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Are Victorian businesses getting the short COVID-19 support stick?

Publication date: 30 Sep 21 | Source: THE TAX INSTITUTE

SYDNEY, 22 September 2021: As restrictions and lockdowns due to COVID-19 continue to impact businesses and with economic support rolled out on a state-by-state basis, The Tax Institute’s Senior Advocate, Robyn Jacobson, CTA, has raised concerns around whether the COVID-19 support measures designed by each state government and co-funded by the Commonwealth Government present unfair treatment for business owners.

“As states design their own economic support packages, we’re seeing disparities in the approach taken across borders and it can be the difference between a small boost and a genuine lifeline,” Robyn said.

“Of course, we all know how complicated and dynamic the situation is and state governments are providing support they deem both suitable for their business owners and feasible to rollout and maintain with regard to budgetary constraints. However, given these programs are co-funded by the Commonwealth and there may be a need for similar programs on a long-term or recurring basis, the question has to be asked: Is the support being fairly distributed to businesses across different jurisdictions?”

Assistance available from June to September 2021: Sydney vs Melbourne business


 

NSW COVID-19 Business Grant* (26 June to 17 July)

NSW COVID-19 JobSaver payment1 (10 weeks2 from 18 July to 26 September)

VIC Business Costs Assistance Program Round Two + Round 33

Payroll $10m**

VIC Business Costs Assistance Program Round Four (2 weeks from 2–16 September) + 2 weeks from 17–30 September

Difference between States

Annual payroll $200,000

$15,000 (assumes 70% DIT)

$1,538 per week × 10 = $15,380

$7,000 + $2,800

$2,800 per week × 4 = $11,200

NSW: $30,380

VIC: $21,000

Diff: $9,380

Annual payroll $500,000

$15,000 (assumes 70% DIT)

$3,846 per week × 10 = $38,460

$7,000 + $2,800

$2,800 per week × 4 = $11,200

NSW: $53,460

VIC: $21,000

Diff: $32,460

Annual payroll $1 million

$15,000 (assumes 70% DIT)

$7,692 per week × 10 = $76,920

$7,000 + $2,800

$5,600 per week × 4 = $22,400

NSW: $91,920

VIC: $32,200

Diff: $59,720

Annual payroll $3 million

$15,000 (assumes 70% DIT)

$23,076 per week × 10 = $230,760

$7,000 + $2,800

$8,400 per week × 4 = $33,600

NSW: $245,760

VIC: $43,400

Diff: $202,360

Annual payroll $10 million

$15,000 (assumes 70% DIT)

$76,923 per week × 10 = $769,230

$7,000 + $2,800

$8,400 per week × 4 = $33,600

NSW: $784,230

VIC: $43,400

Diff: $740,830

Annual payroll $20 million

$15,000 (assumes 70% DIT)

$153,846 per week (capped at $100,000) × 10 = $1,000,000

 

 

NSW: $1,015,000

VIC: Nil

“For many businesses, the Victorian program appears to be less generous, and is also restricted to particular industries. JobSaver, on the other hand, is available to any business or not-for-profit organisation that experiences a decline in turnover of 30% or more and meets other eligibility conditions,” Robyn said.

“Given the uncertainty of the COVID-19 situation for businesses, it’s vital to ensure appropriate, ongoing support for businesses of all sizes and in all states.”

NSW vs Victoria: economic support comparison

Hypothetically, two identical businesses, one operating in NSW, the other in Victoria, may be eligible for support in their respective state. However, the practical reality of that support differs vastly for each.

 

NSW Business

Victorian Business

COVID-19 Support Program

COVID-19 JobSaver Payment

Small Business COVID Hardship Fund

Business Costs Assistance Program Round Four

Support amount

Employing business: $1,500 to $100,000

Non-employing business: $1,000

(Higher amounts are available for larger tourism, hospitality and recreation businesses)

$20,000

 

Business with no payroll or an annual payroll below $650,000: $2,800

Business with an annual payroll between $650,000 and less than $3 million: $5,600

Business with an annual payroll between $3 million and $10 million: $8,400

Payment frequency

Weekly payment (paid fortnightly) (applications can be made from 26 July 2021 to 18 October 2021)

One-off

 

 

 

Weekly payment (paid fortnightly) (broadly, until 30 September 2021)

Threshold

Aggregated turnover of $75,000 to $250m for 2019–20

Victorian payroll up to $10 million in 2019–20

Victorian payroll up to $10 million in 2019–20 on an ungrouped basis

Decline in turnover

≥ 30% from 26 June 2021

≥ 70% Minimum 2-week period from 27 May 2021 to 10 September 2021

Must have been eligible for the Business Costs Assistance Program Round Two and the Business Costs Assistance Program Round Two July Extension, which state the business “must have incurred direct costs”* as a result of COVID lockdowns and “cannot predominately operate remotely”.

Other eligibility requirements

  • Maintain 13 July 2021 headcount
  • Capped at 40% of NSW Weekly Payroll
  • Business costs incurred since 26 June 2021
  • Registered for GST on and from 28 July 2021
  • Available only if ineligible for other key COVID-19 Vic Govt business grant programs announced since 27 May 2021
  • Operating in an eligible industry sector listed in the Eligible ANZSIC classes4
  •  Registered for GST on and from 27 May 2021
 

Program end

Scheduled to end on 18 October 2021

Ended on 10 September 2021

To 30 September 2021 (but depends on lockdown dates in regional locations)

*As per business.vic.gov.au, this includes booking cancellations, utilities, wages, paid leave for staff unable to attend work, rent or the loss of perishable good or any other direct costs affecting the operation of the business related to the May-June 2021 COVID-19 restrictions.

“If the support program was funded only by the respective state government, like lockdown rules, it is the prerogative of any state government to set their own policy. However, while these support programs are administered by state government, they are co-funded by the Commonwealth. So it is appropriate to consider, on a national level, whether business owners in different jurisdictions are being treated equally. Victorian businesses are impacted just as much as those in NSW, if not more so, given the past five lockdowns in the southern state, so equitable treatment is paramount and just,” Robyn said.

“This support has been a vital lifeline for our business community. It’s absolutely worth getting it right and worth planning for the long-term. This won’t be our last crisis, so eighteen months into the pandemic with the benefit of hindsight, we need to design a sustainable, scalable and appropriately targeted framework that will serve us should we ever need it again.

“In the meantime, the professional tax and accounting bodies, including The Tax Institute, have been working with the NSW government to refine its approach, and I’d encourage other state governments to have those conversations as well. We are the boots on the ground, and we are only too happy to assist.”

 

For more information, please contact:

Kelly Emmerton – The Tax Institute               kellyemmerton@taxinstitute.com.au                    02 8223 0029

 

 

1 Paid fortnightly.

2 In addition to the COVID-19 Business Grant, 10 weeks of JobSaver payments represents the comparative period for which the VIC Business Costs Assistance Program runs, from June to September.

3 A business that is eligible for the VIC Business Costs Assistance Program Round Two was not eligible for the VIC Small Business COVID Hardship Fund.

4 Limited to the following industries: Non-essential retail, Hospitality, Tourism, Transport, Events and related services, Services and education, Health care and social assistance.