Federal and NSW government measures to support business and households
The Federal and New South Wales (NSW) governments have announced measures to help individuals and businesses deal with the economic consequences of movement restrictions in areas affected by COVID-19.
The two governments are co-funding the measures. The Federal Government will deliver the support for individuals, and the NSW Government will deliver the support for businesses.
The package announced by the NSW and Federal governments should support the NSW economy through this challenging period.
The NSW economy is highly integrated with the Australian economy as a whole, so supporting NSW will help reduce wider negative economic flow-on effects – including by reducing the risk of COVID-19 spreading further.
The initiatives are in keeping with the key themes the Federal Government has been promoting in that they are targeted and temporary. Importantly, the emphasis is on keeping workers connected to their workplaces and reducing the need for workers to make difficult choices between isolating at home when necessary and working to make ends meet.
The policies are designed to minimise the economic damage that movement restrictions entail, including the potential to blunt the stimulatory policies that have been implemented as part of the recovery phase. Until the vaccination program is successfully executed policy makers will need to maintain a deft touch with one foot on the brake and the other on the accelerator.
Income support for individuals
The Federal Government’s COVID-19 Disaster Payment will increase to a maximum of $600 per week from the fourth week of a person’s place of residence or employment being designated a “hotspot” by the Federal Government.
This payment will move to a weekly recurring amount while restrictions remain, with no need for recipients to re-claim each week.
There is no payment for the first week of hotspot status, and a maximum weekly payment of $500 for weeks two and three.
A key difference compared to the JobKeeper scheme is that individuals claim the payment through Services Australia. Employers do not need to be involved in the process.
The maximum payment applies where the person has lost 20 hours or more of work a week. A lower payment of $375 ($325 for weeks two and three) applies where the person has lost between 8 and 20 hours of work a week. Individuals must also satisfy some further conditions to be eligible.
The payment is taxable income for the recipient (as was the case with JobKeeper). For the sake of comparison, in the final phase of JobKeeper the two tiers of payment worked out at $500 and $325 per week. The current rate of (tax-exempt) JobSeeker payment for a single person with no dependents equates to $310 per week.
The NSW Government will also fund the expansion of the COVID-19 Disaster Payment to cover NSW individuals living or working outside a hotspot, but who have lost work due to the movement restrictions.
Services Australia will also deliver these payments.
Cashflow support for small and medium business
The Federal and NSW governments will jointly fund a weekly support payment of up to 40 percent of a business’s NSW payroll, with the maximum support payment being $10,000 and the minimum $1,500.
The support payment will be available from the fourth week of the NSW movement restrictions to businesses with an annual turnover between $75,000 and $50 million whose turnover is 30 percent lower than in an equivalent two-week period in 2019.
In order to be eligible, these businesses will need to maintain their full time, part time and long-term casual staffing at the same level as it was on 13 July 2021 (the date of the announcement).
These businesses can be expected to weigh up their forecast net cash position from doing what is required to be eligible for the payment, versus the position that would result from taking alternative measures to save on payroll costs.
The NSW Government will administer the support payments through Service NSW.
Certain businesses that have experienced a decline in turnover due to the movement restrictions may be eligible for additional NSW Government grants of up to $15,000, for which the full eligibility details have not yet been released.
NSW payroll tax waivers and deferrals
NSW payroll tax waivers will apply for businesses with Australian wages of between $1.2 million and $10 million that have experienced at least a 30 percent decline in turnover. The waiver will be of 25 percent of the annual liability. Revenue NSW will provide more details on this in due course.
All NSW payroll taxpayers have until 7 October 2021 to lodge their annual reconciliation for 2020-21 and pay any outstanding amount, and can also defer payment of their NSW payroll tax on July and August wages until 7 October 2021.
Landlords and tenants
Residential landlords who agree to a reduction in rent can be eligible for a payment from the NSW Government. Landlords who do not pay NSW land tax can receive a grant of up to $1,500 if they reduce their tenant’s rent.
Landlords who pay land tax can receive land tax relief of up to 100 percent of their land tax liability for 2021, where they agree rent reductions of an equivalent amount. This also applies in commercial and retail situations.
The NSW Government will also implement limitations on evictions during this period of movement restrictions.