Tight eligibility criteria could exclude small businesses from Victoria’s lockdown payments

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Eligibility criteria for the Victorian government’s Business Support Package could exclude SMEs that have been forced to stand down staff without pay, or those that have remained partially open.

Applications are open for up to $7,000 in grant funding for businesses affected by the latest COVID-19 snap lockdown. However, accounting body CPA Australia has raised concerns over which businesses will be eligible, and which will not.

First and foremost, the Business Costs Assistance Program requires applicants to be registered for Goods and Services Tax as of Thursday, 27 May.

“Requiring applicants to be registered for GST excludes some small businesses such as performers who haven’t registered but can no longer work,” Gavin Ord, senior manager for business and investment policy at CPA Australia, tells SmartCompany.

However, under the eligibility criteria for both the assistance program and the Licensed Hospitality Venue Fund, businesses with employees must also show they are offering paid leave to workers.

The Business Victoria page relating to the package states that the grant funding can be used to assist with meeting utilities, wages or rent; seeking financial and legal advice; marketing and communications activities; and other supporting business activities.

However, it also says: “The applicant must 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 circuit breaker action, and supporting their casual workers, where possible.”

This suggests businesses that have stood down staff members without pay may not be entitled to the funding.

But, “the attestation requirements regarding support for workers are unclear,” Ord notes.

This could mean businesses that were forced to stand down workers immediately find themselves ineligible for support.

Finally, in their application, businesses are required to show they meet the eligibility criteria, and attest they “intend to remain trading at the end of the circuit breaker action”.

This places unfair pressure on businesses already facing considerable uncertainty.

“On the face of it, a business owner who isn’t sure they’ll be able to continue trading after the lockdown ends can’t apply,” Ord observes.

Arguably, it should go without saying that business owners want to stay in business. But, this begs the question as to what happens if they receive grant funding, but still can’t survive.

Confusion and contradiction

There is also a question mark over whether a business that hasn’t been forced to close because of the snap lockdown, but has lost income because of it, is eligible for the grant funding.

One section of the FAQ regarding the Business Costs Assistance Program states that businesses in eligible sectors that are continuing to operate but are “unable to carry out their usual business activity” can apply for the grant and “may be eligible”.

The document cites retailers switching to click-and-collect and restaurants offering takeaway as examples.

However, another section says: “Businesses that are continuing to operate or can work from home during restrictions are not able to apply.”

It goes on to list examples including essential retail and professional services as examples.

“Businesses that are allowed to remain open may nonetheless experience significant losses because of the lockdown,” Ord says.

“They should be eligible to apply for the grant.”

But the very fact that there’s any confusion or contradiction here is troubling in itself.

When the lockdown period is so short, affected businesses need to know whether or not the eligibility criteria apply to them as quickly as possible. That means the rules need to be easy to understand.

“It’s disappointing that feedback isn’t being taken on board to improve programs such as this, especially given the likelihood they’ll be needed again in future,” Ord says.

A litany of errors

This isn’t the first time Victoria’s state government grants programs have been criticised.

In April this year, a report from the Victorian Ombudsman Deborah Glass found the state government may have unfairly rejected COVID-19 grant applications from more than 12,000 businesses.

Applications were rejected because of typing errors, missed emails and other honest mistakes, the report found.

And while some businesses have since received the funds they’re entitled to, others say they’re still waiting.

SmartCompany has also received reports of business owners who have not received funding promised from the five-day lockdown in February 2021.

Has your business missed out on state government grant funding due to strict eligibility criteria? Are you still waiting on support? Let us know in the comments.

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Shaun
Shaun
4 months ago

A friend asked me to help him apply – he’s a sole trader running a small lawn mowing business. Last year he couldn’t work for much of the year, and he couldn’t work for a week in this new lockdown, although they’ve changed the criteria now.

His business turnover is less than $20,000 a year – and so he isn’t registered for GST as you don’t have to until you hit $75,000. But because of this it looks like he’s not eligible for any support from this state government grant program and that seems ridiculous to me – these are some of the lowest income workers around and they can’t get help?

Paul D
Paul D
4 months ago

Cynics said yesterday that you would be more likely to catch COVID than to be eligible for the Federal Government relief (and i agree with that).

Just as that was the case, it is definitely more likely that you will catch COVID and the whole of Victoria will go into lockdown on the back of false positives, than you will get any grants this time around.

