Currently, small businesses have the opportunity to apply for new government financial assistance as a result of COVID-19.
The JobKeeper Payment will help businesses stay afloat by supporting employee pay. It provides $1,500 per fortnight per eligible employee for up to 6 months on a fortnightly basis. It does this by reimbursing payments you make to your employees. Enrolment opened on 20 April 2020.
The NSW government is also offering grants of up to $10,000 for businesses experiencing a significant decline in revenue as a result of COVID-19. Applications will be open until 1 June 2020.
Steps for Accessing the JobKeeper Payment
Step 1 – Confirm your Eligibility
You can apply for the JobKeeper Payment if
- You carried out a business or not-for-profit in Australia with at least one eligible employee on 1 March 2020.
- Your eligible employees are employed by you (including those stood down or re-hired) for the fortnights when you are applying, and are
- permanent full-time or part-time employees at 1 March 2020
- casual employees who have been employed on a regular and systematic basis for at least 12 months as at 1 March 2020 and who are not permanent employees of any other employer.
- at least 16 years of age on 1 March 2020
- an Australian permanent resident as at 1 March 2020 within the meaning of the Social Security Act 1991. This requires that they reside in Australia, and are either an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa, or a Special Category (Subclass 444) Visa Holder. If they are not permanent residents, they need notify you of their visa status.
- sole traders may be able to nominate themselves as the one ‘principal’ or eligible employee, as long as they have an ABN and reported an amount of assessable income in their 2019 tax return on or before 12 March 2020, and have provided information about a supply between 1 July 2018 and 12 March 2020 to the ATO prior to 12 March 2020.
- You must make sure that your eligible employees are not claiming the JobKeeper payment through another employer or have not been nominated through another business. If they have multiple employers, they can usually choose which employer they want to nominate through. However, long-term casuals working for you who have other permanent employment must choose the permanent employer and cannot nominate you.
- You have determined that an employee is not ineligible because they
- receive government parental leave, Dad and partner pay, or a payment in accordance with Australian worker compensation law for any given fortnight for which you are claiming JobKeeper on their behalf
- were first employed by you after 1 March 2020.
- left your employment before 1 March 2020.
- have been, or have agreed to be, nominated by another employer.
- are employed on a casual basis, and not on a regular and systematic casual basis for at least 12 months as at 1 March 2020.
- have been made redundant on or after 1 March 2020 and have not been rehired.
- Your business faces (or is likely to face) a fall in turnover of
- 30% (if your business has an aggregated turnover of $1 billion or less).
- 50% (if your business has an aggregated turnover of more than $1 billion).
- 15% fall (for ACNC-registered charities other than universities and schools).
To work out your fall in turnover, you can compare either:
- GST turnover for March 2020 with GST turnover for March 2019.
- Projected GST turnover for April 2020 with GST turnover for April 2019.
- Projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.
Your business advisor and accountant should be approached as soon as possible in order for you to work out your actual and forecasted turnover and GST turnover. If your turnover has not fallen by 30%, you will need to talk to your accountant or business advisor. There are other options for demonstrating the applicable fall in turnover.
Step 2 – Notify your employees
If you apply for the JobKeeper payment on behalf of an employee, then they need to be informed. You must send a JobKeeper employee nomination notice to each of your eligible employees to complete. If you expect to receive the payment for April, your eligible employees need to be complete the notice by the end of April.
Step 3 – Continue to pay your employees
You need to keep paying each of your employees at least $1,500 for each JobKeeper fortnightly period
- The first period is the fortnight starting from 30 March to 12 April.
- After this, you need to continue to pay each eligible employee for either every subsequent fortnight until 27 September 2020 or until an eligible employee stops being eligible, or until you opt out.
- For the first two fortnights (30 March – 12 April and 13 April – 26 April), the ATO will accept the minimum $1,500 has been paid for each fortnight even if it has been paid late, provided it is paid by the end of April. This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.
- You will need to deduct PAYG withholding from payments made to employees.
- If you do not have the cash flow to meet the required payments, there may be other options. However, the relevant law and the ATO is very clear: you must make these payments to your employees first, since the Job Keeper payment is a reimbursement scheme.
Step 4 – Enrol Online
You or your accountant must enrol by filling out the online form on the ATO’s business portal. You’ll need to do this by the end of April to claim payments for April. To enrol, you will need
- your bank details. Make sure the ATO has your current details.
- an estimate of the number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).
- from 3 May, to identify your eligible employees by selecting employee details that are prefilled from your STP pay reports or by manually entering employee details.
