2021 COVID-19 micro-business grant – Guidelines

1. About the program

On 26 June 2021, the Public Health (COVID-19 Temporary Movement and Gathering Restrictions) Order 2021 (the Public Health Order) was issued. This and other subsequent orders have restricted freedom of movement, gatherings and the ability of certain businesses to operate in New South Wales.

These measures combined with border restrictions imposed by other states and territories have created challenges for many micro-businesses across New South Wales that will either be forced to close, or experience reduced demand.

To help address these impacts, the 2021 COVID-19 Micro-business Grant (the Grant) will provide cash flow support to micro–businesses with an aggregated annual turnover more than $30,000 and less than $75,000. The Grant will help micro-businesses survive the restrictions so they can continue to support the economy after restrictions are lifted.

The Grant will be available to micro-businesses in New South Wales impacted by the Public Health Order that meet the eligibility criteria outlined in this document.

Service NSW will deliver the Grant on behalf of the NSW Government.

By applying for this Grant, applicants agree:

• their application may be subject to an audit by the NSW Government or its representatives and agree to participate in the process if requested, and
• Service NSW and Revenue NSW may use other data provided by applicants to other government agencies to assist with determining eligibility for the Grant.

A public reporting channel will be established to allow people to report employing businesses not adhering to these Guidelines.

2. Available funding

2.1 Eligible businesses (including non-employing businesses such as non-employing sole traders) and not-for-profit organisations can apply for a fortnightly payment to cover business expenses for the period in which they experience a decline in turnover as a result of the Public Health Order.

2.2 Eligible businesses will initially receive a payment of $1,500 per fortnight. On 30 October 2021, after New South Wales reaches 80% double dose vaccinations, the fortnightly payment will reduce to $750 per fortnight. Payments for all grant recipients will cease on 30 November 2021.

3. Eligibility criteria

3.1 Businesses and not-for-profit organisations impacted by the Public Health Order will be eligible if:

• they have an Australian Business Number (ABN) as at 1 June 2021 registered in, or can demonstrate they are primarily operating in, New South Wales;
• they had an aggregated annual turnover of more than $30,000 and less than $75,000 for the year ended 30 June 2020;
• they experienced a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period within the period of restrictions (commenced 26 June 2021), compared to:
  • the same period in 2019, or
  • the same period in 2020, or
  • the 2 weeks immediately prior to any restrictions of 12-25 June 2021 (inclusive).
• they have business costs for which there is no other government support available;
• they have not applied for either the 2021 COVID-19 Business Grant, or the JobSaver scheme;
• for employing businesses, they maintain their employee headcount from 13 July 2021, if they receive payments from the commencement of the Micro-business Grant, or from the day immediately prior to the fortnight they first experienced the required decline in turnover; they must maintain this employee headcount while they continue to receive grant payments (businesses that do not maintain their headcount agree to notify Service NSW); and
• for non-employing businesses, the business receiving payments must be the primary income source (i.e. 50% or more of total income) for the associated person.

3.2 Individuals with more than one non-employing business may only claim payments for one business.

3.3 Certain entities, such as those primarily earning passive income (rents, interest, or dividends), government agencies, local governments, banks and universities are not eligible for the Micro-business Grant. The full list of ineligible businesses is at Attachment A.

3.4 Non-employing businesses are not eligible to apply if persons associated with the business, and who derive income from it, have received a Commonwealth COVID-19 Disaster Payment for the same period.

3.5 Where the annual turnover of non-employing businesses is aggregated with  employing business(es) for the purpose of calculating aggregated annual turnover, the non-employing businesses are ineligible to apply.

3.6 Employees can receive Commonwealth COVID-19 Disaster Payments if their employer is receiving the Grant.

3.7 Businesses located in the Jervis Bay Territory that were not operating in New South Wales on 1 June 2021 will be eligible for the Grant if they meet all other eligibility criteria.

3.8 Registered charities are not eligible if they are receiving COVID-19 support from:

• the NSW Department of Communities and Justice Social Sector Support Fund (SSSF).
• Commonwealth-funded Business Continuity Payments (e.g. in the early childhood education and care sector).