I should be running a Brothel. At least I would qualify!

Therese
Therese
4 months ago
Reply to  Paul D

I wouldn’t recommend that. They were shut down for 8 months straight last year.

James
James
4 months ago

I run a small business providing accommodation in metro Melbourne. This lockdown has resulted in us not only losing all bookings for the duration but well beyond it (and it will slow our business down while guest confidence is low). We are not YET registered for GST because we are below the $75k threshold. This is of course in accordance with the law but has now meant we are not eligible for any financial support. We’re on our knees like so many other businesses in a similar position. I can’t for the life of me work out the reason why we are being excluded.
According to their FAQ their reason for it is “being registered for GST indicates that your business was actively trading prior to 27 May 2021 up to now.” This is insane — of course businesses will have other ways to provide they were trading before 27 May. I mean, they could do something as simple as look up when the ABN was registered. How much more stress do they want to put on people who have all been doing the right thing and keep getting hurt?!

Heather
Heather
4 months ago
Reply to  James

Completely agree and I am also in the same boat with cancelled bookings. This is effecting so many accommodation hosts. I am waiting for a reply to my asking them why?

Lisa Jacobson
Lisa Jacobson
4 months ago

Yes, I resigned from my full time family services job in April to launch my own dog training business as a sole trader. I am not yet earning enough to claim GST, if I were where is the ANZSIC code for dog obedience trainers? And does the government mean to say they will reimburse brothels (nothing wrong with that), gyms and hairdressers. But not dog trainers. As in 2020, please explain.

trudy
trudy
4 months ago

we own two small business. Owner occupier of a PT studio. A one man show ..just one on ones. we pay the morgage on the freehold and body corp. Shut down . cause we dont pay gst or employ anyone we are not entitled to anything.
Our other business is a cafe in a age care. No visitors. No income ..Im small with no overheads so we dont pay gst. I do employ one person for 4 hours a week causal and i dont have to have workcover. I also have a part time job in the age care kitchen for 10 hours a week which meant i wasnt entitled to jobkeeper. We have received nothing . And yet we have a freehold that we need to pay a morgage on and personal bills . We are regional and have never had a case in our shire. Been tough.

Janet Holtkamp
Janet Holtkamp
4 months ago

We run a tourist business we have to pay rent and other ongoing costs also we discontinued our GST because we earn under the $75,000 threshold this is very unfair we feel forgotten and under a lot of stress because we want to continue our business we are the forgotten business owner.

April
April
4 months ago

I am in the same boat, a Sole Trader earning under $75,000 a year so am not required to register for GST. I have been in business and paying tax for the last 5 years. But the application does not let you put in that any of that information. I meet all other criteria. Absolutely ridiculous.

Karen
Karen
4 months ago

I’m a sole trader in the beauty industry. I work from home so of course l don’t earn enough to register for GST. Last year was terrible & this year follows suit. As so many others, l haven’t been able to work during lockdown & l’m sure l won’t be able to work in the coming days or weeks! Over the past 2 months l started seeing an increase in booking from last year, but now this had happened so it’s back to square one. My main issue is once lockdown is over & we can go back to sub normal living, no one will have money to spend on beauty treatments particularly the people who, like me, haven’t had any income during our 4th lockdown. Under the business guidelines, l don’t qualify for any help. We have been forced to stop work by the government so it’s only right we get some sort of financial help from them. Small business like me just won’t survive if this continues to happen. ☹️

Peter
Peter
4 months ago

Seems incredibly unfair the sole traders that couldn’t work because of last year aren’t able to get the funds. I just don’t see the logic in using the GST threshold to see the legitimacy of the business. I’ve just started picking up clients like everyone to now have everything cancelled again and left with no support. Disappointed.

Luke
Luke
4 months ago

I am a professional musician who has worked in the entertainment industry for over 10 years. In that time, I have never registered for GST, due to the fact I have never earned in excess of $75,000. During this circuit breaker lockdown, I lost all of my bookings, equating to nearly $4000. I was fortunate to receive JobKeeper in 2020 when this horrible situation struck, however, I was mortified to discover that I was ineligible for the Business Costs Assistance Program merely due to the fact that I was not registered for GST. The message from the Andrews government is rhetorical: “We’re all in this together, stay strong, Victoria!”. We are clearly NOT all in this together are we, Mr. Andrews? My heart goes out to the other commenters on this thread and the thousands of sole traders in this state. At least we can be “In this together.”

