NSW 2021 COVID-19 Jobsaver – The current state of play

The High Level Summary

The good news is as follows:

• Payments of 40% of weekly payroll for work performed in NSW can be claimed for businesses that have suffered a decline in turnover of 30%.
• Payments will range from $1,500 to $100,000 per week and will be paid fortnightly.
• Claims can now be made on the Service NSW website.
• Businesses located anywhere in NSW can claim, and
• Businesses can claim the Jobsaver payment for payroll and expenses incurred from 18 July 2021 in addition to the Business Grant which reimburses expenses incurred during the period from 1 June to 17 July 2021.

The two critical qualification tests that most businesses will need to focus on, are:

• The decline in turnover of 30% or more is due to Public Health restrictions, and
• Maintenance of their Employee Headcount as at 13 July 2021 for as long as they continue to receive Jobsaver payments. 

Each of these critical tests is discussed in detail below.

Qualification – the Business entity itself

Business employers such as operating businesses and not-for-profit organisations can claim. Major banks, certain tertiary education institutions, insolvent businesses, bankrupt individuals, government agencies and entities primarily earning passive income such as rents, interest and dividends cannot claim. It is not known at this stage whether entities genuinely carrying on independent, viable trading enterprises with employees are still eligible to claim even if the passive income they derive amounts to more than 50% of total income.

A business entity can claim if it has the following features:

• An ABN registered in New South Wales, or it can demonstrate it was physically located and operating in New South Wales, as at 1 June 2021, and
• A national aggregated annual turnover (based on the ATO’s income assessment concept) of between $75,000 and $250 million for the year ended 30 June 2020.  Aggregated annual turnover means the annual Australian turnover of the business as well as the annual Australian turnover of any business that is "connected with you" or any business that is an "affiliate" for the year ended 30 June 2020.

Jobsaver is not restricted to entities with Australian payroll below $10m unlike most other NSW business support schemes.

The Decline in Turnover Test

The decline in turnover of 30% or more must be due to the NSW Public Health movement and gathering restrictions.  Certain businesses can prove that easily as they have been highly impacted by the restrictions because they have been required to, in effect, shut their doors during the lockdowns. Other businesses will need to be able to demonstrate, when their claim is reviewed, that their 30% turnover decline has been caused by the movement and gathering restrictions in NSW. 

The NSW Government has provided minimal guidelines regarding when the claimed fall in turnover will be accepted as due to the restrictions. There has been no comment discerning when a fall in turnover is due to the restrictions in NSW versus those in other states or due to the incidence of COVID-19 in other countries for example. It appears, with the exception of turnover declines caused by structural changes, acquisitions and divestments, that the precise and main cause of claimant’s turnover decline is not currently an area of close scrutiny.

The turnover is the GST turnover being the ordinary income derived in the ordinary course of running a business.  It will be measured usingthe accounting basis that is adopted for the BAS, being either accruals or cash.  It is important to note that it is not restricted to income derived in NSW. 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.

The turnover decline will be measured by comparing the turnover, during a minimum two-week period from 26 June 2021 and due to end on 28 August 2021, to the turnover during:

• The same period in 2019, or
• The same period in 2020, or
• The two week period immediately before the lockdown commended (11-25 June 2021).

Maintenance of the Employee Headcount

The business will be required to declare that it will maintain its Employee Headcount as at 13 July 2021 for as long as its continues to receive Jobsaver payments. The headcount is the total number of persons:

• Employed in New South Wales.
• Who are permanent (full time or part time) or casual staff, and
• Who have been employed by the business for more than 12 months as at 13 July 2021.

A business will maintain its employee headcount if it does not take active steps to end the employment relationship with its employees. An employee has the same meaning as its ordinary or common law meaning. Employees who have been stood down are still included in the headcount as long as their employment has not been terminated.  Casual employees are included in the headcount if they have been employed more than 12 months.  The headcount does not include independent contractors.  While still to be confirmed, it also does not appear to include an employee on a fixed term contract that terminates during the period from 13 July 2021.

Reductions after 13 July 2021 resulting from circumstances outside the control of the employer (such as voluntary resignations, retirement or death of an employee) will not be taken as a reduction in the Employee Headcount. The employer is not required to replace those employees.

