Latest Federal and State government support for COVID-affected areas

By Neville Birthisel

In the wake of the current outbreak of the COVID-19 Delta variant which is ripping through NSW and surrounding states, both the NSW and Federal Governments have announced packages to support businesses and workers affected by various public health orders.

Turnover tests

Many of the grants have a turnover test component for eligibility, similar to that for JobKeeper eligibility. The turnover test compares the entity’s turnover for a minimum period of two weeks after the lockdown period started, noting that the turnover period varies for different parts of NSW.

Many of the issues and concerns that arose with the JobKeeper decline in turnover test were around the appropriateness of the comparison period:

  • What if the comparison period is not representative of normal trading operations?
  • What is the principal of the business was away or ill during that period?
  • What if the business has irregular turnover?
  • What if the business went through a restructure, merger or acquisition?

For JobKeeper, these concerns were addressed with the Alternative Decline in Turnover Tests legislative instrument. However, there is currently no such guidance for the NSW grants. Therefore, unless the entity’s situation is vanilla, there may be some confusion around how the test should be applied.

Tax treatment of grants

  • The Treasury Laws Amendment (COVID-19 Economic Response) Act 2021 amended section 59-97 of the Income Tax Assessment Act 1997 to extend the concessional non-assessable non-exempt treatment of state and territory grants provided to assist with recovery from COVID-19, to include the 2021-22 financial year. It is expected that the grants would fall within that concessional treatment, however it is important to note that the concession is only available to small business entities, or those entities that would be small business entities if the threshold were $50 million rather that $10 million, and that the minister, by legislative instrument, must declare that the grant is eligible for this concession.
  • The Federal Treasurer, in his media statement of 13 July 2021, indicated that all NSW small business grants would be tax exempt, but the legislative instrument(s) is still pending.
  • Taxpayers and their advisers should check whether the support package they are intending to access has received the concession.

A selection of available grants and supports are as follows.
Note: This article is based on information from the Service NSW website https://www.service.nsw.gov.au/covid-19. However, the situation has been evolving and so applicants are encouraged to check the website again to determine the grant or support that is right for them in their current situation.

Businesses, sole traders and small not-for-profits

2021 COVID-19 Business Grant

  • Grants of up to $15,000 for businesses, sole traders or not-for-profit organisations affected by the NSW COVID-19 restrictions.
  • The grant can be used for business costs incurred from 1 June 2021.
  • Turnover test:
    • The amount of the grant will be determined by the amount of the decline in the entity’s turnover:
    • $7,500 for a decline of 30% or more
    • $10,500 for a decline of 50% or more
    • $15,000 for a decline of 70% or more
  • Eligibility:
    • The entity must:
    • have an active Australian Business Number (ABN);
    • demonstrate that the business was operating in NSW as at 1 June 2021;
    • have had total annual Australian wages of $10 million or less as at 1 July 2020;
    • have had an aggregated annual turnover between $75,000 and $50 million (inclusive) for the year ended 30 June 2020;
    • have business costs for which there is no other government support available;
    • maintain its employee headcount as at 13 July 2021.
  • Full details are available here.
  • Applications open on 19 July 2021.

Job Saver

  • Fortnightly payments to help maintain employee headcount (as at 13 July) and provide cashflow support to businesses
  • Employing businesses:
    • 40% of weekly payroll, with a minimum payment of $1,500 per week and a maximum payment of $10,000 per week
  • Non-employing business:
    • $1,000 per week
  • Eligibility:
    • A revenue decline of over 30%
    • A turnover between $75,000 and $50 million.
  • Applications open 26 July.

COVID-19 Micro Business Grants

  • $1,500 payment per fortnight of restrictions.
  • Eligibility:
    • Micro businesses (small business or sole trader with annual turnover of more than $30,000 and under $75,000);
    • Applicants must have experienced a decline in turnover of 30%.
    • The business provides the primary income source for a person associated with the business. See the media release.
  • Applications open late July.

Payroll tax deferrals

  • Businesses can opt in to defer payments on the 2020-21 annual reconciliation return and wages paid in July and August. Interest free repayment plans for up to 12 months will be available.
  • Deferral of 2020-21 reconciliation (due 28 July) and payments due on 7 August and 7 September until 7 October 2022
  • Eligibility
    • Any business paying payroll tax.

