16 August 2021
by David Prichard
- Related topics
- Corporate Tax & Regulatory
Given all the changes in definitions and dates we thought it would be beneficial to provide a recap on where we have landed (for the moment anyway) in respect of the eligibility for the NSW Covid-19 support packages. Given the recent announcements in NSW of a state-wide lockdown, and ServiceNSW’s propensity for changing the criteria, it is anticipated that there will be further “refinements” to come.
The sentiment remains that businesses that have applied and are eligible for the 2021 Covid-19 business grant will generally be automatically eligible for JobSaver (although will need to provide additional information).
To be eligible for the NSW Business Grant and JobSaver businesses must apply through their own MyServiceNSW Account and:
|Business||Have an active ABN and demonstrate that the business was operating in NSW as at 1 June 2021|
|Aggregated annual turnover (refer below)||$75,000 – $50m for the year ended 30 June 2020||$75,000 – $250m for the year ended 30 June 2020|
|Decline in turnover of 30% or more over a minimum 2-week period||26 June to 17 July 2021 compared to the same period in:
|26 June to 28 August 2021 compared to the same period in:
|Headcount||Maintain your employee headcount (refer below) on 13 July 2021 while you continue to receive Grant and/or JobSaver payments|
|Income Type||Entities earning passive income (rents, interest, or dividends), government agencies, local governments, banks, and universities are not eligible for the Grant and/or JobSaver. Please refer to this link for a complete list of ineligible businesses
Refer below for non-employing businesses
|Tax Status||Payments are to be tax free if aggregated turnover is less than $50m (ie some entities will be taxable on JobSaver and some will not)|
For non-employing businesses
- Grant – not eligible if individuals received a Commonwealth Disaster Payment between 26 June and 17 July;
- JobSaver – must show that the business is the primary income source for the associated person. If you have more than one non-employing business, you can only claim payments for one business.
What is still missing?
- There is still no clear guidance on the documentation required to be provided for members of a tax consolidated group (income or GST), however, confirmation of the membership of the tax consolidated group from the ATO portal would appear to be a starting point.
- No alternative treatment appears to be available for service entity type arrangements.
- No definitive guidance for entities with Substituted Accounting Periods (SAP’s)
- Grants – one off payments:
*$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.
*Payments will be equivalent to 40% of the weekly payroll (refer below) for work performed in NSW being capped at $100,000 per week and a $1,500 minimum.
*Payments will be made fortnightly and backdated to cover costs incurred from 18 July 2021 onwards (week 4 of the Greater Sydney lockdown) picking up from when the grants run off.
Evidence to support eligibility
The requirements are split into two categories – highly impacted (which is now quite an extensive list) and everyone else.
Highly impacted businesses must:
- declare that they meet the eligibility criteria;
- declare and maintain employee headcount at 13 July 2021 (this may have already been done a part of the Covid-19 grants application);
- submit an Australian income tax return, Notice of Assessment or other documentation demonstrating the business had aggregated annual turnover within the prescribed ranges for the year ended 30 June 2020;
- provide details of your qualified accountant, registered tax agent or registered BAS agent;
- provide evidence of weekly payroll; and
- lodge other supporting documents as required to demonstrate you meet the eligibility criteria.
Other businesses must provide all of the above items plus a letter from a qualified accountant, registered tax agent or registered BAS agent to demonstrate the decline in turnover. ServiceNSW has provided a template letter.
Turnover & Decline in Turnover
Aggregated annual turnover includes the turnover of the entity itself plus connected and affiliate entities. As such, this can include connected or affiliate entities that are not in Australia – ie worldwide group turnover is required to be used.
A decline in turnover is to be determined by using the GST turnover definition. The use of this terminology would appear to be seeking to eliminate the cash versus accruals issue that initially arose with JobKeeper.
The decline in turnover needs to be “due to the Public Health Order” rather than just a fall in turnover. There is no clarity on whether this decline needs to be direct or indirect only that the fall is “due to” the public health orders. Given the uncertainty around this requirement, it would appear difficult for ServiceNSW to determine whether a business (other than one in the highly impacted list) is eligible or not.
- Employees who have been stood down are still included in the headcount as long as their employment has not been terminated.
- Employees who take leave without pay are included within the headcount and do not result in the business becoming ineligible.
- Casual employees are included in the headcount if they have been employed for more than 12 months.
- Reductions in employee headcount resulting from circumstances outside the control of the employer (such as voluntary resignations, death of an employee) will not be taken as a reduction in employee headcount.
- Weekly payroll is determined by reference to the most recent BAS provided to the ATO before 26 June 2021 for the 2020-21 financial year (ie most likely 31 March 2021 quarter).
- The W1 Box on the BAS is used to calculate the weekly payroll as follows:
*NSW only businesses – identify the W1 amount and deduct any amounts voluntarily withheld on behalf of contractors. That amount should be divided by the number of days in the BAS period and multiplied by 7 to give weekly payroll.
*Other businesses – calculate the W1 amount in respect of relevant salaries, wages etc paid to employees who usually worked or were based in New South Wales during the relevant BAS period.
*Deduct amounts voluntarily withheld on behalf of NSW contractors. That amount should be divided by the number of days in the BAS period and multiplied by 7 to give weekly payroll.
- For businesses that submit a BAS without a W1 amount because they report wages using single touch payroll (STP) then:
*Their 2019-20 NSW payroll tax reconciliation return; and
*Copies of the payroll report/s filed with the ATO using STP, after redacting all personally identifiable information. The STP report should include the effective date, branch ID, Submission ID, Event Type, Gross payments and PAYGW.
The alternate circumstances include:
- businesses not operating for the full year to 30 June 2020;
- businesses that opened in 2020;
- businesses affected by drought, bushfires or other natural disasters.
Lastly, employees can receive the Commonwealth Covid-19 Disaster Payments if their employer is receiving JobSaver.
Should you have any questions regarding these support measures please reach out to your Engagement Partner. We are finding that some of the ‘rules’ are changing – we will continue to keep our clients up to date.