2021 COVID-19 NSW Business Grant

The 2021 COVID-19 Business Grant is a one-off Grant managed by the State of NSW available as part of the 2021 COVID-19 NSW Support Package. The Grant is available to Businesses registered or operating in NSW, including:

• Sole Traders
• Companies
• Not for Profit

The Grant payment varies, based on the Business decline in turnover:

Tier 1 – A one-off Grant of $7,500 will be paid to eligible businesses that have suffered a decline in GST turnover between 30% and 50%

Tier 2 – A one-off Grant of $10,500 will be paid to eligible businesses that have suffered a decline in GST turnover between 50% and 70%

Tier 3 ​- A one-off Grant of $15,000 will be paid to eligible businesses that have suffered a decline in GST turnover of 70% or more.

The Business Grant is both exempt from Income Tax and GST.

Eligibility Criteria

What types of Businesses are eligible?

As well as meeting the required decline in turnover, to be eligible for the Covid-19 Business Grant, Businesses must also meet the following eligibility criteria:

• have a valid Australian Business Number (ABN) operating in New South Wales as of 1 June 2021;
• have a total annual Australian wages of $10 million or less as of the 1st July 2020;
• have an aggregated annual turnover between $75,000 and $50 million for the Financial Year ended on 30 June 2020;
• maintain their employee headcount as of 13 July 2021 for the period in which the Business is receiving payments under this Grant and the JobSaver scheme.

Eligible Businesses can only receive one Grant Tier, multiple businesses under a single ABN are only eligible for one Grant.

What type of Businesses are not eligible?

A business is not eligible for the 2021 COVID-19 Business Grant if any of the following apply:

• the business does not employ any employees and is already receiving the COVID-19 Disaster Payment;
• the Major Bank Levy was imposed on the entity or a member of its consolidated group for any quarter before 1 July 2021;
• the entity is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997);
• the entity is a local governing body;
• the entity is wholly owned by an Australian government agency or local governing body;
• the entity is a sovereign entity or owned by a sovereign entity;
• 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).
  See the full list of ineligible business types.

Meeting the GST Decline in Turnover

Eligible Businesses need to have experienced a decline in turnover over a minimum 2-week period between 26 June 2021 and 17 July 2021 compared to the same 2 week period in 2019.

For Southern Border Businesses, the turnover period is from 27 May 2021 and 17 July 2021 compared to the same 2 week period in 2019.

Businesses may be eligible to use alternate testing periods if they fall within specific Alternative Circumstances.

The Decline in Turnover test must be assessed using the same reporting method (Cash or Accruals) applied to the GST reported on the Business Activity Statements.

Depending on the applicable Tiers eligible Businesses will need to declare and submit evidence of their decline in turnover.

Supporting Evidence

• Valid ABN Operating in NSW as of 1st June 2021;
  The easiest proof is the ASIC paperwork, Service NSW may require other documentation (Rates, Bills, Insurance papers), if the Business is not registered in NSW, but it operates in NSW.
• Have an aggregated annual turnover between $75,000 and $50 million for the year ended on 30 June 2020;
  Income Tax Statement for the 2020 Financial Year;
  Note: where a business operates through a Trust structure, the applicant will be required to provide additional information to demonstrate an aggregated annual turnover of $75,000 or more is derived through the trust, as opposed to a business linked to a Trust.
• have met the required decline in turnover;
  Copies of Activity Statements, Profit & Loss Statements for the relevant period;
• have a total annual Australian wages of $10 million or less as of the 1st July 2020;
  Copies of Activity Statements; lodged STP Income Statements.

Businesses will also need to provide a letter from one of the following Independent Practitioners:

• a qualified Accountant, as defined in the Corporations Act 2001;
• a registered Tax Agent, as defined in the Tax Agent Services Act 2009;
• a registered BAS Agent, as defined in the Tax Agent Services Act 2009.

Alternate Comparison Periods

The NSW Government has recently highlighted a number of circumstances where certain Businesses may not meet the eligibility criteria for the NSW Government Grant but may still be able to apply by accessing alternate comparison periods.

• Businesses that were not operating for the full year as of 30 June 2020 (new Businesses);
• Businesses affected by drought, bushfires or other natural disasters;
• Business acquisitions, disposal or business restructure that has impacted the Business’ turnover
• A Sole Trader or small Partnership impacted by sickness, injury or leave.

Maintaining Employee Headcount

Unlike the eligibility criterion associated with the JobMaker Hiring Credits, the NSW Business Grant condition to maintain headcount exclusively relates to the number of Employees employed during the lockdown, a reduction in the cost of wages has no bearings on the eligibility to this support measure. Employee Headcount is not affected by the following:

• Employees who have been stood down due to the Enforceable Government Directions;
• Employees on leave (Annual, Personal and Pandemic Leave);
• Employees who voluntarily resign from their position.

How funding can be spent

Funding may be spent towards business costs. Eligible expenses include (but not limited to):

• utilities, wages and rent;
• financial, legal or other advice to support business continuity planning;
• marketing and communications activities to develop the business;
• the cost of perishable goods that can no longer be used; or
• other activities to support the operation of the business.

Businesses who fall within the above circumstances are encouraged to contact Service NSW to determine if they are eligible for an alternate comparison period or supporting evidence.

Application Process

To apply for the 2021 COVID-19 Business Grant, Eligible Businesses must have a valid Service NSW Account. Applications opened on Monday 19 July 2021.

Although Eligible Businesses require Support from their Registered Tax/BAS Agent, the application must be lodged by the Business.

Before submitting the application, Businesses should ensure they have the following:

• All required documentation to declare and prove their eligibility to the Grant;
• The required letter from their BAS/Tax Agent;
• ​Two Proof of Identity Required.

Once the required documentation and evidence are ready for upload, they can apply directly to Service NSW.

Application close on Monday 13 September 2021.

References

https://www.nsw.gov.au/covid-19/rules

https://www.service.nsw.gov.au/campaign/covid-19-help-businesses/grants-loans-and-financial-assistance

https://www.service.nsw.gov.au/transaction/2021-covid-19-business-grant

FAQ-COVID-19-Business-Support

Disclaimer

This blog and attached resources are of general nature designed for informational and educational purposes only. They should not be construed as professional financial advice for your individual business. Should you need such advice, consult a licensed financial or tax advisor.