All claiming businesses are required to notify Service NSW if, due to their actions, their Employee Headcount declines over the period that Jobsaver payments are received. While it is still to be confirmed, it does appear that payments received by a business for the period until immediately before the Employee Headcount declines will not be clawed back by Service NSW if the business fulfils the notification process above.

Applying for Jobsaver

Service NSW has recently changed the application process for smaller businesses in Highly Impacted Industries as opposed to all other applicants. Each are discussed below.

Highly Impacted Industries applying for weekly payments of $10,000 or less

The Jobsaver claim conditions list more than 100 Highly Impacted Industries with their ANZSIC code. Typically, a business will have previously self-selected its most applicable ANZSIC code, for example, when it applied for its ABN. The Highly Impacted Industries include most retailing and various food services, accommodation, entertainment, arts, health, and personal services businesses.

A business in a Highly Impacted Industry applying for weekly payments of $10,000 or less is not required to provide evidence of its decline in turnover at the time of claiming. Rather, the business is required to:

• Submit an Australian Income Tax Return or other documentation to demonstrate that the business had an Australia aggregated annual turnover of between $75,000 and $250 million for the year ended 30 June 2020.
• If it does not have employees, declare the business is the primary income source for the owner of the business
• Declare it has experienced the required decline in turnover.
• If it has employees, make declarations of the following:
• Provide details of its qualified accountant, registered tax agent or a registered BAS agent for possible compliance checking,
• Provide evidence of Weekly Payroll being its most recent BAS/IAS lodged prior to 26 June 2021 with a W1 amount reported (refer Calculating the Jobsaver Payment below), and
• Lodge other supporting document after the claim if required by Revenue NSW.

• Its Employee Headcount at 13 July 2021,
• It will maintain that headcount for the period that Jobsaver payments are being received, and
• It will notify Service NSW if there is any reduction in Employee Headcount during the period due to circumstances outside of its control.

Highly Impacted Industries claiming more than $10,000 weekly and all other applicants

A business in a Highly Impacted Industry that is applying for Jobsaver payments of more than $10,000 per week and applicants in all other industries need to:

• Submit an Australian Income Tax Return or other documentation to demonstrate that the business had Australian aggregated annual turnover of between $75,000 and $250 million for the year ended 30 June 2020
• If it does not have employees, declare the business is the primary income source for the owner of the business
• Submit a letter from its qualified accountant, registered tax agent or a registered BAS agent that it experienced the required decline in turnover over the relevant period.  Note that currently, the Independent Practitioner’s signature must be a wet or scanned signature and cannot be an electronic signature via AdobeSign or similar,
• Provide evidence of Weekly Payroll being its most recent BAS/IAS lodged prior to 26 June 2021 with a W1 amount reported (refer Calculating the Jobsaver Payment below), and
• Lodge other supporting document after the claim is lodged if required by Revenue NSW.

• If it has employees, make declarations of the following:
  • Its Employee Headcount at 13 July 2021,
  • It will maintain that headcount for the period that Jobsaver payments are being received, and
  • It will notify Service NSW if there is any reduction in Employee Headcount during the period due to circumstances outside of its control.

Calculating the Jobsaver Payment

At this stage the payments will be based on average Weekly Payroll as submitted in the application.  The stipulated basis for calculating average Weekly Payroll is to:

• Refer to the W1 figure inthe most recent BAS/IAS for the 2021-21 financial year that was provided to the ATO before 26 June 2021
• Ensure that W1 figure excludes superannuation contributions, amounts subject to salary sacrifice, interest or dividends
• Deduct amounts of wages or salaries for workers who usually worked or were based outside of NSW
• Deduct amounts that have been withheld on behalf of contractors under voluntary agreements, and
• Convert that to a weekly amount.

If a W1 figure is not reported in the BAS/IAS, the business will be required to lodge the following documents from which the average Weekly Payroll average is determined:

• For businesses that lodge a BAS without a W1 amount – its 2019-20 annual payroll tax reconciliation return and copies of payroll reports filed with the ATO under Single Touch Payroll (STP) for the periods April and May 2021, and
• For businesses that do not lodge a BAS - copies of payroll reports filed with the ATO under Single Touch Payroll (STP) for the periods April and May 2021.

