NSW 2022 Small Business Support Program

On 30 January 2022, in a joint media release, the Premier of NSW, The Hon Dominic Perrottet MP, the NSW Treasurer and Minister for Energy, the Hon Matt Kean MP, the Deputy Premier of NSW and Minister for Regional NSW and Police, the Hon Paul Toole MP, and the Minister for Small Business and Fair Trading, the Hon Eleni Petinos MP, announced the 2022 Small Business Support Program (SBSP) to support businesses most impacted by the Omicron wave in NSW.

The JobSaver payment program ended on 30 November 2021 and was co-funded by the Commonwealth and the NSW Government until NSW reached the 80% double COVID-19 vaccination target. From that point, the NSW Government continued to fund its 50% contribution to JobSaver payments, and the amount of the payments tapered from the original rate of 40% of NSW Weekly Payroll to 30% then to 15%. By contrast, the SBSP will be funded solely by the NSW Government and cover 20% of an eligible business’ NSW payroll for February 2022.

Daily case numbers in the tens of thousands have affected consumer confidence, presenting ongoing challenges in the form of hesitant customers not wanting to venture out. Further, significant staffing shortages have resulted from the higher case numbers as those infected, and those (re)defined as ‘close contacts’, are required to isolate leading to furloughs. Many businesses have experienced further disruption to their operations and cash flow, inhibiting them from returning to ‘normal’ trading conditions. However, unlike 2020 and 2021, extensive government financial assistance is no longer available to businesses.

The NSW Government has introduced the SBSP to provide targeted assistance to those businesses requiring financial support to continue operating in 2022 and beyond. This measure is supplemented by an expansion of the support provided under the Small Business Fees, Charges and RAT Rebate. The SBSP will be delivered jointly by Service NSW and Revenue NSW.

There will be a tendency to describe this payment as ‘JobSaver Mark 2’ or ‘JobSaver 2022’, but this should be avoided. While some features of the new payment are the same or similar to the former program, there are important distinctions; the most significant being that the SBSP payment is not a recurring fortnightly payment.

The Guidelines for the SBSP were released on 8 February 2022. A reference to 'businesses’ below should be interpreted as including businesses, registered charities and not-for-profit (NFP) organisations.

Expansion of the Small business fees and charges rebate

The NSW Government has also expanded the support available to eligible businesses under the Small business fees and charges rebate (Rebate). This measure initially provided businesses with a credit of $1,500 that could be used to cover the cost of NSW and local government fees and charges.

The amount of the Rebate was subsequently increased to $2,000 on 18 October 2021 and expanded to include road user tolls as an eligible expense. As part of the recently announced measures, the Rebate will increase further from $2,000 to $3,000 and allow employing businesses to use the Rebate to cover 50% of the cost of rapid antigen tests (RATs). Business that have already registered for the scheme will automatically receive a top-up of $1,000. New registrants will receive the full rebate amount of $3,000.

Available funding under the SBSP program

• Eligible businesses will receive a one-off payment equal to 20% of their NSW weekly payroll.
• The minimum payment for employing businesses is $750 per week, or $3,000 in total.
• The maximum payment for employing businesses is $5,000 per week, or $20,000 in total.
• Non-employing businesses will receive a flat payment of $500 per week, or $2,000 in total

The single lump sum support payment covers only the four weeks in February 2022 and does not cover January 2022.

Weekly payroll should be determined using the calculations underlying the most recently lodged Business Activity Statement (BAS) or Instalment Activity Statement (IAS) that is in respect of a tax period that falls within the 2021–22 financial year. Notably, only the BAS could be used to work out the amount of JobSaver payments but either a BAS or an IAS can be used to work out the amount of the SBSP payment.

As for JobSaver, the amount reported at item W1 on the BAS or IAS should be used:

• Include only worked performed in NSW
• Include allowances, leave loading, directors fees and termination payments
• Exclude superannuation contributions, amounts subject to salary sacrifice, interest or dividend
• Exclude amounts paid to contractors where PAYG withholding has been withheld under voluntary agreements.

The weekly payroll amount is arrived at by dividing the amount reported at item W1 (adjusted for the above exclusions) by the number of calendar days reported in the PAYG withholding section of the BAS or IAS and multiplying the result by 7.

