Small Business COVID Hardship Fund (Vic) release!
Last Thursday (12 August 2021), the Victorian Government released full details of the Small Business COVID Hardship Fund intended to assist eligible small and medium businesses whose operations have been severely impacted by COVID restrictions that have been in place between 27 May 2021 and August 2021.
This program offers grants of $10,000 to eligible small and medium businesses, including employing and non-employing businesses.
Application are open from Thursday 12 August 2021 until program funds are exhausted or Friday 10 September 2021, whichever is earlier
This program intends to offer support for more businesses who have previously not received support via other COVID support packages. Grant funds must be used to assist the business with meeting business costs (ie. utilities, wages, rent), developing marketing and communications activities; or any other supporting activities related to business.
Who is not eligible to apply?
Before we consider the eligibility criteria, it is worth noting which businesses are not eligible to apply for this support package.
Businesses will not be eligible to receive this grant if they have previously received support under any of the government COVID support packages launched on and after 27 May 2021, including:
- Business Costs Assistance Program Round Two
- Business Costs Assistance Program Round Two Extension
- Licensed Hospitality Venue Fund 2021
- Licensed Hospitality Venue Fund 2021 – July Extension
- Alpine Resorts Support Program
- Victorian Events Support Package, comprising of:
- Sustainable Events Business Program
- Impacted Public Events Support Program
- Independent Cinema Support Program
- Live Performance Support Program (Presenters)
- Live Performance Support Program (Suppliers)
Further information on the packages listed above can be seen via the Business Victoria website.
Finally, organisations that operate a private gender-exclusive club where membership is only by invitation or nomination by an existing member are not eligible for this support package.
What are the Eligibility Criteria?
To be eligible for this support package, a business must satisfy all of the following:
- be located within Victoria; and
- as a direct consequence of COVID restrictions since 27 May 2021 (the "Impacted Period"), have experienced a reduction in turnover of at least 70% for a minimum consecutive two-week period comparable to a "Benchmark Period" in 2019 (note alternative arrangements are available for businesses who do not have a trading history in 2019 – explained below); and
- have an annual Victorian payroll of up to $10 million in 2019-20 on an ungrouped basis; and
- be registered for Goods and Services Tax (GST) on and from 28 July 2021; and
- hold an Australian Business Number (ABN) and have held that ABN on and from 28 July 2021; and
- be registered with the responsible Federal or State regulator (ie. Australian Securities and Investment Commission (ASIC); the ACNC for charities and not for profits; and Consumer Affairs Victoria (CAV) for incorporated associations.); and
There are two additional eligibility requirements for employing businesses (ie. defined as those businesses required to be registered for WorkCover insurance or equivalent):
- be registered with WorkSafe Victoria; and
- attest that the business is supporting its workers to access any paid leave entitlements, or that if a person can work from home, to work from home during the COVID restrictions, and supporting their casual workers, where possible.
We will clarify here that a business which does not employee staff is eligible to consider this support package, and you should simply ignore the two additional requirements (g) and (h) above.
There are a few concepts within the eligibility criteria which need to be explained in further detail below.
Condition (2) - How do I calculate business turnover?
Turnover is measured as the GST turnover of the business. This will be a familiar concept for businesses who received (or applied for) the JobKeeper Support Payment during 2020.
GST turnover is the total business income (not profit) minus:
- GST included in sales to customers;
- sales that are not for payment and are not taxable;
- sales not connected with the business;
- input-taxed sales;
- sales not connected with Australia.
If you need a refresher, more information is available on the Australian Taxation Office website.
We note that while there is no specific guidance provided on whether you should use a cash or accruals basis for calculating your GST turnover, we recommend you use the accounting method which your business had adopted before this support package was announced. We would not recommend changing methods just to satisfy the 70% reduction in business turnover requirement..
Condition (2) - How do I calculate the 70% reduction in business turnover?
To calculate whether your business has experienced a 70% reduction in turnover, consider the following steps:
- Select a minimum consecutive two-week period (the Impacted Period) since 27 May 2021 where your business turnover was most impacted by COVID restrictions.
- Select a minimum consecutive two-week trading period (the Benchmark Period) in 2019, or an "Alternative Period") as explained below, as a comparison point. Then this two-week trading period can be any two consecutive weeks within the benchmark period (27 May – 10 September 2019).
- Calculate the reduction in turnover using the following formula:
- Reduction in turnover % = [1 - (GST turnover in Impacted Period/GST turnover in Benchmark Period)] x 100
If your calculations give a reduction in turnover of less than 70%, then your business is not eligible for this program.
It is important to note that if your business was not operational in 2019, you can compare the GST turnover amount calculated for the Impacted Period to a minimum consecutive two-week period between 1 February 2021 and 28 July 2021 (the Alternative Period).
Condition (2) - The 70% reduction in business turnover needs to be attested by a Qualified Accountant/Agent
When calculating your 70% reduction in turnover, it will be necessary to have supporting evidence to prove the calculation. It is a requirement that the calculation of the 70% reduction in turnover must be attested to by a qualified accountant (Qualified Agent). Your Lowe Lippmann Relationship Partner can assist with this requirement.
The Qualified Agent may submit an application on behalf of the applicant. Alternatively, if you prefer to submit the application for your business, you will still be required to include a PDF copy of a signed copy of a "Letter from the Qualified Agent", which the Victorian Government will accept as confirmation that a Qualified Agent attests the calculations of the reduction in turnover are accurate.
How to apply?
You can only apply for one grant per ABN. If you have separate ABNs for your businesses, you must submit separate applications for each ABN and each business (under each ABN) must satisfy all the eligibility criteria.
Your Lowe Lippmann Relationship Partner can assist with the application process on your behalf and verify the 70% drop in business turnover as part of the application.
Alternatively, you can apply directly as a business owner and have the application verified by Lowe Lippmann as your Qualified Agent.
An application can be prepared and submitted via the Business Victoria website.
The Victorian Government or our representatives may audit your application, so you will need to produce evidence at the request of the Victorian Government.
What evidence and supporting documentation is required?
- To demonstrate a reduction in turnover of at least 70% for a minimum consecutive two-week period, the following evidence to support calculations for both the Benchmark Period and the Impacted Period;
o a Business Activity Statement (ie. month, quarter or annual statement);
o total sales;
o financial statements; and/or
o bank statements.
- Endorsement of the reduction in turnover by a Qualified Agent may require evidence including sales reports, financial statements and/or a BAS to demonstrate the reduction in turnover.
- A valid proof of identity document (ie. Australian driver licence, Australian Passport, Medicare Card or Australian visa information and foreign passport).
- If you are an employing business, you will need to:
o be registered with WorkSafe Victoria
o attest that their business is supporting:
o its workers to access any paid leave entitlements
o its workers to work from home during COVID-19 Restrictions, where possible
o its casual workers, where possible.
- If you are an employing business, you will need to include your unique WorkCover Employer Number (WEN) on your application. Your WEN can be found on the top right-hand corner of your 2020-21 invoice from WorkSafe Victoria.
- Non-employing businesses do not need to provide a WEN on their application.
We note that the Victorian Government has stated that they endeavour to process applications and notify successful outcomes within 15 business days of receiving a completed application.
However, we must stress that incomplete or incorrect information may delay your application assessment.
Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.