3.9 If a business or not-for-profit organisation is ineligible based on the above criteria, but is still suffering financial hardship, they may be eligible to apply through the hardship review pathway.

4. How funding may be used

4.1 The Grant will help eligible micro-businesses with costs incurred due to the impacts of the Public Health Order in New South Wales. These costs may 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.

4.2 The Grant must only be used for expenses for which no other government support is available. For example, the Grant cannot be used to pay government fees and charges that would be covered by the Small Business Fees and Charges Rebate.

5. Application process

5.1 Applications will open on 26 July 2021 and close after 11:59pm on 18 October 2021.

5.2 Upon successful application, businesses will receive automatic fortnightly payments.

5.3 Payments will be made in arrears. Businesses will need to nominate the 2-week period in which they first experienced the required decline in turnover on or after the commencement of the Micro-business Grant scheme on 26 June. Once approved, payments will begin from that nominated fortnight.

5.4 Businesses that received the Small Business Fees and Charges Rebate can apply for this Grant.

5.5 Only one application can be submitted for a single ABN.

5.6 Only one application is permitted where there are multiple businesses under a single ABN.

5.7 From 10 September 2021, to continue to receive fortnightly payments, businesses will need to declare that they continue to be impacted by the public health order and as a result experienced a decline in turnover of 30% or more in the preceding fortnight, and that they continue to maintain their employee headcount. 

5.8 Businesses must notify Service NSW through the fortnightly reaffirmation process if they are not maintaining their employee headcount in accordance with these guidelines, or if they are no longer being impacted by public health order, resulting in a 30% or more decline in turnover. Reductions in employee headcount resulting from circumstances outside the control of the employer (such as voluntary resignations) will not be taken as a reduction in employee headcount. 

6. Evidence in support of eligibility

6.1 Eligible businesses applying for the Grant are required to:

• declare they experienced a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period within the period of restrictions (commenced 26 June), compared to:
  • the same period in 2019, or 
  • the same period in 2020, or 
  • the 2 weeks immediately prior to any restrictions of 12-25 June 2021 (inclusive).
• if they are not on the highly impacted industries list (see Attachment B), they must also submit evidence of this decline in turnover in the form of a:
  • letter from a qualified accountant, registered tax agent or registered BAS agent; or
  • business bank account statement (separate from any personal accounts), or
  • profit and loss statements from an accounting software and an annotated personal bank statement
• submit evidence they had an aggregated annual turnover of more than $30,000 and less than $75,000 for the year ended 30 June 2020. This can be in a form of a:
  • letter from a qualified accountant, registered tax agent or registered BAS agent; or
  • Business Activity Statement (BAS), or
  • business bank account statement (separate from any personal accounts); or
  • Australian tax return (businesses can choose to redact their tax file number), or
  • a profit and loss statement from an accounting software for a minimum 3-month period during the 2019-20 financial year, and one of the following documents:
    • an annotated personal bank statement for the same minimum three-month period, or 
    • a 2019-20 personal income tax return. 
• if they do not have employees, declare the business is the primary income source for the owner of the business (i.e. 50% or more of total income),
• if they do have employees, declare they will maintain their employee headcount from 13 July 2021 if they receive payments from the commencement of the Micro-business Grant, or from the day immediately prior to the fortnight they first experienced the required decline in turnover, for the period the business is receiving grant payments; the business must notify Service NSW if employee headcount declines over the period of the payment due to any actions of the business, and
• lodge other supporting documents, as required, to demonstrate that they meet the eligibility criteria.
• From 10 September 2021 to be eligible for ongoing fortnightly payments, businesses will need to declare that they experienced a decline in turnover of 30 per cent or more due to the impact of the Public Health Order in the preceding fortnight, and that they continue to maintain their employee headcount.

6.2 Businesses that are unable to provide sufficient evidence of eligibility are ineligible for the Grant.

6.3 Where a business is not registered for GST, it may use the same accounting method it uses for income tax purposes to determine decline in turnover.

6.4 For not-for-profit organisations, when calculating aggregated annual turnover or decline in turnover the JobKeeper modifications to include gifts and exclude grants do not apply.

Calculating decline in turnover

6.5 Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) (“registered charities”), other than schools or universities, should include gifts (e.g. donations) and Government grants when calculating decline in turnover.