Last edited 4 months ago by Luke
Rod
Rod
4 months ago

Sole Traders left out in the cold… Despite owning and operating a small businesss for the past 20 years, once again those sole traders who earn less than $75,000 and as such do not pay GST have been excluded from any Circuit Breaker Covid 19 support grants. Accommodation bookings have been cancelled, guests returning to homes prior to lockdown curfews, long weekend bookings lost from Melbourne residents unable to leave to regions and no booking in between with lockdowm extensions….. The great divide remains and the Victorian Government needs to rethink and pro actively and immediately provide funding support for small business sole traders.

Sue Keogh
Sue Keogh
4 months ago

I am another sole trader earning under $75,000. My business Baby Gym is closed due to lock down. I will have to pay back all my clients!! Is there any thing that can be done??

Troy
Troy
3 months ago

Hi All
Jumped on the net looking for some support after being rejected for the business support package no 2 as our ANZIC class does not meet the eligibility requirement.

With the recent shut downs associated with lock down number what ever this one is, Real estate was on line only, with no building inspection allowed, our core business is pre purchase building inspections for clients interested in purchasing real estate we didn’t work for over 2 weeks yet we don’t fit the eligibility requirements.

I know that this would be the case for so many others as well, the slap in the face is that due to loop holes with the Anzic class some business’s can still operate and apply for the grants .. and get them!?
We have applied for all grants and have been rejected for all,for different reasons each time, there is no consistency and no account for emerging industries because we don’t fit the criteria.

Business Victoria your criteria is a disgrace.

Jacinta chappel
Jacinta chappel
3 months ago

I’m a sole trade not gst registered I’ve been locked down 5 times now and the last two times I haven’t been eligible for any money the Victorian government is being biased and only funding gst registered business why do we not matter we have no income all why isn’t anyone fighting for us now again I have no income anc forced to shut

daniel tyrrell
daniel tyrrell
3 months ago

The list of eligible business sectors was so short and didn’t just apply to those that were not allowed to work? WTF. And you cant talk to anyone about why not.

Joseph Carter
Joseph Carter
3 months ago

Why are sole traders who are not eligible putting up with this complete over site by the Government it’s wrong and needs to be rectified ASAP
How are we expected live and pay the ongoing business and personal exspences on ZERO INCOME?

Last edited 3 months ago by Joseph Carter
Edward Macwhirter
Edward Macwhirter
2 months ago

I am a small business owner of a takeaway Fish n chip shop, so therefore I can stay open. Probably cheaper to close, being on the surf coast, the effects of these locodowns are just as costly if not more, as I still have ALL the running costs, plus all the fresh produce, that has to be thrown away, no exceptions, it is hazardous foods, fresh seafood etc. So due to that, I am not eligible. I have an ANZSIC code of 4512, which from all of the hospitality sectors, mine is the one to miss out. There are 5 sectors for hospitality, and 4 out of 5 are eligible, 1 is not. Yet it is in the same category, sub class. Absolutely ludicrous, for round 3 all are apparently eligible. The government’s way, out of actually helping small businesses, that actually need it, to get through. All staff hours have been reduced, customers are almost not exsistant, I am registered for get, I have workcover, coved safe plan, qr codes, harassed by services Vic, to make sure I was compliant, tier 1 and 2 exposure sites, in the small community where I am. I am a new business, not even 2 years, struggle since the start, as I opened just before coved it, in 2019, not sure how we are meant to survive, with crumbs if we are lucky, and my grant application is still wait for assessment, from the 4/6/2021

Paramdeep Singh
Paramdeep Singh
2 months ago

Hi,
I have a business but not registered for gst. The business has been operating since 2014 till now except during lockdown. Am i eligible for any business grant?
Thank you.

Jane
Jane
2 months ago

Another sole trader here and fed up, like so many others, that as a small trader and no GST registration, I have lost all my income. Is there anything for Victorian businesses? I’d be more accepting if this was all for genuine reasons, but many of us know full well that we are all being played.

Kylie
Kylie
1 month ago

Am I the only person asking why this is happening? I only run my small business to bring in an income while I study to try & increase my income & wonder why they would leave out this group of self employed earners under $75k? There has to be a logical answer or something is not right.
Are we being punished for supporting ourselves (before lockdowns) & not relying on others to support us?