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COVID Relief Update – Complexities Explained

COVID Relief Update – Complexities Explained

There has been much speculation of late about the Service NSW and Federal Government support for small business during the latest Covid crisis lockdown. Many of our clients are now starting to receive funds but others have fallen outside the original tests.

Here’s a current update of some of the complexities including details of the newly expanded decline in turnover test.

NSW Covid 19 relief business grants

Now that the two main business grants (Cash Grant and JobSaver) have been operating since mid-July, there are some issues to highlight in the way the legislation has been drafted and how it impacts your business.

Below are a few special circumstances or tips that may prove useful in your investigation of the application of the Cash Grant and JobSaver.

New Business, Acquisitions, Restructures or Abnormal Trading circumstances

Both the Cash Grant and the JobSaver rely on a decrease in turnover concept, but unlike the JobKeeper last year, there are no specific alternative tests or provisions for abnormal trading conditions, businesses that weren’t in operation in the comparative period of 2019, or businesses who have increased turnover through acquisition of another business since 2019.

Now however there has been some additional guidance provided. The decline in turnover test required for the JobSaver, COVID-19 business and micro-business grants has been causing a lot of angst but some additional flexibility has been provided. Businesses and non-profit entities can now pass this test if they can show a decline in turnover of at least 30% due to the Public Health Order over a minimum 2-week period within the relevant test period compared to:

The same period in 2019;

The same period in 2020; or

The 2-week period immediately before the start of the relevant test period.

The test period depends on which payment you are looking at:

COVID-19 business grant: 26 June 2021 to 17 July 2021 (this is changed to 27 May 2021 to 17 July 2021 for entities on the NSW border with Victoria);

JobSaver and the micro-business grant: 26 June 2021 until the Greater Sydney lockdown ends.

This additional flexibility is helpful for businesses that started after the comparison period in 2019 and for those that have undertaken an acquisition, disposal or restructure.

Calculation of the Decline in turnover

Decline in turnover is measured over a consecutive minimum two week period. You can use more than 2 weeks especially where there are two non-linked weeks that produce low turnover results. Note that there is a difference in cut-off dates for the Cash Grant ( 26 June -17 July 2021) and the JobSaver (26 June – 30 July 2021) for the purposes of selecting the minimum 2 week period.

JobSaver vs Disaster relief Payment

Where an employee receives a Disaster Relief Payment, that payment will prevent a ‘non-employing business’ from receiving JobSaver, but it will not disqualify employees. For example, a sole trader earning over $75,000 with a 30% pr more decrease in turnover would not be eligible for the JobSaver if they are already accessing the Disaster Relief Payment.

Maintaining Employee Headcount

Cash Grant – requires the recipient to maintain their employee headcount as at 13 July 2021 for the period in which the business is receiving payments under both the Cash Grant and JobSaver;

JobSaver – requires that the business maintains its employee headcount while they continue to receive payments under the JobSaver program.

It is important to differentiate between employees and independent contractors from the point of view of headcount as well as amount of wages. Unlike JobKeeper, a specific number of employees is requested.

Conclusion

As with all government relief measures, we are always available to assist you in assessing your eligibility and providing you guidance through the application process. We are always here to answer your questions so please feel free to reach out to our team at S&S on 7226 1226 or info@stewartsmithadvisory.com.