- to reconfirm on a monthly basis that your reported eligible employees have not changed, and identify through the monthly JobKeeper Declaration report if eligible employees change or leave your employ.
- If you do not use STP, consider registering in this system since it is the primary means to determine entitlement for the payment.
Steps to Apply for a NSW COVID-19 Support Grant
Step 1: Confirm your eligibility
To be eligible for this COVID-19 support grant, you must
- have between 1-19 employees and a turnover of more than $75,000.
- have a payroll below the NSW Government 2019-20 payroll tax threshold of $900,000.
- have an Australian Business Number (ABN) as at 1 March 2020.
- be based in NSW.
- employ staff as at 1 March 2020.
- be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and movement) Order 2020 issued on 30 March 2020.
- have experienced at least 75% decline in turnover compared to the same two-week period in 2019 as a result of COVID-19 and the above order.
- have unavoidable business costs that are not being met and supported by other NSW and Commonwealth Government financial assistance measures.
- use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice.
The grant money is targeted toward businesses in highly impacted industries. This includes
- accommodation and food services.
- arts and recreation services.
- rental, hiring and real estate services.
- administrative and support services.
- information, media and telecommunications.
- transport.
- retail trade (excluding food retailing).
- wholesale trade.
- education and training.
If your business is not in one of the highly impacted industries (as listed in the NSW government guidelines) but you can demonstrate a significant disruption to your business resulting in a 75% reduction in turnover, you may still be eligible, but will need to provide additional evidence and documentation. If you are a sole trader and you do not employ staff, you are not eligible for the grant money.
Step 2 – Gather your documentation
You will need the following:
- a MyService NSW Account.
- your proof of identity.
- your valid ABN/ACN number.
- your business banking details for payment.
- your latest Business Activity Statement (BAS).
- a declaration that you meet the eligibility criteria, including at least a 75% decline in turnover compared to the same 2-week period in 2019.
A Business Activity Statement must be provided as evidence of this decline in turnover. If you do not submit a BAS to the Australian Tax Office but meet all other criteria to access the grant, then you or your accountant should contact Service NSW. In these cases, an income tax declaration may be accepted as evidence of an annual turnover of $75,000.
You’ll need to provide a letter from your accountant if your business is not in one of the highly impacted industries, demonstrating a significant disruption to your business as a result of the Public Health Order 2020 resulting in a 75% reduction in turnover.
Step 3 – Apply Online
You can apply the $10,000 grant online with a MyService NSW account. If additional information to support your claim is required, you’ll be notified. If your application is approved, payment will be transferred within 10 business days.
Step 4 – Prepare your documentation for review
After you receive the grant, you may be required to demonstrate that the decline in turnover was a result of COVID-19. It’s important to have keep all relevant documentation in case of an administrative audit. This could also involve providing further
- letters from your business accountant.
- proof of reduced customer numbers.
- proof of changes to business operations due to implementation of social distancing rules.
- proof of increased costs associated with public health protection measures.
You’ll need to keep all documentary evidence related to your application and the funds you receive for a minimum of 5 years, in case of an audit. This audit may require you to provide evidence (such as official receipts) of how you have used the funds given. Remember, the funds need to be used to mitigate the impact of COVID-19 related restrictions and business duress, for purposes such as
- meeting business costs that have been impacted during this period, including utilities, salaries, rent, telecommunication charges, insurance payments, etc.
- seeking financial, legal or other advice to support business continuity planning in light of operating or changing operations during COVID-19.
- developing the business through marketing and communications activities.
- other supporting activities related to the operation of the business during the COVID-19 crisis.
The key is using the grant money for unavoidable expenses where no other support is available. So, if you pay an employee wages and then seek reimbursement for these wages under the JobKeeper support scheme, you cannot use the grant money to pay these wages.
Finding the Right Support
These continuing support measures can give your business the funding it needs to continue in difficult and uncertain times. Calibre Business Advisory is dedicated to providing its clients with consistent, clear, and comprehensive assistance at this time. We can work with you to apply for the JobKeeper Payment and the NSW COVID-19 Support Grant.
Calibre Business Advisory invests more time than most firms into finding solutions for our clients. Contact our business advisors and tax accountants to discover new options for your business in Australia and beyond.
Important Disclaimer: Readers should not act solely on the basis of the material on this page. Items herein are general comments only and do not constitute or convey advice. Legislation and proposals of legislation are also subject to constant change. We therefore recommend that formal advice be sought before acting in any of the areas. This news article is issued as a guide to the readers. Calibre Business Advisory Pty Ltd and its associated entities disclaims any losses that may be incurred as a result of the reader undertaking any action based on this article.