2022 Small Business Support Program for NSW Businesses

On 27 December 2021, the Public Health (COVID-19 General Order (No 2) 2021 imposed a number of restrictions on businesses, particularly to hospitality venues. While aimed at curbing the spread of COVID-19, these restrictions have directly impacted the operation of these businesses. Although not directly impacted by the Public Health Order, other industries have also suffered the impact of the COVID-19 Omicron variant with Consumers avoiding public places and staff shortages due to the COVID infection or close contact isolation requirements.

In response to this situation, the NSW Government launched the 2022 Small Business Support Program. This is a one-off Grant payment to support NSW Businesses whose income have been impacted by the Public Health Orders during January and the first two weeks of February 2022.

The Grant is available to eligible Businesses registered or operating in NSW, including:

• Sole Traders Employing Staff;
  Note: Non-employing businesses can also receive payment under the Small Business Support Program if individuals associated with and deriving income from the business receive a Commonwealth Pandemic Leave Disaster Payment for the same period.
• Companies;
• Not for Profit;

The Grant payment is equivalent to the average of 20% of the eligible business weekly payroll for work performed in NSW.

Minimum Payment – $750 per week

Maximum Payment – $5,000 per week

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

How funding can be spent

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

• salaries and wages;
• utilities 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;
• other business costs.

Eligibility Criteria

What types of Businesses are eligible?

To be eligible for the 2022 Business Support Program, Businesses must meet the following eligibility criteria:

• have a valid Australian Business Number (ABN) operating in New South Wales as of 1 January 2021;
• have an aggregated annual turnover between $75,000 and $50 million for the Financial Year ended on 30 June 2020 or 30 June 2021;
• have experienced a decline in turnover of 40% or more due to the impact of COVID-19 during the month of January 2022, compared to the income made either in January 2020 or January 2021; OR
• have experienced a decline in turnover of 40% or more due to the impact of COVID-19 during the fortnight between 1st -14th of February 2022, compared to the income made during the same fortnight in February 2020 or February 2021;
• maintain their employee headcount from 30 January 2022 to 28 February 2022.

What type of Businesses are not eligible?

A business is not eligible for the 2022 Business Support Program if any of the following conditions apply:

• the business does not employ any employees and is already receiving the Disaster Payment;
• the business has suffered a decline in turnover of 40% or more that is not related to the COVID-19 pandemic;
• the Major Bank Levy was imposed on the entity or a member of its consolidated group for any quarter before 1 July 2022;
• 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 40% decline in turnover either over a 1 month period between January 2022 compared to the same period in either 2020 or 2021 or over the 2-week period between 1 February 2022 and 14 February 2022 compared to the same 2 week period in either 2020 or 2021.

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.

Alternative rules apply to Businesses with special circumstances, including:

• Businesses that did not trade on 1 January 2021 and started trading any time between January 2021 and 1 October 2021;
• Businesses that have been impacted by acquisition, disposal or restructure;
• Sole Traders or Small Partnerships impacted by sickness, injury or leave;
• Businesses impacted by natural disasters;

More information on the alternate tests is available on the Service NSW website.

Supporting Evidence

Eligible Businesses must submit as part of the application process the following documentation as supporting evidence:

• The most recent Tax Return lodged with the ATO.
  Note: different options apply to Businesses that are not required to submit a tax return. More information is available on the Service NSW website.
• Copies of Activity Statements (IAS or BAS) for the relevant periods; OR
• If the applying Business has not yet lodged Activity Statements for the above periods, they can 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.

Maintaining Employee Headcount

Unlike the eligibility criterion associated with the JobMaker Hiring Credits, the condition to maintain headcount exclusively relates to the number of Employees employed during the January & mid-February 2022 period in the Small Business Support Program. A reduction in the cost of wages has no bearing on the eligibility to this program. Furthermore, employee headcount is not affected by the following:

• Employees who have been stood down due to the Public Health order;
• Employees on leave (Annual, Personal and Pandemic Leave);
• Employees who have voluntarily resigned from their position.

Calculating the Average Weekly Payroll

Service NSW has provided a template on how to correctly calculate the 20% of the Business average weekly payroll:

1. Use the total of Gross Wages (W1) from the latest lodged Activity Statement
   Note: you should add any Superannuation Salary Sacrificed amount if you are not yet reporting through Single Touch Payroll Phase 2
2. Deduct any Gross Wages for Employees based outside of NSW
3. Deduct any Subcontractors’ Gross Wages included in W1
4. Calculate the number of payroll days in the same month as the gross wages from the Activity Statement
5. Divide the Gross Wages by the number of payroll days
6. Multiply the result from step 5 by 7 (Days)

Application Process

To apply for the 2022 Small Business Support Program, Eligible Businesses must have a valid MyService NSW Account.

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 for the program;
• Copies of their most recently lodged Tax Return with the ATO (FY 2020 or FY 2021);
• Copies of their lodged Activity Statements for the period or the required letter from their BAS/Tax Agent;
• ​Current and valid identification saved on their MyServiceNSW Account.

Declarations

In the application Businesses must declare:

• their employee headcount on 30 January 2022 and the commitment to maintain the headcount from 30 January to 28 February 2022;
• the calculation of the 20% of their average weekly payroll;
• identify how the Public Health Order has directly impacted the turnover of their business unless the applying business is part of the ANZSIC list;

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

Applications opened on 16 February 2022 and close on 29 April 2022.

References

https://www.service.nsw.gov.au/transaction/apply-2022-small-business-support-program#what-you-needhttps://www.nsw.gov.au/covid-19/rules

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.