What lockdown support is available to NSW business?

If your business is adversely impacted by NSW lockdowns, support is available.

Three primary methods of financial support are available to businesses during extended lockdowns:

• Up to $15,000 through the expanded NSW 2021 COVID-19 business grants program
• Up to $100,000 in weekly JobSaver cashflow support payments, and
• NSW micro-business grants

Other support is also available through:

• NSW rent protections and grants
• NSW payroll tax deferrals and a 25% payroll tax waiver
• NSW gaming machine tax deferrals
• NSW performing arts support

If your business is in the performing arts sector, please see the NSW Performing Arts COVID support package – CreateNSW is streamlining all applications through them.

2021 COVID-19 Business Grant of up to $15,000

The COVID-19 Business Grant provides up to $15,000 to eligible businesses (including not-for-profits and sole traders) with annual wages of up to $10 million.

The value of the grant is determined by the impact of the lockdown on your turnover. Your business will need to prove a decline in turnover across a minimum 2 week period from 26 June 2021 to 17 July 2021 (or 27 May 2021 to 17 July 2021 for businesses on the NSW border with Victoria).

Eligibility

The 2021 COVID-19 business grant is available if you:

• Have an active ABN; and
• Can demonstrate that your business was operating in NSW as at 1 June 2021; and
• Had total annual Australian wages of $10m or less as at 1 July 2020; and
• Had an aggregated annual turnover between $75,000 and $50m (inclusive) for the year ended 30 June 2020 (for businesses that were not in operation for the full year or where conditions were not usual in 2019-20, see For new business and businesses where 2019-20 was not a normal year below); and
• Have unavoidable business costs from 1 June 2021 for which there is no other government support available; and
• Maintain employee headcount as at 13 July 2021 – the number of people you employed in NSW including full time, part time and long-term casuals that have been employed by the business for more than 12 months; and
• Have experienced a decline in turnover of 30% or more over a minimum 2-week period from 26 June 2021 to 17 July 2021 (27 May 2021 to 17 July 2021 for businesses on the NSW border with Victoria) compared to:
• The same period in 2019;
• The same period in 2020; or
• The 2-week period immediately before the start of the relevant lockdown test period.

Some businesses are ineligible for the grant. These include businesses predominantly earning passive income (rent, interest, or dividends), businesses owned by sovereign entities (foreign Governments), businesses in liquidation or bankruptcy proceedings, businesses that did not have an ABN as at 1 June, government agencies, local governments, banks, and universities.

For new business and businesses where 2019-20 was not a normal year

For businesses that were in operation on 1 June 2021 but:

• Were a new business that did not operate for a full year; or
• Were impacted by acquisition, disposal or restructure

you can use a 3 month period that is representative of your normal operating environment to prove your turnover. Generally, a business activity statement or income tax return will be required as evidence of turnover, or if these are not available, a letter from your accountant or bank statements can be used.

For businesses where 2019-20 was not a normal year, for example your business was impacted by the bushfires or for sole traders or small partnerships impacted by illness, you can use 2018 as your comparison period.

These alternatives apply to the 2021 COVID-19 Business Grant, JobSaver and Micro-business grant.

How to apply

Applications are made online through Service NSW and close at 11:59pm on 13 September 2021.

To apply for the grant, you will need a series of documents to evidence your application:

• An Australian Income Tax Return (or Notice of Assessment) or other documentation demonstrating your business had, or would have had, an aggregated annual turnover
• If your business is not on the highly impacted list of industries, you must supply a letter from your accountant evidencing your businesses decline in turnover
• Details of your accountant, tax agent, BAS agent
• For businesses operating outside of NSW but claiming they were operating in NSW as at 1 June:
• Commercial rates notices or lease agreements
• In the absence of rates or lease agreements – utility bills, insurance documents, supply invoices, registration papers, contractor licenses etc

Eligible expenses such as invoices may also be required if an audit is undertaken.

Common questions

How is aggregated annual turnover measured?

Aggregated turnover is generally your business's annual turnover plus the annual turnover of any business connected with you or that are an affiliate of yours. If you have any related entities that carry on a business, please contact us and we'll work with you on calculating this figure.