Payroll tax concessions

  • Concessions to help reduce overheads for eligible businesses with a 30% decline in turnover.
  • 25% reduction in 2021-22 payroll tax where 30% decline in turnover for businesses with Australian wages up to $10 million
  • Eligibility
    • A revenue decline of 30%
    • For businesses with Australian wages up to $10 million

Residential and commercial landlords and tenants

Eviction moratorium

  • Targeted eviction moratorium, through to 11 September 2021, to protect residential tenants;
    • Landlords who reduce the rents of COVID impacted tenants can apply for grants of up to $1,500, or the amount of the rent reduction, whichever is lower.

Tenants in commercial or retail premises

  • Protection will be offered for impacted tenants in commercial and retail tenancies in NSW.
  • Landlords will not be able to lockout or evict impacted tenants without first going to mediation
  • Eligibility
    • Tenants must have an annual turnover of $50 million or less
    • Tenants must be eligible for either the Micro-business COVID-19 Support Grant, the COVID-19 NSW Business Grant, or the JobSaver Scheme

Landlords leasing commercial properties

  • For landlords with tenants in financial distress. Landlords with commercial properties may be eligible for a land tax concession if they provide rent reductions to their tenants.
  • Payment up to 100% of 2021 land tax available
  • Eligibility
    • For landlords who provide at least that much rental relief to tenants who are eligible for the:
    • Micro-business COVID-19 Support Grant
    • 2021 COVID-19 NSW Business Grant and/or
    • JobSaver scheme
  • Available for rent reductions made from now until 31 December 2021

Landlords leasing residential properties

  • For landlords with tenants in financial distress. Landlords with eligible properties may be eligible for a land tax concession if they provide rent reductions to their tenants.
  • $1500 grant to residential landowners to pass onto their tenants; or
  • Concession up to 100% of 2021 land tax
  • Eligibility
    • For landlords who provide at least that much rental relief
    • Tenants must have lost 25% or more of their income
    • Available for rent reductions made from now until 31 December 2021

Individuals and Households

COVID-19 Disaster Payment (Federal)

  • The amount of the payment depends on the period of a restricted movement order:
    • First and second period
    • Lost less than 20 hours work per week => $325 for each relevant period.
    • Lost 20 hours or more of work per week => $500 for each relevant period.
    • Third period and beyond
    • 15 July 2021 for people in parts of Sydney
    • 18 July 2021 for people in Greater Sydney.
      • $375 for each relevant period if the worker lost either:
        • between 8 and less than 20 hours of work per week
        • a full day of usual work* hours per week.
      • $600 for each relevant period where the worker lost 20 hours or more of work per week.
  • This payment is taxable.
  • Amounts are paid from the date of activation for an area where:
    • the area has a public health lockdown or period of restricted movement for more than 7 days; and
    • the area is a declared COVID-19 hotspot.
  • A full day of usual work is what the worker was scheduled to work but could not because of a restricted movement order. This includes not being able to attend a full time, part time or casual shift of less than 8 hours.
  • Eligibility:
    • General rules:
    • The applicant is an Australian resident or hold an eligible working visa;
    • The applicant is 17 years or older;
    • The applicant is not getting an income support payment, ABSTUDY Living Allowance, Dad and Partner Pay or Parental Leave Pay;
    • The applicant is not getting the Pandemic Leave Disaster Payment, a state or territory pandemic payment or a state small business payment for the same period;
    • The applicant lives in, works from or has visited a Commonwealth-declared COVID-19 hotspot;
    • The applicant lives in, works from or has visited a location subject to a state or territory restricted movement order;
    • The applicant had paid employment but could not attend work on or after day 8 because they were in the COVID-19 hotspot or subject to restricted movement;
    • The applicant lost income on or after day 8 and don’t have any appropriate paid leave entitlements;
    • Where claiming for a period prior to the third week of lockdown, the applicant has liquid assets of less than $10,000.
    • NSW rules:
      • Parts of Sydney
        • 1 July 2021 – 30 July 2021;
        • Applies to specific local government areas;
      • Greater Sydney
        • 4 July 2021 – 30 July 2021;
        • Additional local government areas specified;
    • Applicants don’t need to satisfy the liquid assets rule.
    • Payments may also be available to visitors to Sydney who were caught up in a COVID-19 hotspot and subject to restricted movement order as a result.
  • This payment will be available to other states and territories that have a lockdown in the future as a result of a Commonwealth declared hotspot.

Pandemic Leave Disaster Payment
Available for NSW residents who cannot work because they are required to self-isolate, or they are in quarantine.

Residents are eligible for $1,500 for each 14 day period they are required to self-isolate or quarantine.

This article is based on information from the Service NSW website https://www.service.nsw.gov.au/covid-19. However, the situation has been evolving and so applicants are encouraged to check the website again to determine the grant or support that is right for them in their current situation.

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