2021) to 18 October 2021

Applications will be manually assessed

Aggregated annual turnover of:

  • More than $250m to $500m: $300,000 per week*
  • More than $500m to $1 billion: $500,000 per week*
  • Aggregated annual turnover of:
  • More than $250m to $500m: ≥ 50%
  • More than $500m to $1b: ≥ 70%
  • Minimum 1-month period within the lockdown (commenced 26 June 2021) compared with the same period in 2019 or another agreed period
  • Maintain headcount from the day immediately prior to the month they first experienced the required decline in turnover
  • Capped at 40% of NSW Weekly Payroll

Apply for JobSaver here

COVID-19 Micro-business Grant

A fortnightly payment for businesses with a turnover between $30,000 and $75,000 (exclusive)

Covers business costs incurred from 1 June 2021

Program closes on 18 October 2021
$1,500 per fortnight
  • A decline of revenue 30% or more in a minimum 2-week period from 26 June 2021
  • Aggregated annual turnover between $30,000 and $75,000 (exclusive)
  • Employing businesses: must maintain their 13 July 2021 employee headcount
  • Non-employing businesses: Business must be the primary income source for a person associated with the business

Apply for the 2021 COVID-19 Micro-business Grant here

Small business fees and charges rebate

A digital voucher that 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

Program closes on 30 June 2022
Single $1,500 rebate, but can make multiple claims up to the $1,500 cap
  • Total Australian wages below NSW payroll tax threshold of $1.2 million
Payroll tax deferrals Businesses have the option to defer their annual reconciliation and certain payroll tax payments. Interest free repayment plans for up to 12 months are available

 

Deferral of the 2020–21 annual reconciliation (due by 28 July 2021), as well as payroll tax payments due on 7 August and 7 September, until 7 October 2021

Any NSW business liable for payroll tax 

More information can be found on the Revenue NSW website
Payroll tax reduction A 25% reduction to help reduce overheads for eligible businesses Eligible employers will receive a 25% reduction in their 2021–22 payroll tax liability if they have experienced a 30% decline in turnover
  • A decline in turnover of 30%
  • For NSW businesses with grouped Australian wages of no more than $10 million
More information can be found on the Revenue NSW website
Gaming Machine Tax deferrals Gaming machine tax deferral options for clubs and hotels
  • Clubs: deferral of the August quarter until 21 December 2021
  • Hotels: deferral of the June and September quarters until 21 January 2022

All NSW clubs or hotels liable for gaming machine tax

More information can be found on the Revenue NSW website

 *Fortnightly payments will be backdated to the start of the month in which the business first experienced the required decline in turnover on or after the commencement of JobSaver on 18 July 2021.

Victorian COVID-19 support measures

Small Business COVID Hardship Fund

The Victorian Government’s Small Business COVID Hardship Fund assists eligible small and medium businesses:

  • whose operations have been severely impacted by COVID-19 restrictions that have been in place since 27 May 2021
  • that have experienced at least a 70% reduction in turnover as a result of the COVID-19 restrictions
  • that are ineligible for other key COVID-19 Victorian Government business grant programs that have been announced since 27 May 2021.

The program offers grants of $20,000 to eligible small and medium businesses, including employing and non-employing businesses. This program will allow more businesses, who have previously not received support, to receive financial relief now.

More information on the Victorian Government’s support measures can be found here.

Queensland support measures

2021 COVID-19 Business Support Grants for lockdown-impacted businesses in Queensland

A joint Queensland and Australian Government support package for Queensland businesses has been announced. The package includes support for non-employing sole traders and expands on support for eligible small and medium businesses, and large tourism and hospitality businesses.

Successful applicants will receive the total value of the boosted grants ranging from $1,000 to $30,000 depending on the size of their annual payroll.

More information on the Queensland Government’s support measures can be found here.

ACT support measures

COVID-19 economic support for business

The ACT Government is delivering a range of measures to support local business and industry during the COVID-19 pandemic:

  • Small business support schemes
  • Financial support for local tourism industry
  • Food business registration, outdoor dining and liquor licencing fee waivers
  • Payroll tax waivers, deferrals and exemptions.

More information on the ACT’s Government’s support measures can be found here.

Supporting more small and medium sized business to access funding

On 25 August 2021, the Government announced that it is providing additional support to small and medium sized businesses (SMEs) who continue to deal with the economic impacts of the COVID‑19 crisis by expanding eligibility for the SME Recovery Loan Scheme.

The Government will remove requirements for SMEs to have received JobKeeper during the March 2021 quarter or to have been a flood-affected business in order to be eligible under the SME Recovery Loan Scheme.

SMEs who are dealing with the economic impacts of the coronavirus with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.

Other features of the SME Recovery Loan Scheme include:

  • The Government guarantee will be 80% of the loan amount.
  • Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
  • Loans can be used for a broad range of business purposes, including to support investment.
  • Loans may be used to refinance any pre-existing debt of an eligible borrower, including those from the SME Guarantee Scheme.
  • Loans can be either unsecured or secured (excluding residential property).

The loans will be available through participating lenders until 31 December 2021.

More information can be found here.

Toolkit for accounting and tax practitioners

On 28 July 2021, the NSW Government and the Australian Government announced additional financial support for businesses and individuals affected by the current COVID-19 measures.

Accountants and tax practitioners are on the frontline helping businesses and individuals understand the support available to them.

This toolkit contains a downloadable frequently asked questions (FAQs) document to help you understand the NSW financial support measures available.

The toolkit is now available on the NSW Government website. Scroll to the bottom where it says ‘Stakeholder toolkits’.

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