6.6 For not-for-profit organisations that are not registered charities, gifts should be excluded and Government grants included when calculating decline in turnover.

Alternative circumstances

6.7 Micro-businesses primarily operating in New South Wales with their ABN registered business address elsewhere should contact Service NSW. They may be able to apply if they can provide evidence their business was primarily operating in New South Wales on 1 June 2021. Evidence to demonstrate this includes commercial rates notices or lease agreements. Where a rates notice or lease agreement is not available, Service NSW may accept a combination of the following:

• utility bills 
• insurance papers 
• supply invoices 
• registration papers 
• contractor licences.

6.8 There are several circumstances where a business may not meet the eligibility criteria and supporting evidence requirements, but still may be able to apply. These circumstances include: 

• businesses not operating for the full year to 30 June 2020 (e.g. new businesses) 
• 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.

Businesses in these circumstances should contact Service NSW to determine if an alternate comparison period, or alternative supporting evidence, can be applied.

6.9 Where a business operates through a trust structure, the applicant will be required to provide additional information to demonstrate an aggregated annual turnover of more than $30,000 and less than $75,000 is derived through the trust. The entity operating the business is eligible for the Grant, not other entities that are receiving passive income from the business.

6.10 Service NSW can request a combination of the following documents to support its determination of eligibility:

• accountant’s letter
• prior Business Activity Statements
• Australian tax returns 
• profit and loss statements prepared by a qualified accountant
• receipts and invoices from sales
• business bank account statements (separate from any personal accounts).

6.11 Where a micro-business is unable to provide these documents, or where Service NSW is satisfied it has other suitable methods to determine eligibility, Service NSW may accept another form of documentation.

6.12 Micro-businesses requiring assistance with their online application can contact Service NSW on 13 77 88.

7. Definitions

Aggregated Annual Turnover: means aggregated turnover as defined in s. 328-115 of the Income Tax Assessment Act 1997 (Cth) (“ITAA 97”). Aggregated turnover includes the annual turnovers of entities (including foreign entities) that are connected with or affiliates of the business entity. The ATO has further information on calculating aggregated turnover.

For charities registered with the Australian Charities and Not-for-profits Commission (ACNC) (“registered charities”), when calculating aggregated annual turnover, gifts and Government grants should be included.

For not-for-profit organisations that are not registered charities, gifts should be excluded and Government grants included when calculating aggregated annual turnover.

Business: an entity carrying on a business as per the Corporations Act 2001 with an ABN.

Decline in turnover: an entity satisfies the decline in turnover test for a fortnight if the entity’s current GST turnover for the fortnight falls by at least 30% compared to the relevant comparison period.

• Current GST turnover has the meaning given by the Income Tax Assessment Act 1997 (Cth) and the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
• Modifications: In calculating current GST turnover, an applicant would need to make the following adjustments:
  • section 188 15 of the GST Act applies as if a reference to a month were a reference to the fortnight;
  • subsection 188 15(1) of the GST Act is to be applied at the end of the fortnight;
  • subsection 188 15(1) of the GST Act has effect as if the reference in that subsection to “, or are likely to make, during the 12 months ending at the end of that month,” were instead a reference to “during that fortnight”;
  • subsection 188 15(2) of the GST Act (about members of GST groups) is to be disregarded;
  • each external Territory is treated as forming part of the indirect tax zone (within the meaning of the GST Act).
• Modifications – Registered charities: In calculating current GST turnover:

(a) for an entity that is a deductible gift recipient or a registered charity – each gift received by the entity in the period (other than from an associate) results in the following treatment:

(i) the entity is treated as making a supply in the period for consideration; and

(ii) the value (within the meaning of the GST Act) of the supply is treated as being equal to the amount of the gift (if the gift is money) or the market value of the gift (if the gift is not money).

(b) include, for the avoidance of doubt, any supply made by an entity to which paragraph (a) of this modification applies if consideration for the supply was provided by an Australian government agency, a local governing body, the United Nations, or an agency of the United Nations.