Annual turnover generally includes income that has been generated in the ordinary course of carrying on a business. You would normally use GST-exclusive figures for this purpose. ATO guidance suggests that JobKeeper and cash flow boost amounts would probably be ignored as part of this calculation.

How is decline in turnover measured?

In general, the concept of 'current GST turnover' is used to determine whether the business has suffered a decline in turnover of at least 30%. This turnover test includes proceeds from the sale of capital assets, GST free supplies such as exports, and supplies made between members of a GST group.

When you are calculating turnover, if your business accounts for GST on an accrual basis, you should use this method. If you account for GST on a cash basis, you should use this method.

Can I get the JobSaver and the business grant?

If your business meets the eligibility conditions, you can access both the grant and JobSaver.

If your business does not have any employees, you cannot access the grant if persons associated with the business, and who derive income from it, have applied for, or are receiving, the Commonwealth COVID-19 Disaster Payment.

If your business is in the performing arts sector, please see the NSW Performing Arts COVID support package – CreateNSW is streamlining all applications through them.

I don't employ staff, can I still get the grant?

For sole traders and other businesses without employees, you can access the grant if you meet the other eligibility criteria but only if persons associated with the business, and who derive income from it, have not applied for, and are not receiving, the Commonwealth COVID-19 Disaster Payment.

JobSaver: Cashflow Support of up to $100,000

JobSaver is a weekly payment between a minimum of $1,500 and maximum of $100,000 based on 40% of the NSW payroll payments of your business (including not-for-profits).

Eligible businesses without employees that meet the eligibility criteria (such as sole traders with no employees), will be able to access a payment of $1,000 per week.

JobSaver applies from week four of the lockdown (from 18 July for Greater Sydney) and will cease when lockdown restrictions are eased or when the Commonwealth hotspot declaration is removed.

Funding is limited to specific purposes such as salaries and wages, utilities and rent, financial and legal support, marketing and perishable goods, etc.

Eligibility

To access JobSaver, you must:

• Have an active ABN; and
• Demonstrate that your business was operating in NSW as at 1 June 2021; and
• Have an aggregated turnover between $75,000 and $250 million for the year ended 30 June 2020 (for businesses that were not in operation for the full year or where conditions were not usual in 2019-20, see For new business and businesses where 2019-20 was not a normal year above); and
• Have experienced a decline in turnover of at least 30% over a minimum 2-week period from the start of the Greater Sydney Lockdown (from 26 June 2021), compared to:
• The same period in 2019, or
• The same period in 2020, or
• The 2-week period immediately before the start of the lockdown period (26 June 2021).
• And, maintain employee headcount as at 13 July 2021 – the number of people you employed in NSW including full time, part time and long-term casuals that have been employed by the business for more than 12 months.

Some businesses are ineligible for JobSaver. These include businesses predominantly earning passive income (rent, interest, or dividends), businesses owned by sovereign entities (foreign Governments), businesses in liquidation or bankruptcy proceedings, businesses that did not have an ABN as at 1 June or backdated their ABN, government agencies, local governments, banks, and universities.

How to apply

Applications can be made online through Service NSW and close at 11:59pm on 18 October 2021.

If your business has successfully applied for the COVID-19 business grant, your business will be automatically eligible for JobSaver but will need to provide the additional information on payroll and headcount.

To apply for JobSaver, you will need the following for the business:

• Australian income tax return, Notice of Assessment or other documentation demonstrating the business had a national aggregated annual turnover of between $75,000 and $250 million for the financial year ending 30 June 2020.
• Weekly payroll – W1 amount excluding amounts withheld for contractors on the most recent BAS submitted prior to 26 June 2021 for the 2020-21 financial year, 2019-20 payroll reconciliation for those without a W1 amount (see How is the 40% of payroll calculated?)

If your business is not on the highly impacted industries list, you will also need to submit a letter from your accountant demonstrating that that you meet the decline in turnover test.

How is the 40% of payroll calculated?

Payroll is based on your most recent Business Activity Statement (BAS) lodged with the ATO prior to 26 June 2021 for the 2020-21 financial year. Use the figure at item WI, removing any amounts withheld on behalf of contractors. To determine weekly payroll, divide the amount by the number of days in the BAS period and multiply this by 7.

