27 August | Updates from extension to lockdown and expansion to regional areas
With lockdown extending, Service NSW has clarified that businesses will only be eligible for the Micro-business Grant from the fortnight they first satisfy the 30% decline in turnover after 26 June 2021.
Further with lockdown being expanded to include all of NSW, the decline in turnover no longer needs to be as a result of the Greater Sydney lockdown with the Guidelines now more generally referring to the Public Health Order.
12 August | More detail and changed guidance released for 2021 COVID-19 Micro-business Grant on the Service NSW website
Updates have been made to the Service NSW website for the 2021 COVID-19 Micro-business Grant. Some of these changes include:
- Additional comparison periods provided
- Defining aggregated annual turnover to include worldwide income of the business, its connected entities and affiliates and not just national income
- Clarification on additional documentation requirements
- Allowing accountants to apply on behalf of their clients.
Full details on the Micro-business Grant incorporating all the updates are provided below.
Applications for the 2021 COVID-19 Micro-business Grant opened on 26 July 2021 and will close on 18 October 2021.
The grant provides fortnightly payments of $1,500 to eligible businesses with an with aggregated annual turnover between $30,000 and $75,000 to boost cash flow.
The NSW Government has now provided further detail on the Grant including greater clarity around the eligibility requirements and the documentation required for application.
Businesses (including sole traders) and not-for-profits will be eligible for the 2021 COVID-19 Micro-business grant if they meet the criteria below.
- have an ABN registered in NSW, or can demonstrate that they are primarily operating in NSW, on 1 June 2021.
- have an aggregated annual turnover of between $30,000 and $75,000 for the year ended 30 June 2020.
- experienced a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period within the restrictions (commenced 26 June 2021), compared to:
- the same period in 2019, or
- the same period in 2020, or
- the 2-week period immediately before the Greater Sydney lockdown commenced (12 June to 25 June 2021).
- have business costs for which there is no other government support available.
- have not applied for either the 2021 COVID-19 Business Grant or the JobSaver payment.
- for employing businesses, maintain their employee headcount from 13 July 2021 if they receive payments from the commencement of the Micro-business grant, or otherwise from the day immediately prior to the fortnight they first experienced the decline in turnover, while they continue to receive the Grant (businesses that do not maintain the declared headcount must notify Service NSW).
- for non-employing businesses, such as a sole-trader, the business receiving payments must be the primary income source for the associated person. Individuals with more than one non-employing business may only claim payments for one business. Non-employing businesses included in the aggregated turnover of an employing business are ineligible to apply.
Only one application can be submitted for a single ABN. Further, only one application is permitted where there is multiple business under a single ABN.
The 2021 COVID-19 Micro-business grant cannot be used to cover expenses for which other government support is available(such as government fees and charges that would be covered by the $1,500 small business fees and charges rebate). Where the business does have other costs that it can allocate the Micro-business grant to, it may be eligible to receive both the $1,500 small business fees and charges rebate and the Micro-business grant.
Businesses that are not eligible
A business will not be eligible if any of the following criteria apply:
- for a particular period, the entity is a non-employing business and individuals associated with the business and deriving income from the business, have received a Commonwealth COVID-19 Disaster Payment for the same period.
- the entity is a company in liquidation or provisional liquidation.
- the entity is an individual who has entered bankruptcy.
- the entity has been found to have been engaged in fraud.
- the entity primarily earns passive income (rents, interest, or dividends).
- the business registered its Australian Business Number (ABN) after 1 June 2021.
Eligible micro-businesses will receive a fortnightly payment of $1,500 to cover business expenses for the duration of the Greater Sydney lockdown.
Payments will be made fortnightly in arrears. Businesses will need to nominate the 2-week period in which they first experienced the required decline in turnover on or after the commencement of the Micro-business Grant scheme on 26 June. Once approved, payments will begin from that nominated fortnight.
What you need to apply
To apply, you will need to:
- declare that you meet the eligibility criteria.
- declare that you experienced a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period within the restrictions (commenced 26 June 2021) compared to:
- the same period in 2019, or
- the same period in 2020, or
- the 2-week period immediately before restrictions commenced (12-25 June 2021)
- If you are not on the highly impacted industries list, you must also submit evidence of this decline in turnover in the form of:
- letter from a qualified accountant, registered tax agent or registered BAS agent, or
- business bank account statement, or
- profit and loss statement from an accounting software and an annotated personal bank statement.
- Submit evidence you had an aggregated annual turnover of more than $30,000 and less than $75,000 for the year ended 30 June 2020. This can be in the form of a:
- letter from a qualified accountant, registered tax agent or registered BAS agent, or
- Business Activity Statement (BAS), or
- business bank account statement, or
- Australian tax return, or
- a profit and loss statement from an accounting software for a minimum 3-month period during the 2019-20 financial year, AND either; an annotated personal bank statement for the same period, or a 2019-20 personal income tax return.