Applicants declare their Weekly Payroll and are not required to calculate the Jobsaver payment itself.

Non Employing Businesses

Non-employing businesses, such as non-employing sole traders, can apply for payments of $1,000 per week for the period from 18 July 2021 for the duration of the restrictions. They have a series of other conditions including a declaration that the business is the primary income source for the owner and that they have not received the Commonwealth COVID-19 Disaster payment since 18 July 2021.

It appears, but is yet to be confirmed, that a non-employing business will not include a company whose sole employee is the owner of its shares. Provided the shareholder has a pre-existing employment contact enforceable under the Fair Work legislation, such a business should be able to claim a minimum of $1,500 per week.

Corporate or Family Groups

Subject to the turnover thresholds, there appears to be nothing to prevent applications being lodged by more than one entity in a corporate or family group.  Further, there do not appear to be restrictions preventing such groups from claiming:

• 40% of Weekly Payroll for the group entity that employs staff, and
• $1,000 per week for the other entities that have experienced the 30% decline in turnover but who do not employ staff.

It has been confirmed that where an entity is part of a GST Group, it will calculate its GST turnover as if it was not part of a Group. Supplies made by one group member to another will be included in the GST turnover for the decline in turnover test.

Alternative Circumstances

Businesses that were not operating at critical dates, whose comparative turnover was not representative of their usual or average turnover, who otherwise do not meet the eligibility criteria or who cannot provided the specified supporting evidence are not automatically precluded from receiving Jobsaver payments. They should contact Service NSW to discuss alternative means of satisfying eligibility and the evidentiary conditions. It is unlikely that general economic downturn, hardship or fairness will be accepted as reasons for eligibility for those who do not meet the prescribed conditions.  Reaching a decision maker at Service NSW is very difficult at the moment. Businesses may need to consider lodging an explanation of their special circumstances with their application rather than attempting to contact and to achieve resolution from Service NSW before applying.

Expenses claimable under Jobsaver

The Terms and Conditions indicate that the Jobsaver payment is a reimbursement of costs incurred from 18 July 2021 until at least 28 August 2021 that enable the employer to maintain its NSW Employee Headcount including, but not limited to, the following:

(a) Business operating expenses, such as salary and wages, utilities and rent;

(b) Financial, legal or other advice;

(c) Marketing and communications;

(d) The cost of perishable goods that can no longer be used; and

(e) Other business costs necessary for business survival and employee retention.

The typical basis of calculation of Jobsaver payments, being 40% of Weekly Payroll, appears generous for many scenarios.  For example, a business may be able to receive Jobsaver payments based on the Weekly Payroll calculated for May 2021 even though it had no payroll in July and August because it has shut its doors and all employees had been stood down. Such a business should expect that Services NSW will require them to substantiate non-payroll costs equalling the amount of Jobsaver payments received. Otherwise, it is not known how Service NSW will address businesses whose actual payroll during the period of health restrictions is significantly less than the Weekly Payroll submitted with the application. 

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. Inconsistent messages are coming from Service NSW regarding whether it will require substantiation of actual expenses incurred by recipients of the lower rungs of Jobsaver payments.

Claim Deadline

Claims must be made before 11:59PM on 18 October 2021. 

Income Tax

The Jobsaver payments received from the NSW Government are exempt from income tax.

What to do Next

Mazars has summarised all the relevant conditions for qualification for Jobsaver, but the scheme has changed and can be expected to change further as the NSW Government addresses the recent COVID-19 outbreak.  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 Practitioner letter where required. 

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: 05/08/2021

All rights reserved. This publication in whole or in part may not be reproduced, distributed or used in any manner whatsoever without the express prior and written consent of the Mazars, except for the use of brief quotations in the press, in social media or in another communication tool, as long as Mazars and the source of the publication are duly mentioned. In all cases, Mazars’ intellectual property rights are protected and the Mazars Group shall not be liable for any use of this publication by third parties, either with or without Mazars’ prior authorisation. Also please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice. Content is accurate as at the date published.