For businesses with employees outside of NSW, you will need to calculate the amount based on just the NSW employees using the same method you use to report on your BAS.

If your business does not submit a BAS with a W1 amount, use your 2019-20 NSW payroll tax reconciliation return. If your business does not submit a BAS, you will need to contact ServiceNSW to discuss alternatives.

Where an employer's headcount changed because of circumstances outside the control of the employer (such as voluntary resignations, death of an employee) it will not be taken as a reduction in employee headcount on 13 July. 

Common questions

I don't have employees; can I still qualify?

If your business does not have employees (such as sole traders) but meets all the other eligibility tests, you can apply for JobSaver but only if the individuals associated with and deriving income from the business have not received a Commonwealth COVID-19 Disaster Payment since 18 July 2021. You also need to ensure that the business is the primary income source for the associated person.

I have stood down my employees, do they still qualify for the headcount test?

Yes. If you have stood down your full time, part time or long-term casual employees, they are counted in the headcount. During a stand down the employment relationship remains (their role has not been terminated), the employee is not paid (unless they are taking paid leave), and they continue to accrue annual leave. See the FairWork website to clarify how and when an employer can stand down employees.

An employee has resigned, does this impact my headcount?

No. If the employee is no longer with the business due to circumstances outside of your control, such as resignation or death, this will not impact the headcount test.

If, however you forced the employee to resign or terminated their employment, this will impact on your headcount and eligibility for JobSaver and the COVID-19 business grant. Any actions taken by the business that reduce headcount will need to be reported to Service NSW.

$1,500 Micro-Business Grants

The micro-business grant provides $1,500 per fortnight to sole traders and other small businesses with aggregated annual turnover between $30,000 and $75,000. The grants are available from week one of the lockdown until restrictions are eased.

Grants are for costs incurred from 1 June 2021 including salaries and wages, utilities and rent, financial and legal costs, perishable goods, etc.

Eligibility

To access the micro-business grant, you must:

• Have an active ABN registered in NSW or can demonstrate your business was operating in NSW as at 1 June 2021; and
• Have aggregated annual turnover of more than $30,000 and less than $75,000 for the year ended 30 June 2020 (for businesses that were not in operation for the full year or where conditions were not usual in 2019-20, see For new business and businesses where 2019-20 was not a normal year above);
• Have experienced a decline in turnover of at least 30% over a minimum 2-week period from the start of the Greater Sydney Lockdown (from 26 June 2021), compared to
  • The same period in 2019, or
  • The same period in 2020, or
  • The 2-week period immediately before the start of the lockdown period
• Have business costs for which there is no other government support available; and
• Have not applied for either the 2021 COVID-19 Business Grant or JobSaver; and
• Have less than 20 full time equivalent employees at 1 June 2021; and
• If you are an employer, maintain your headcount as at 13 July 2021; and
• If you do not have employees, such as a sole trader, the business making the application is your primary source of income.

Businesses that received the $1,500 small business fees and charges rebate can apply for this grant.

If your business does not have any employees, you cannot access the grant if persons associated with the business, and who derive income from it, have applied for, or are receiving, the Commonwealth COVID-19 Disaster Payment.

Ineligible businesses include those predominantly earning passive income (rent, interest, or dividends), or businesses in liquidation or individuals in bankruptcy proceedings.

How to apply

Applications are made online through Service NSW and close at 11:59pm on 18 October 2021.

If we submit the application for you, we will provide a letter to ServiceNSW documenting your decline in turnover and aggregated annual turnover. 

If we are not submitting your application for you, you will need show evidence such as your income tax return, business activity statement, and business bank accounts.

If your business operates in another State or Territory, you will also need to evidence that your business operates in NSW (e.g., utility bills, insurance papers, supply invoices, registration papers, contractor licences).

Where your business operates through a trust structure, you will need to provide additional information to demonstrate that a national aggregated annual turnover of more than $30,000 and less than $75,000 is derived through the trust.

If your business is a not-for-profit, you will also need to provide a copy of your constitution, minutes and resolutions from your AGM for the last 3 years, and audited financial statements for the last 3 years.