- if you have employees, declare that you will maintain your employee headcount on 13 July 2021 if receiving payments from the commencement of the Micro-business Grant, or from the day immediately prior to the fortnight the business first experienced the required decline in turnover, for the period for which you will receive the Grant. Service NSW must be notified if the headcount declines over the payment period.
- if you do not have employees, declare that the business is the primary income source for the owner of the business.
- lodge other supporting documents as required to demonstrate you meet the eligibility criteria.
How to apply for the grant
Applications for the Grant are made through the Service NSW website and are now open until 11:59pm on 18 October 2021.
- Check you meet the eligibility criteria.
- Have your documentation and evidence ready for uploading.
Note: You cannot save and resume your application once you’ve started.
- Select the ‘Apply online’ button.
- Log in, or create your MyServiceNSW Account.
- Select and verify your identity documents.
- When your identity is verified, select ‘Continue’.
- Confirm your personal details.
- Enter your business details and answer the eligibility questions, then select ‘Next’.
- Provide information about your decline in turnover and upload your supporting documentation, then select ‘Next’.
- Enter your bank details, then select ‘Next’.
- Review your application.
- Check the declaration boxes.
- Select ‘Submit’ to complete your application.
After submitting your application, you will receive a confirmation email with your application reference number. If you do not receive this confirmation email, check your junk mail folder, and then call Service NSW on 13 77 88 if you’re still unable to locate the email.
Service NSW will review your application and contact you should they require additional information to support your application. If your application is approved, funds will be transferred to your specified bank account within 5 to 7 business days from the approval date.
Your accountant may also apply on behalf of your business, however you will need to provide a letter of authority to show that they are authorised to act on your behalf.
In limited circumstances, there are alternative rules for businesses that do not meet the standard eligibility criteria.
If one of the following circumstances applies, the business may be able to demonstrate that it satisfies the aggregated annual turnover criteria through alternative ways:
- Business commenced after June 2019 but on or before 1 June 2021 (e.g. new businesses)
- A business acquisition, disposal, or business restructure occurred that impacted the business’ turnover
- A sole trader or small partnership impacted by sickness, injury or leave.
Where one of these applies, a shorter period can be accepted to demonstrate aggregated annual turnover of more than $30,000 and less than $75,000 has been derived provided that shorter period is representative of the “normal operating environment” of the business. The turnover for this shorter period will be annualised to get an equivalent annual turnover figure for the business.
Businesses should generally use a minimum 3-month period to demonstrate turnover, and should provide:
- a BAS for at least one quarter (or 3-monthly BAS), or
- an Australian Tax Return annotated to show when the business commenced during the financial year.
Where a business does not have the evidence outlined above (e.g. because the business started between 1 January and 1 June 2021), the following may be provided as evidence of annual turnover:
- letter from a qualified accountant, registered tax agent or registered BAS agent; or
- business bank account statement for a minimum 3-month period (separate from any personal accounts), or the period for which the business has been operating if less than 3 months
- a profit and loss statement from an accounting software for a minimum 3-month period, or the period for which the business has been operating if less than 3 months, and one of the following documents
- an annotated personal bank statement for the same period, or
- a personal income tax return annotated to show when the business commenced during the financial year.
Importantly, businesses that fall under one of those three alternative circumstances will still have to satisfy the decline in turnover using the standard comparison periods.
For businesses impacted by natural disasters, they will have to provide the same information to demonstrate they meet the aggregated annual turnover requirement. However, they may also compare their turnover to the same period in 2018 in addition to the standard comparison periods.
Where a business’s ABN is not registered in NSW but the business was operating in NSW as at 1 June 2021, it will need to provide additional information. This additional information should be in the form of commercial rates notices or lease agreements. Where none of these are available, the Service NSW website lists some alternative documentation that they may accept.
Where a business operates through a trust structure, the business will be required to provide additional information to demonstrate that an aggregated annual turnover of more than $30,000 and less than $75,000 is derived through the trust, as opposed to a business linked to a trust. The Service NSW Guidelines do not specify what additional information is required for the Micro-business Grant. However, we believe that this additional information is in the form of a letter from an independent accountant which is in-line with the requirements of the COVID-19 Business Grant.
How do I determine if my business has aggregated annual turnover of between $30,000 and $75,000?
Aggregated Annual Turnover means aggregated turnover as defined in s. 328-115 of the Income Tax Assessment Act 1997 (Cth) (“ITAA 97”). Therefore it will include the worldwide turnover of the entity plus the worldwide turnover of its connected entities and affiliates – including non-Australian entities when assessing whether a business had aggregated annual turnover of more than $30,000 and less than $75,000.
This means, for example, that a small Australian subsidiary of a large multinational group may not be eligible if the worldwide aggregated annual turnover was greater than $75,000 for the year ended 30 June 2020.