(c) for an entity covered by paragraph (a) – an amount or property received (unless received as consideration for a supply covered by paragraph (b)) by the entity from an Australian government agency, a local governing body, the United Nations, or an agency of the United Nations results in the following treatment:

(i) the entity is treated as making a supply in the period for consideration; and

(ii) the value (within the meaning of the GST Act) of the supply is treated as being equal to the amount (if money) or the market value of the property (if not money).

Employee has the same meaning as its ordinary or common law meaning. Where it is not known whether there is an employee/employer relationship, businesses and non-profits should consider the guidance provided by the ATO.

For the purposes of this program references to an employee include a religious practitioner of a religious institution if the religious practitioner meets the following criteria:

• they are not employed by the religious institution
• they are a minister of religion or a full-time member of a religious order and were undertaking activities in pursuit of their vocation as a member of the religious institution as at 13 July 2021 if the religious institution is receiving payments from the commencement of the Grant, or as at the day immediately prior to the fortnight in which the religious institution first experienced the decline in turnover
• they receive from the religious institution a payment for undertaking activities in pursuit of their vocation as a religious practitioner and as a member of the religious institution
• on 13 July 2021 if the religious institution is receiving payments from the commencement of the Grant, or on the day immediately prior to the fortnight in which the religious institution first experienced the decline in turnover, they were both:
  • aged at least 18 (or were 16 or 17, and were independent or not undertaking full-time study); and
  • an Australian resident (within the meaning of section 7 of the Social Security Act 1991), or a resident for income tax purposes and the holder of a special category (Subclass 444) visa.

Employee headcount: the number of persons who are employed in New South Wales and who are permanent (full-time or part-time), or casual staff that have been employed by the business for more than 12 months.

Independent Practitioner: is not an employee or director of the applicant, an associated entity of the applicant, or a director or employee of an associated entity of the applicant.

Maintain their employee headcount means maintenance of the employer-employee relationship consistent with employment law. Employees who have been stood down under the Fair Work Act 2009 or take leave without pay are considered employees for the purpose of headcount. Businesses will remain eligible if their employee headcount declines because employees discontinue their employment relationship for reasons outside the control of the employer, for example if they voluntarily resign or retire.

Micro-business means a business that:

1. holds an Australian Business Number (ABN)
2. has aggregated annual turnover of less than $75,000, and
3. has fewer than 20 FTE employees as at 1 June 2021.

Micro-business Owner is a sole trader, partnership, private company or trust that carries on a business.

Non-employing business means a business that does not have employees. This may include a range of entity types, such as non-employing sole traders or any other businesses without employees.

Not-for-profit organisation means an entity whose principal objective is not the generation of profit. A not-for-profit entity can be a single entity or a group of entities comprising the parent entity and each of the entities that it controls.

Qualified accountant, registered tax agent or registered BAS agent means an Independent Practitioner that is a:

• qualified accountant as defined in the Corporations Act 2001;
• registered tax agent as defined under the Tax Agent Services Act 2009; or
• registered BAS agent as defined under the Tax Agent Services Act 2009.

Registered charity means an entity that is registered with the Australian Charities and Not-for-profits Commission (ACNC).

Religious institution means an entity that was: 

• an ACNC-registered charity, registered under the sub-type ‘advancing religion’ as at 1 June 2021; and 
• on 1 June 2021, one of the following:       
  • a non-profit body that pursued its objectives principally in Australia, or 
  • a deductible gift recipient (DGR) endorsed, under the Overseas Aid Gift Deductibility Scheme (DGR item 9.1.1) or for developed country relief (DGR item 9.1.2), either as a public fund or for a public fund it operated.

Attachment A: Ineligible businesses

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

• the business is a company in liquidation or provisional liquidation
• the business is an individual who has entered bankruptcy
• the business has been found to have been engaged in fraud
• the business registered its Australian Business Number (ABN) after 1 June 2021 or has backdated its ABN to before 1 June 2021 for the purposes of eligibility
• where passive income, such as rent, interest, dividends and royalties, is more than 50% of the business’ income (note: if passive income is more than 50% of a business’ income but the business is actively providing services that relate to the passive income, the business should contact Service NSW to discuss their circumstances).

Attachment B: Highly impacted industries

Attachment C: Alternative rules for businesses that do not meet standard eligibility criteria for the COVID-19 Micro-business Grant