Rent protections and grants

Commercial and retail rent protections are in place for rental arrears from 13 July 2021 for an initial 6 month period.

Eviction moratorium

An eviction moratorium is in place for rental arrears where a tenant has:

• An annual turnover of up to $50 million; and
• Is eligible for the Micro-business COVID-19 Support Grant, the COVID-19 NSW Business Grant and/or the Job Saver Grant.

Commercial and retail landlords will need to attempt mediation before recovering a security bond or locking-out or evicting a tenant impacted by Public Health Orders.

See the NSW Small Business Commissioner for further details.

Land tax relief

Land tax relief equal to the value of rent reductions provided by commercial, retail and residential landlords to financially distressed tenants is available for up to 100% of the 2021 land tax liability.

See Apply for COVID-19 land tax relief and Residential Tenancies Moratorium Application for rent negotiation

Payroll tax relief

Payroll tax and lodgement deadline deferred

The due date for the 2020-21 annual reconciliation has been deferred until 7 October 2021. You also have the option of deferring July and August 2021 payroll tax payments until 7 October 2021.

Previous payroll tax deferrals and payment arrangements for 2020-21 due in July 2021 have not been deferred. 

See Revenue NSW for further details.

25% payroll tax waiver for businesses between $1.2m and $10m

Businesses with Australian wages of between $1.2 million and $10 million that have experienced a 30% decline in turnover, will be provided with a 25% payroll tax waiver in 2021-22. Further details of the reduction will be available by the end of August from Revenue NSW

Gaming machine tax deferrals

All businesses paying hotel or club gaming machine tax will be able to defer the taxes for the 2021-22 financial year:

• Hotels: deferrals for June and September quarter until 21 January 2022.
• Clubs: deferrals for the August quarter until 21 December 2022.

Support for Performing Arts

The NSW Performing Arts COVID support package covers performances impacted by NSW Government Public Health Orders from 26 June 2021.

The funding amount per performance is calculated using a formula of average ticket price multiplied by the number of tickets available for sale and a specified percentage tied to the lockdown period.

To be eligible for funding, you must be one of the following:

• An eligible venue
• A producer of an eligible performance scheduled to perform at one of the eligible venues
• A promoter of an eligible performance scheduled to perform at one of the eligible venues.

See the full details and the list of eligible venues and performances here.

How to apply

Applications are made online through SmartyGrants.

What lockdown support is available?

If you can't work because you or someone in your household is impacted by COVID-19, support is available.

There are two payments accessible to individuals: the COVID-19 Disaster Payment; and, the Pandemic Leave Disaster Payment.

How to apply for support

You can apply for the COVID-19 Disaster Payment or the top-up income support payment through your MyGov account if you have created and linked a Centrelink account. Apply for the Pandemic Leave Payment by phoning Services Australia on 180 22 66.

The COVID-19 Disaster Payment is a weekly payment available to eligible workers who can't attend work or who have lost income because of a lockdown and don't have access to certain paid leave entitlements. If you are a couple, both people can separately claim the payment.

Sole traders may apply for COVID-19 Disaster Payment if you are unable to operate your business from home. However, you will not be eligible if you are also receiving a state business grant such as the NSW 2021 COVID-19 Business Grant or JobSaver.

Timing of the payment

The disaster payment is generally accessible if the hotspot triggering the lockdown lasts more than 7 days as declared by the Chief Medical Officer (you can find the listing here). From 2 August 2021, payments will apply from day one of the lockdown and will be paid in arrears once claims open (previously, the payment only applied from day 8 of a lockdown).

However, the disaster payment will also be available:

·        In NSW from 18 July 2021, to anyone who meets the eligibility criteria. The requirement to be in a Commonwealth declared hotspot has been removed and the payment will apply to anyone in NSW impacted by the lockdowns who meets the other eligibility criteria.

·        In Victoria from 15 to 27 July 2021, to anyone who met the eligibility criteria. The requirement to be in a Commonwealth declared hotspot was removed and the payment applies to anyone in Victoria impacted by the lockdowns who met the other eligibility criteria.

*Payment accessible from 23 July 2021 paid in arrears from 15 July 2021 (day 1 of the lockdown).

How much is the payment?

