NSW 2021 COVID-19 Business Grant – full guidelines released

The high-level summary

The good news is as follows:

• Business Grants of $7,500 can be claimed for businesses that have suffered a decline in turnover of 30% or more due to the Public Health restrictions and rising to $15,000 if the decline in turnover was 70% or more;
• Claims can now be made on the Service NSW website;
• Businesses located anywhere in NSW can claim;
• The claim process is relatively straight forward and similar to that for previous NSW Covid support and relief; and
• Businesses can claim both the Business Grant and under the newer Jobsaver scheme which covers the period from 18 July 2021. It is expected that the business qualification criterion under Jobsaver will be the same as those for the Business Grant.

However, the qualification and entitlement conditions are narrower and much more complex than the previous announcements revealed. For example, for the majority of small to medium enterprises:

• Qualification requires the business to have experienced a decline in turnover of 30% or more during a minimum two-week period from 26 June 2021 to 17 July 2021 compared to the same period in June and/or July 2019;
• It also requires them to maintain their employee headcount as at 13 July 2021 until at least 31 July 2021; and
• The Business Grant is a one-off payment to reimburse for business costs incurred from 1 June to 17 July 2021. 

Qualification – the business entity

Business entities such as operating businesses, non-employing sole traders and not-for-profit organisations can claim.  Insolvent businesses, bankrupt individuals, government agencies and entities primarily earning passive income such as rents, interest and dividends cannot claim.

A business entity can claim if they have the following features:

• an ABN registered in New South Wales, or they can demonstrate it was physically located and operating in New South Wales, as at 1 June 2021;
• total annual Australian wages of $10 million or less as at 1 July 2020 as reported to Revenue NSW for payroll tax purposes;
• an aggregated annual turnover (based on the ATO’s income assessment concept) of between $75,000 and $50 million for the year ended 30 June 2020; and
• maintain their Employee Headcount of full time, part time and or casual staff who they have employed for more than 12 months as at 13 July 2021, until at least 31 July 2021. The headcount maintained must be of “employees” per employment law but it is not  breached where employees voluntarily resign and are not replaced.

The grant entitlement and turnover tests

Multiple businesses under a single ABN are only eligible for one grant. Eligible businesses may only receive one grant tier from the following:

• $7,500 (tier one): Businesses that have experienced a decline in turnover of 30% or more, due to the NSW Public Health Orders that restricted movement and gathering from 26 June 2021, will be eligible for a grant of $7,500.
• $10,500 (tier two): Businesses that have experienced a decline in turnover of 50%, due to the Public Health Orders, will be eligible for a grant of $10,500.
• $15,000 (tier three): Businesses that have experienced a decline in turnover of 70% or more, due to the Public Health Orders, will be eligible for a grant of $15,000.

The decline is determined by comparing turnover during a minimum two-week period from 26 June to 17 July 2021 with the same period in June and/or July 2019. The default measure of turnover will be from amounts reported in the BAS.

Southern border businesses

The Business Grant conditions recognise that businesses in Southern NSW were affected by lockdowns in Victoria that commenced on 27 May 2021. 

Where it was due to the relevant public health orders either in NSW or Victoria, those businesses determine their turnover decline by comparing their turnover during a minimum two-week period from 27 May to 17 July 2021 with the same period in May and/or June and/or July 2019. A Southern Border business is located or operating in the Local Government Areas of Albury, Balranald, Berrigan, Bega Valley, Edward River, Federation, Greater Hume Shire, Hay, Murray River, Murrumbidgee, Snowy Monaro, Snowy Valleys and Wentworth.

Claiming the business grant - highly impacted industries

Separate claim criteria are in place for business in highly impacted industries versus those who are not. The claim conditions list more than 80 highly impacted industries with their ANZSIC code. Typically, a business will have previously self-selected its most applicable ANZSIC code, for example, when they applied for their ABN. The highly impacted industries include most retailing and various food services, accommodation, entertainment, arts, health, and personal services businesses.

Highly impacted industries are not required to provide evidence of their decline in turnover at the time of claiming.  Rather, they are required to:

• Submit an Australian Income Tax Return or Assessment or other documentation to demonstrate their business had an aggregated annual turnover of more than $75,000 for the year ended 30 June 2020;
• Make declarations of four qualification conditions being their employee headcount at 13 July 2021, that they will maintain that headcount until at least 31 July 2021, they have eligible expenses for which no other government support is available and they are not eligible for the Commonwealth COVID-19 Disaster Payment (if they are self-employed);
• Provide details of their Independent Practitioner for possible compliance checking (being a qualified accountant, registered tax agent or a registered BAS agent) for possible compliance checking; and
• Lodge other supporting document after the claim if required by Revenue NSW.

A business operating in one of the highly impacted industries that applies for the $15,000 (tier three) payment will initially receive a payment of $10,500 if they meet the requirements. To receive the remaining $4,500 payment, they will be required to submit evidence in the form of a letter from an Independent Practitioner that they:

(a) had total Australian wages of $10 million or less as at 1 July 2020; and

(b) have experienced the required decline in turnover over the relevant period.

Claiming the business grant – other industries

A business operating outside the highly impacted industries needs to:

• Submit an Australian Income Tax Return or Assessment or other documentation to demonstrate their business had an aggregated annual turnover of more than $75,000 for the year ended 30 June 2020;
• Make declarations that they meet each of the four qualification conditions discussed above; and
• Submit a letter from an Independent Practitioner that they:

(a) Had total Australian wages of $10 million or less as at 1 July 2020;

(b) Have experienced the required decline in turnover over the relevant period, and

• lodge other supporting document after the claim if required by Revenue NSW.

Alternative circumstances

Business that were not operating at critical dates, businesses that do not lodge a BAS and businesses whose comparative turnover was not representative of their usual or average turnover are not automatically precluded from applying for the Business Grant. They should contact Service NSW to discuss alternative means of satisfying the evidentiary conditions.

Expenses claimable under the business grant

The business grant is a reimbursement of costs incurred from 1 June to 17 July 2021 which may include, but are not limited to, the following:

(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.

Evidence of the incurred expenses does need to be submitted at the time of claiming but may be required by Revenue NSW when it reviews the claim.

Claim deadline

Claims must be made before 11:59PM on 13 September 2021.  Qualifying businesses will also be able to apply for funding under the Jobsaver scheme which will commence from 18 July 2021.  The full claim process for the Jobsaver scheme is yet to be announced.

Income tax

The Business Grants received from the NSW Government are exempt from income tax.

What to do next

Mazars has summarised all the relevant conditions for qualification for the Business Grant, but the regular changes to the scheme suggest it is still being developed.  For businesses that wish to claim themselves, the links to the Service NSW website are:

Guidelines 

Terms & Conditions

Mazars can advise you on qualification and your entitlements in your business circumstances. We can assist you to assemble the supporting evidence including preparing the Independent

Should you have any questions, please contact your usual Mazars advisor, the author, or if you require assistance with claims or want to know more, please contact your local office below.

Author: Stephen Baxter

Published: 21/07/2021

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