Businesses that do not submit a BAS or IAS, or have no W1 amount should use the ATO’s definition of W1 to calculate the total wages, salaries and other amounts, excluding amounts paid to contractors where PAYG withholding has been withheld under voluntary agreements.

When should a business expect to receive the payment?

Most applicants submitting complete and eligible applications through the Service NSW website should receive payment within 5 to business 15 days of approval of the application.

Payment timeframes can sometimes be extended if applications are:

• incomplete
• require additional verification
• potential fraudulent behaviour is identified.

Eligibility conditions

To be able to claim an SBSP payment, eligible businesses must:

• have had an ABN and were operating in NSW on 1 January 2021;
• have an aggregated turnover of between $75,000 and $50 million (inclusive) for the year ended 30 June 2020 or 30 June 2021 (the business must use the financial year for the income tax return most recently lodged with the ATO);
• have experienced a decline in turnover (DIT) of 40% or more due to the impacts of COVID-19 during the month of January 2022, compared with January 2020 or January 2021;
• have experienced a DIT of 40% or more due to the impacts of COVID-19 from 1–14 February 2022 compared with the same fortnight in February in the comparison year used immediately above; and
• maintain their employee headcount from 30 January 2022 to 28 February 2022.

Key points about the eligibility conditions

• Meaning of aggregated turnover: the same definition used for JobSaver purposes and is defined in s 328-115 of the Income Tax Assessment Act 1997 (ITAA 1997). It includes the annual turnovers¹ of entities (including foreign entities) that are connected with², or affiliates³ of, the business entity.
• Meaning of decline in turnover: an entity satisfies the DIT test for a month if the entity’s current GST turnover for the month falls by at least 40 per cent compared to the relevant comparison period. Current GST turnover has the meaning given by the ITAA 1997 and s 188-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Certain modifications are made for the purposes of the SBSP; these are set out in the Guidelines.
• Businesses must have experienced a DIT due to COVID-19 that has, for example, impacted the business through reduced consumer demand, labour shortages and supply chain disruptions. Businesses that have experienced a DIT for other reasons, such as seasonal variations, or the business closing for the holiday period or for renovations, are ineligible.
• Treatment of gifts and government grants:
  • Registered charities (other than schools or universities) should include gifts and government grants when calculating their DIT.
  • NFP organisations that are not registered charities should exclude gifts but include government grants when calculating their DIT.
  • All other businesses should include government grants when calculating their DIT.
• In determining the employee headcount, the business should count the number of persons who are employed in NSW and who are permanent (full-time or part-time), or casual staff who have been employed by the business for more than 12 months.
  • To maintain their employee headcount, the employer must not take active steps to end the employment relationship with their employees.
  • Employees who have been stood down under the Fair Work Act 2009 or take leave without pay are considered employees for the purpose of the headcount.
  • Businesses remain eligible if their employee headcount declines for reasons outside the control of the employer, for example if employees voluntarily resign, die or retire.
  • Businesses must notify Service NSW if they are not maintaining their employee headcount in accordance with these guidelines
• Certain businesses are specifically listed as ineligible entities (see Attachment B of the Guidelines), including those primarily earning passive income (rents, interest, or dividends).
• Where the annual turnover of a non-employing business is aggregated with an employing business for the purpose of calculating aggregated turnover, the non-employing business is ineligible to apply.
• For non-employing businesses, the business receiving payments must be the primary income source (50% or more of total income) for the associated individual.

How funding may be used

The SBSP payment may be used to cover business costs that include, but are not limited to, the following expenses:

• salaries and wages
• utilities and rent
• financial, legal or other advice
• marketing and communications
• perishable goods, or
• other business costs.

Applications

Eligible businesses will be able to apply for the SBSP from 14 February 2022 until 11:59pm on 31 March 2022. Applicants will be required to complete an online application form through the Service NSW website.

The Guidelines set out the evidentiary requirements, that include:

• making declarations;
• submitting their most recently lodged 2020 or 2021 income tax return with tax file numbers redacted to demonstrate the business had an aggregated turnover⁴ of between $75,000 and $50 million (inclusive);
• evidence of how the weekly payroll amount was calculated;
• lodge other supporting documents as required to demonstrate that the business meets the eligibility criteria.