The COVID-19 disaster payment amount available depends on:

·        How many hours of work you have lost in the week, and

·        If the payment is on or after the third period of the lockdown.

* Eligible Victorians received the higher rate from week one of the lockdown

** These higher rates will apply from day one of any potential lockdown in the future

The payment applies to each week of lockdown you are eligible and is taxable (you will need to declare it in your income tax return).

Eligibility

The COVID-19 disaster payment is emergency relief. It is available if you:

·        Live or work in an area that is subject to a state or territory public health order that imposes restriction on movement and is declared a Commonwealth COVID-19 hotspot, or

·        Have visited an area that is a Commonwealth COVID-19 hotspot and you are subsequently subject to a restricted movement order when you return to other parts of New South Wales or interstate.

And you:

·                  Are an Australian citizen, permanent resident or temporary visa holder who has the right to work in Australia, and

·                  Are aged 17 years or over, and

·                  Have lost 8 hours or more of work or a full day of your usual work as a result of the restrictions - losing work includes being stood down by your employer, not being assigned any shifts for the week of restrictions and being unable to work from home. Losing a full day of what you were scheduled to work but could not work because of a restricted movement order includes not being able to attend a full-time, part-time or casual shift of less than 8 hours, and

·                  Don't have paid pandemic-related leave available through your employer (annual leave is not taken into account for this), and

·                  Are not receiving income support payments, a state or territory pandemic payment, Pandemic Leave Disaster Payment or state small business payment for the same period. See 'Top up' payments for those on income support below. Income support payments include Age Pension, Austudy, Carer Payment, Disability Support Pension, Farm Household Allowance, JobSeeker Payment, Parenting Payment, Partner Allowance, Special Benefit, Widow Allowance, Youth Allowance and Income Support Supplement, Service Pension or Veteran Pension from the Department of Veterans' Affairs.

A liquid assets test of $10,000 previously applied to the disaster payment but was removed from Thursday, 8 July 2021.

'Top up' payments for those on income support

A special separate $200 'top-up' payment will be made to those who currently receive an income support payment through social security, in addition to their existing payment, if they can demonstrate they have lost more than 8 hours of work and meet the other eligibility requirements for the COVID-19 Disaster Payment.

The Pandemic Leave Disaster Payment is for those who have been advised by their relevant health authority to self-isolate or quarantine because they:

·        Test positive to COVID-19;

·        Have been identified as a close contact of a confirmed COVID-19 case;

·        Care for a child, 16 years or under, who has COVID-19; or

·        Care for a child, 16 years or under, who has been identified as a close contact of a confirmed COVID-19 case; or

·        Care for a person who has tested positive to COVID-19.

How much is the payment?

The payment is $1,500 for each 14 day period you are advised to self-isolate or quarantine. If you are a couple, you both can claim this payment if you meet the eligibility criteria.

Eligibility

The Pandemic Leave Disaster Payment is available if you:

·        Are an Australian citizen, permanent resident or temporary visa holder who has the right to work in Australia; and

·        Are aged 17 years or over; and

·        Are unable to go to work and earn an income; and

·        Do not have appropriate leave entitlements, including pandemic sick leave, personal leave or carers leave; and

·        Are not getting any income support payment, ABSTUDY Living Allowance, Paid parental leave or Dad and Partner Pay. Income support payments include Age Pension, Austudy, Carer Payment, Disability Support Pension, Farm Household Allowance, JobSeeker Payment, Parenting Payment, Partner Allowance, Special Benefit, Widow Allowance, Youth Allowance and Income Support Supplement, Service Pension or Veteran Pension from the Department of Veterans' Affairs.

The payment is taxable and you will need to declare it in your income tax return.

If you are uncertain of your eligibility, talk to Services Australia.

If you are concerned about the impact of disaster relief payments on you, talk to us.

From 19 July 2021, the Government is enabling childcare services in NSW Local Government Areas subject to stay at home orders to waive gap-fees for parents keeping their children at home due to current COVID-19 restrictions. The gap fee is the difference between the Child Care Subsidy (CCS) the Government pays to a service and the remaining fee paid by the family.

The child-care gap fee waiver is only applicable where the childcare service opts in.

