Financing your business post Covid
So, you’ve survived COVID – so far. But at what cost? And as government support reduces, how will you manage to rebuild a viable business into the future?
The good news is as follows:
However, the qualification and entitlement conditions are narrower and much more complex than the previous announcements revealed. For example, for the majority of small to medium enterprises:
Business entities such as operating businesses, non-employing sole traders and not-for-profit organisations can claim. Insolvent businesses, bankrupt individuals, government agencies and entities primarily earning passive income such as rents, interest and dividends cannot claim.
A business entity can claim if they have the following features:
Multiple businesses under a single ABN are only eligible for one grant. Eligible businesses may only receive one grant tier from the following:
The decline is determined by comparing turnover during a minimum two-week period from 26 June to 17 July 2021 with the same period in June and/or July 2019. The default measure of turnover will be from amounts reported in the BAS.
The Business Grant conditions recognise that businesses in Southern NSW were affected by lockdowns in Victoria that commenced on 27 May 2021.
Where it was due to the relevant public health orders either in NSW or Victoria, those businesses determine their turnover decline by comparing their turnover during a minimum two-week period from 27 May to 17 July 2021 with the same period in May and/or June and/or July 2019. A Southern Border business is located or operating in the Local Government Areas of Albury, Balranald, Berrigan, Bega Valley, Edward River, Federation, Greater Hume Shire, Hay, Murray River, Murrumbidgee, Snowy Monaro, Snowy Valleys and Wentworth.
Separate claim criteria are in place for business in highly impacted industries versus those who are not. The claim conditions list more than 80 highly impacted industries with their ANZSIC code. Typically, a business will have previously self-selected its most applicable ANZSIC code, for example, when they applied for their ABN. The highly impacted industries include most retailing and various food services, accommodation, entertainment, arts, health, and personal services businesses.
Highly impacted industries are not required to provide evidence of their decline in turnover at the time of claiming. Rather, they are required to:
A business operating in one of the highly impacted industries that applies for the $15,000 (tier three) payment will initially receive a payment of $10,500 if they meet the requirements. To receive the remaining $4,500 payment, they will be required to submit evidence in the form of a letter from an Independent Practitioner that they:
(a) had total Australian wages of $10 million or less as at 1 July 2020; and
(b) have experienced the required decline in turnover over the relevant period.
A business operating outside the highly impacted industries needs to:
(a) Had total Australian wages of $10 million or less as at 1 July 2020;
(b) Have experienced the required decline in turnover over the relevant period, and
Business that were not operating at critical dates, businesses that do not lodge a BAS and businesses whose comparative turnover was not representative of their usual or average turnover are not automatically precluded from applying for the Business Grant. They should contact Service NSW to discuss alternative means of satisfying the evidentiary conditions.
The business grant is a reimbursement of costs incurred from 1 June to 17 July 2021 which may include, but are not limited to, the following:
(a) Unavoidable business operating expenses, such as utilities, wages or rent;
(b) The cost of perishable goods that can no longer be used;
(c) Financial, legal or other advice to support business continuity planning;
(d) Marketing and communications activities to develop the business; and
(e) Other activities to support the operation of the business.
Evidence of the incurred expenses does need to be submitted at the time of claiming but may be required by Revenue NSW when it reviews the claim.
Claims must be made before 11:59PM on 13 September 2021. Qualifying businesses will also be able to apply for funding under the Jobsaver scheme which will commence from 18 July 2021. The full claim process for the Jobsaver scheme is yet to be announced.
The Business Grants received from the NSW Government are exempt from income tax.
Mazars has summarised all the relevant conditions for qualification for the Business Grant, but the regular changes to the scheme suggest it is still being developed. For businesses that wish to claim themselves, the links to the Service NSW website are:
Mazars can advise you on qualification and your entitlements in your business circumstances. We can assist you to assemble the supporting evidence including preparing the Independent
Should you have any questions, please contact your usual Mazars advisor, the author, or if you require assistance with claims or want to know more, please contact your local office below.
Author: Stephen Baxter
Brisbane | Melbourne | Sydney |
+61 7 3218 3900 | +61 3 9252 0800 | +61 2 9922 1166 |
Published: 21/07/2021
All rights reserved. This publication in whole or in part may not be reproduced, distributed or used in any manner whatsoever without the express prior and written consent of the Mazars, except for the use of brief quotations in the press, in social media or in another communication tool, as long as Mazars and the source of the publication are duly mentioned. In all cases, Mazars’ intellectual property rights are protected and the Mazars Group shall not be liable for any use of this publication by third parties, either with or without Mazars’ prior authorisation. Also please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice. Content is accurate as at the date published.
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