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The $250 million Victorian business support package and federal COVID disaster payment announced last week have each attracted mounting criticism over eligibility criteria that exclude a large cohort of small business owners.
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Federal and state support packages criticised for leaving sole traders behind
08 June 2021
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Victoria’s doubled-pronged targeted business support package, announced by acting Premier James Merlino last week, leaves businesses earning below the threshold required to register for GST ineligible.
Gavin Ord, senior manager of business and investment policy at CPA Australia, said the exclusion of businesses that aren’t registered for GST is inequitable.
“The way the eligibility criteria are framed, it’s inevitable that some businesses which experience significant losses won’t qualify for support,” Mr Ord said. “While it may help with the processing of applications, it’s inequitable to exclude businesses which aren’t registered for GST.”
Victoria’s $250 million targeted business support package includes $2,500 grants to assist small businesses with payrolls less than $10 million, and $3,500 venue grants for hospitality businesses holding an eligible liquor licence and food certificate.
The package will also only be made available to businesses that have been closed as a result of Victoria’s circuit-breaker restrictions. Mr Ord said it was unreasonable to exclude those who might not be geographically affected, as they still may shoulder significant losses.
“Limiting grants to businesses which closed due to the lockdown ignores the reality that businesses which remain open may also experience significant losses,” Mr Ord said. “They should be eligible if they can demonstrate significant impacts.
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“Some of the attestation requirements are unclear and require a degree of guesswork. Applicants must attest they’re providing support for workers, but what does this mean? Does it mean they can’t stand them down?”
Mr Ord’s concerns were echoed by Tony Greco, general manager of technical policy at the Institute of Public Accountants, who said the eligibility requirements are unfair to small business owners who, through no fault of their own, are unable to trade under lockdown.
“It may be an integrity measure to tie it to GST registration, but it will lock out support for the army of sole traders who are reliant on their small business to bring in their weekly income,” Mr Greco said.
He said those same business owners may also miss out on the federal government’s COVID disaster payment announced last week. The payment will provide financial support for areas defined as COVID-19 national hotspots and are undergoing lockdown for more than seven days.
Workers who are unable to work because of lockdown restrictions will be eligible for $500 a week if they normally work more than 20 hours each week, and those who work less than 20 hours receive $325 weekly until restrictions ease.
Eligible workers will include Australian citizens, residents and visa holders who are permitted to work in Australia, aged 17 and older, and must also have liquid assets of less than $10,000.
“The federal government COVID disaster payment which goes live today is aimed at workers or employees,” he said.
“Sole traders and small businesses operating through partnerships, trusts or companies may therefore miss out on both initiatives if the business is not registered for GST. If an individual has more than $10,000 of liquid assets, then they will be ineligible, so this alone will make most applicants not eligible.
“Accountants will be the bearer of bad news for some of their clients as cracks appear between the two initiatives.”
Speaking to the ABC on Monday, Minister for Tourism Martin Pakula said that businesses left behind by both state and federal initiatives may have better luck with a new Commonwealth program that is currently “being put in place”.
“Our understanding [is] there will be a degree of support along the same lines and with the same parameters as have been put in place for income support for casual workers who fill that criteria,” Mr Pakula said.
“Those under the GST threshold… which are mainly home-based businesses, were supported last year by JobKeeper and our discussions with the Commonwealth over the past 24 hours leads us to believe they will also be assisted by the Commonwealth program that’s being put in place.”
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