The Local Government Areas were expanded and now cover: City of Sydney, Municipality of Woollahra, City of Randwick, Municipality of Waverley, Bayside Council, Blacktown City Council, Blue Mountains City Council, Municipality of Burwood, Camden Council, Central Coast Council, City of Campbelltown, City of Canada Bay, City of Canterbury-Bankstown, Cumberland City Council, City of Fairfield, George's River Council, City of Hawkesbury, Hornsby Shire, Municipality of Hunter's Hill, Inner West Council, Ku-ring-gai Council, Lane Cove Council, City of Liverpool, Mosman Council, North Sydney Council, Northern Beaches Council, City of Parramatta, City of Penrith, City of Ryde, Shellharbour City Council, Municipality of Strathfield, Sutherland Shire, The Hills Shire, Wollondilly Shire, City of Willoughby, and Wollongong City Council.

NSW Eviction moratorium

The NSW Government has introduced a targeted eviction moratorium to protect residential tenants. The moratorium applies where:

·                  You have lost work/income because they or a member of their household contracted COVID; or 

·                  The  household's take home weekly income has reduced by 25% or more (including any government assistance received) compared to the weekly income received in the 4 weeks prior to 26 June 2021; and

·                  You continue to pay at least 25% of the rent payable.

60 day freeze on evictions

Tenants who can't pay their rent in full because they are impacted by the COVID-19 outbreak can't be evicted between now and 11 September 2021.

Financial support for landlords

Residential landlords who decrease rent for impacted tenants can apply for a grant of up to $1,500 or land tax reductions depending on their circumstances. The land tax relief will be equal to the value of rent reductions provided to financially distressed tenants for up to 100% of the 2021 land tax year liability.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information.  

Hospitality & Tourism COVID-19 Support Grant

The NSW Government has announced new grants of up to $10,000 to aid businesses impacted by the recent COVID-19 restrictions.

The grant is available to tourism or hospitality businesses with:

• A NSW registered ABN or ability to demonstrate they are physically located and primarily operating in NSW
• Turnover of more than $75,000 per annum
• Annual Australian wages below $10m as at 1 July 2020

These criteria are a bit more generous than the general Small Business COVID-19 Support Grant which is restricted to business and sole traders with:

• Total Australian wages below the NSW Government 2020-21 payroll tax threshold of $1.2m
• Fewer than 20 full time equivalent employees

The value of each grant is determined by the impact of the COVID-19 restrictions on your turnover. Your business will need to prove a decline in turnover across a minimum 2 week period after the commencement of the major restrictions on 26 June 2021.

Applications for the grants can be submitted through Service NSW from late July and we will be in contact with you once the full details and eligibility criteria are released.

We are happy to offer any assistance and support that you may require including calculating and providing proof of the decline in turnover and ongoing assistance with the application. If any of your business associates are also in need of assistance feel free to also put them in touch with us and we will assist. 

Payroll Tax Deferral

To assist with the impact of COVID-19, businesses can apply to defer payroll tax payments due in July 2021. Revenue NSW will provide a repayment program on a case-by-case basis if you wish to apply.

In addition, the due date for lodgement and payment of the 2021 annual reconciliation has been extended to 30 August 2021.

JobKeeper from 28 September 2020

We have summarised the key details in this update please download here. 

The first tranche of JobKeeper ends on 27 September 2020. Those needing further support will need to have their eligibility reassessed and prove an actual decline in turnover.

To receive JobKeeper from 28 September 2020, eligible employers need to assess their decline in turnover with reference to actual GST turnover for the September 2020 quarter (for JobKeeper payments between 28 September to 3 January 2021), and again for the December 2020 quarter (for payments between 4 January 2021 to 28 March 2021).

From 28 September 2020, the JobKeeper payment rate will reduce and split into a higher and lower rate based on the number of hours the employee worked in a specific 28 day period prior to 1 March 2020 or 1 July 2020.

To access JobKeeper payments from 28 September 2020, there are three questions that need to be assessed:

1.      Is my business eligible?

2.      Am I and/or my employees eligible? and

3.      What JobKeeper rate applies?

Please contact our office if you would like assistance with this 02 8848 3000.