Businesses with an ANZSIC code listed at Attachment A

A business that is directly impacted by the Public Health Order and have an ANZSIC code listed at Attachment A will need to:

(a) declare that they experienced a DIT of 40% or more due to COVID-19 in January 2022 compared with January 2020 or January 2021;

(b) declare that they experienced a DIT of 40% or more due to COVID-19 from 1–14 February 2022 compared with the same fortnight in February in the comparison year used for January’s DIT; and

(c) identify how the Public Health Order has directly impacted the turnover of the business.

Businesses with an ANZSIC code not listed at Attachment A

Businesses that meet the eligibility criteria but have ANZSIC codes not listed in Attachment A must:

(a) submit supporting evidence to demonstrate a DIT of 40% or more due to COVID-19 during the month of January 2022, compared with January 2020 or January 2021 through either:

(i) BASs or IASs for January 2022 and January 2020/January 2021; or

(ii) a letter from a qualified accountant, registered tax agent or registered BAS agent;

(b) declare that they experienced a DIT of 40% or more due to COVID-19 over the period from 1–14 February 2022 compared with the same fortnight in February in the comparison year used for January’s DIT; and

(c) identify how COVID-19 has impacted the turnover of the business.

Accountant’s letter

A template for the accountant’s letter will be available on the Service NSW website soon.

The letter to show the DIT must be from one of the following:

(a) a qualified accountant as defined in the Corporations Act 2001;

(b) a registered tax agent as defined in the Tax Agent Services Act 2009; or

(c) a registered BAS agent as defined under the Tax Agent Services Act 2009.

Non-employing accounting businesses (e.g. sole traders) must submit a letter from a qualified accountant, registered tax agent or registered BAS agent who is not an employee or director of the business, an associated entity of the business, or a director or employee of an associated entity of the business.

Other circumstances

There are a range of circumstances in which a business may not meet the eligibility criteria and supporting evidentiary requirements but may still be eligible for the SBSP.

These circumstances include:

• new businesses not operating on 1 January 2021
• businesses affected by drought, bushfires or other natural disasters
• business acquisition, disposal or business restructure that has impacted the business’ turnover
• a sole trader or small partnership impacted by sickness, injury or leave
• businesses that are a group employing entity with the principal function of supplying employee labour to other members of a group.

Alternative rules for these businesses are provided at Attachment C of the Guidelines.

Trusts

Additional evidentiary requirements apply where a business operates through a trust structure. The applicant will be required to provide additional information to demonstrate that an aggregated turnover of between $75,000 and $50 million (inclusive) is derived through the trust. The entity operating the business is eligible for the SBSP, not other entities that are receiving passive income from the business.

Payment rates and schedules

A comparison of the former JobSaver program and the new SBSP is set out in Table 1 below.

TABLE 1: Comparison of previous and new JobSaver payment arrangements

Further guidance and information

Further guidance and information on the SBSP is available from the Service NSW website.

If you have any specific concerns that have not been outlined above, please email taxpolicy@taxinstitute.com.au.

Footnotes

¹ See s 328-120 of the ITAA 1997

² See s 328-125 of the ITAA 1997.

³ See s 328-130 of the ITAA 1997.

⁴ The income tax return will not necessarily evidence the entity’s aggregated turnover, as the entity’s ordinary income derived in the ordinary course of carrying on a business, and that of entities connected with them, or their affiliates, is not reported separately on the income tax return. It is, however, a reasonable proxy to ascertain the entity’s aggregated turnover.

⁵ The rates shown for JobSaver are those in effect as of 24 October 2021 when NSW reached an 80% double-dose COVID-19 vaccination rate.

⁶ The amount of the payments tapered from the original rate of 40% of NSW weekly payroll to 30% then to 15%.

⁷ The amount tapered from the original amount of $1,500 to $100,000, to $1,125 to $75,000 then to $562.50 to $37,500.

⁸ The amount tapered from the original amount of $1,000 to $750 then to $375.

⁹ The amount tapered from the original amount of (up to) $300,000 to (up to) $225,000 then to (up to) $112,500

¹⁰ The amount tapered from the original amount of (up to) $500,000 to (up to) $375,000 then to (up to) $187,500.

¹¹ Aggregated turnover is worked out in accordance with s 328-115 of the Income Tax Assessment Act 1997.

¹² Decline in turnover is calculated based on the modified GST turnover. This modified GST turnover is the amount reported at label W1 on a Business Activity Statement.