Note this is a change in the aggregated annual turnover condition by Service NSW. Previously the Guidelines and Terms & Conditions on the Service NSW website specified it was “national Aggregated Annual Turnover”. Further, information dated 28 July 2021 which was provided to accounting bodies by the NSW Government specified that:
“Aggregated annual turnover means the annual Australian turnover of your business as well as the annual Australian turnover of any business that is “connected with you” or any business that is your “affiliate” for the year ended 30 June 2020.”
No guidance has been provided by Service NSW if businesses have already applied based on the original Terms & Conditions.
Annual turnover includes all ordinary income you earned in the ordinary course of running your business. It includes:
- trading stock sales,
- fees for services you provide,
- interest from business bank accounts and
- amounts received to replace business income.
The following are not included in aggregated annual turnover:
- the GST you charge on transactions,
- amounts borrowed,
- proceeds from selling business capital assets,
- certain insurance proceeds and
- JobKeeper payments.
Decline in Turnover Test – What is turnover? Do I use cash or accruals? Is it NSW turnover or national turnover of the business?
An entity satisfies the decline in turnover test if the entity’s current GST turnover for a minimum 2-week period from 26 June to 28 August 2021 falls by at least 30% compared to the relevant comparison period.
Current GST turnover has the meaning given by the Income Tax Assessment Act 1997 (Cth) and the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
For businesses that are part of a GST group, their ‘GST turnover’ will need to be disaggregated from the GST turnover reported in the group’s BAS, including the re-instatement of intra-group transactions.
A business must use the accounting method they use when preparing their BAS – i.e. if they prepare their BAS on a cash basis, then they should calculate the decline in turnover using turnover calculated on a cash basis.
The decline in turnover is calculated on all turnover of the business (i.e. national turnover) and not just NSW turnover. It should be calculated based on a minimum 2 consecutive weeks, but the period used can start midweek.
Service NSW have updated their guidance to state that the JobKeeper modifications to include gifts and exclude grants do not apply for not-for-profit organisations when calculating aggregated annual turnover or decline in turnover.
Which employees are included in the employee headcount?
Employee headcount is the number of persons who are employed in NSW who are permanent (full-time or part-time) or have been employed by the business on a casual basis for more than 12 months (long term casuals).
What is meant by maintaining employee headcount? Are employees who have been stood down included in headcount?
Maintaining employee headcount means the employer will not take active steps to end the employment relationship with their employees. Employees who have been stood down under the Fair Work Act 2009 or take leave without pay are considered employees for the purpose of headcount.
Businesses will remain eligible if their employee headcount declines for reasons outside the control of the employer, for example if employees voluntarily resign or death of an employee.
Can my business receive the 2021 COVID-19 Micro-business grant if I receive the Commonwealth COVID-19 Disaster Payment?
A business cannot receive the 2021 COVID-19 Micro-business grant for a period if it is a non-employing business and persons associated with the business, and who derive income from it, have received a Commonwealth COVID-19 Disaster Payment for the same period.
If the business is an employing business, the business may receive the 2021 COVID-19 Micro-business grant and employees may receive the Commonwealth COVID-19 Disaster Payment provided all eligibility criteria are met for each scheme.
Are there any ongoing reporting requirements to receive the fortnightly payments?
Once deemed eligible, businesses will receive automatic fortnightly payments. Businesses will not need to re-apply.
However, if their headcount has declined due to circumstances not outside their control, the business will need to notify Service NSW. They will no longer be eligible for the Grant.
My headcount has declined. What do I do?
If the reduction in employee headcount was as a result of circumstances outside the control of the employer (such as voluntary resignations, death of an employee), then you will not be taken as having had a reduction in employee headcount on 13 July (or other relevant date if not receiving the Micro-business Grant from 26 June 2021). You will still be eligible to keep receiving the Grant.
If the business reduced its employee headcount due to circumstances within the employer’s control, it will need to notify Service NSW. The business will no longer be eligible for the Grant.
What is a non-employing business?
Non-employing Business means a business that does not have employees. This may include a range of entity types, such as non-employing sole traders, partnerships, trusts or any other businesses without employees.
What additional information do Not-For-Profit organisations (NFPs) need to provide?
If you are an NFP you will need to provide all of the following:
- a copy of your constitution (or a governing document such as articles of association)
- minutes and resolutions from AGM (bi-annual meetings) for the previous 3 years
- audited financial statements for the previous 3 years.
Is the Grant assessable to the Business?
The 2021 COVID-19 Micro-business Grant is tax free for income tax purposes if the following criteria are met:
- the payment was received by the entity in the 2021–22 financial year;
- the entity carries on a business; and
- the entity has an aggregated turnover of less than $50 million for the year in which the entity receives the payment.
Most businesses which qualify for the Micro Business Grant are likely to be able to treat the grant as tax free income.