What to do when reopening your business

As many business owners look to life after COVID-19, an important question comes up: how do we plan to reopen our business? For most businesses, the easing of restrictions doesn't mean a return to business as usual. 

There are rules and regulations in place about how companies can operate, including how many people can be on their premises at one time and how employees must be protected. Customers may not come back quickly and supply chains may still be disrupted.

Your main goal is to keep your business going after COVID-19, but reopening requires careful planning.

Here are some tips for restarting your business. 

1. Examine your business model 

Many small business owners have expertise that could go into consulting. If you own a restaurant, you could consult with new restaurant owners on setting their menu or hiring staff. You could also create passive income by writing eBooks or running courses related to your specialty.  

2. Have a safety plan and procedures in place

3. Access funding and financial programs

Even with restrictions easing, customers may not be eager to return to your business, for a variety of reasons. Many people now have limited incomes and are concerned about safety measures. It could take a while for your income to balance out.

Local, regional and federal governments have programs available for small businesses. Additionally, financial institutions and local businesses that represent business interests may also have financial programs you can access to help you through the turmoil caused by COVID-19. 

Final thoughts

What's next for you and your business? If you'd like to chat about future-proofing your business, please get in touch with us today on 02 8848 3000.

Extension of the $150,000 threshold for the instant asset write-off rules

As announced earlier last week, the Government is planning to extend the $150,000 instant asset write-off threshold for a further 6 months until 31 December 2020. This means that the higher threshold can apply to assets that are first used or installed ready for use for a taxable purpose on or after 12 March 2020 and by 31 December 2020 (assuming all other basic conditions are satisfied).

The Bill also extends the temporary suspension of the 5 year lock-out rules that can apply when an SBE chooses not to use the simplified depreciation rules. The suspension of these rules will be extended to 30 June 2021.

Modifications will also be made to the rules for entities that have a substituted accounting period to improve access to the higher instant asset write-off thresholds. The way these rules are currently drafted has meant that entities with a year-end other than 30 June have not had the same level of access to the rules as entities using a standard 30 June year-end date.

The HomeBuilder scheme targets the residential construction market by providing tax-free grants of $25,000 to eligible owner-occupiers, including first home buyers, to build a new home or substantially renovate their existing home.

The grants will be distributed by the revenue office of the State or Territory where you live or plan to live.

There are a few complexities to this grant that both home builders/renovators and the building industry need to be across before jumping in and signing a new contract on the expectation that the grant will apply.

Eligibility

Eligibility criteria apply to the individuals applying for the grant and the building project:

Individual eligibility

The HomeBuilder scheme is available to owner occupiers including first home buyers. It is not accessible to owner builders, developers or investors.

To be eligible you need to be:

• An individual (not a company or trust); and
• 18 years of age or older; and
• An Australian citizen.

And, you need to meet the income test. To be eligible, you cannot earn more than:

• Individuals - $125,000 based on your 2018-19 or later tax return
• Couples - $200,000 based on both of your 2018-19 or later tax returns

The building project eligibility

The building contract must be signed between 4 June 2020 and 31 December 2020. And, the construction or renovation must commence within three months of the contract date.

The grants are available if you build a new home or renovate a home to live in (your principal place of residence) where:

* house, apartment, house and land package, off-the-plan, etc.

** renovation works must be to improve the accessibility, safety and liveability of the dwelling. It cannot be for additions to the property (such as swimming pools, tennis courts, outdoor spas and saunas, sheds or garages (unconnected to the property)).

If you own or have purchased land but have not signed a contract to build your home, you may meet the eligibility criteria if you:

• Own a property (house and land), and knock down the house to rebuild – this will be counted as a substantial renovation, and therefore subject to the renovation price range of $150,000 to $750,000 provided the total value (house and land) of the property does not exceed $1.5 million pre-renovation;
• Own vacant land before 4 June 2020, and then build, the total value of the land and new build cannot exceed $750,000; or
• Buy the land after 4 June 2020, and then build, the total value of the land and build cannot exceed $750,000.

Integrity measures and pricing

Building contracts must be at arms-length, that is, the parties cannot be related or connected.

Renovations or building work must be undertaken by a registered or licenced building service 'contractor' (depending on the state or territory you live in) and named as a builder on the building licence or permit.

When it comes to price, the terms should be commercially reasonable, and the contract price should not be inflated compared to the fair market price. The rules enable the purchaser to request that the builder demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at 1 July 2019.

Interaction with first home owner grant schemes

The HomeBuilder grant does not exclude first home buyers from accessing other grants and concessions such as the First Home Owner Grant, stamp duty concessions, the First Home Loan Deposit Scheme, and First Home Super Saver Scheme.

Problem areas

As the building contract is entered into before the grant is approved, it will be important that the grant is not essential to finance the building project, just in case the grant is not approved.

In addition, as the builder needs to commence work within three months of the contract date, it will be important to ensure that the contract recognises the commencement dates.

Code of conduct for commercial tenancies

The Prime Minster has announced that the states and territories will legislate a mandatory code of conduct for commercial tenancies – see National Cabinet Mandatory Code of Conduct.

The code applies where:

• The landlord or tenant is eligible for the JobKeeper program, and
• They have a turnover of $50 million or less.

The code brings together a set of good-faith leasing principles. Landlords must not terminate the lease or draw on a tenant's security and tenants must honour the lease.

Landlords will be required to reduce rent proportionate to the trading reduction in the tenant's business, through a combination of waivers of rent and deferrals of rent over the "pandemic period." Waivers of rent must account for at least 50% of the reduction in the rental provided to the tenant during that period and deferrals must be covered over the balance of the lease term and in no less period than 24 months.

The arrangements are overseen through a binding mediation process at state and territory level.

Residential landlords and tenants

Most states and territories have introduced rules to ensure that tenants facing COVID related financial distress are not evicted for rental arrears.

Rent remains due, however landlords are encouraged to negotiate either a rent reduction to some degree or waiver where possible – for example, the landlord has a mortgage and has received a freeze on mortgage payments.

Most state and territory governments have free mediation services in place to manage disputes.

New South Wales

The NSW Government is introducing an interim 60-day stop on landlords seeking to evict tenants due to rental arrears as a result of COVID-19, together with longer six month restrictions on rental arrears evictions for those financially disadvantaged by COVID-19.

A household is COVID-19 impacted if:

·        One or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or

·        One or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and

·        The above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.

Notice periods for certain other lease termination reasons will be extended to 90 days.

All other tenants not impacted by COVID 19 are expected to honour their existing tenancy agreements.

See Six month moratorium on residential tenancy evictions during COVID-19.

ATO releases JobKeeper alternative test

The alternative tests will only kick in if an entity cannot satisfy the basic decline in turnover test.

These include where an entity commenced business after the relevant comparison period in 2019 or the business did not exist in the relevant comparison period and as a result there was no relevant comparison period in 2019.

It will also cover a circumstance where an entity acquired or disposed of part of their business after the relevant comparison period in 2019, and where an entity has restructured part or all of their business after the relevant comparison period in 2019.

Entities who had an increase in turnover by 50 per cent or more in the 12 months immediately before the applicable turnover test period, or 25 per cent or more in the six months immediately before the applicable turnover test period, or 12.5 per cent or more in the three months immediately before the applicable turnover test period, will also be covered.

The alternative test will also cover entities affected by a drought or other natural disaster in the relevant comparison period in 2019, and entities who have an irregular turnover that is not cyclical, such as what can occur in the building and construction sector.

A sole trader or a small partnership where the sole trader or one of the partners did not work for all or part of the relevant comparison period because they were sick, injured or on leave during the relevant comparison period, and those circumstances affects the turnover of the sole trader or partnership, will also be covered.

Each of the seven circumstances has its own alternative test that is detailed in the legislative instrument.

Update from Accountants Daily

Automatic ATO lodgement and payment deferrals 

The Tax Office will now apply automatic lodgement and payment deferrals for company 2018–19 income tax returns to a new due date of 5 June 2020.

Further, SMSF 2018–19 annual returns will now be due on 30 June 2020.

2019–20 fringe benefits tax (FBT) annual returns have also been automatically deferred to 25 June 2020.

2018–19 income tax returns for individuals, partnerships and trusts can be lodged by the 5 June concessional due date, provided clients pay any liability by this date.