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Am I eligible? Calculating turnover for business support

MYOB Team

11TH AUGUST, 2021

https://www.myob.com/au/blog/calculating-turnover-business-support-eligibility/?fbclid=IwAR247j4ObkAPMGsYpFDtcrG2NIUidQUrNVZYSreB0uaEsuSlBSlpzzq6p30

In order to apply for a COVID-19 business support grant, chances are you’ll need to demonstrate a loss of turnover for specific time frames.

Around the country, the impact of the COVID-19 Delta strain is being played out, with rolling restrictions and lockdowns of various levels.

In turn, state governments have been working to provide targeted support packages for individuals and businesses impacted by disruptions of one kind of another.

Most states are currently offering timely grants designed to support businesses that experience disruption as a direct result of pandemic-related restrictions.

Unlike JobKeeper, these grants are delivered by state-run services, such as Service NSW, not the ATO.

But businesses still need to prove eligibility, and in many cases that comes down to having clear oversight of cash flow on a week-by-week basis in order to demonstrate a decline in turnover.

Calculating turnover for eligibility

Looking at businesses in NSW for example, there are currently three grants on offer (at the time of writing) for eligible businesses that can prove a decline in turnover over a minimum of two weeks under lockdown, compared to the same period in 2019, 2020, or the two-week period ending just prior to 26 June.

These are the COVID-19 business grant, the micro-business grant and JobSaver. And there are other grant schemes in nearly all states that similarly require reporting on a decline in turnover.

Many businesses regularly report turnover as part of their BAS and GST reporting. If you’re not, then you’ll be relying on the accuracy of your bookkeeping to keep a record of business transactions.

Here are the key things to keep in mind when calculating your turnover before applying for a government grant.

1. Reference period, comparison period

Understanding the reference period for which you’ll be comparing your turnover is critical, and due to the nature of lockdown restrictions, there are different time periods set according to each grant.

As in the example above, NSW has set a minimum two-week reference period from the 26 June, while other states have reference periods that begin later. These then need to be compared against relevant reporting periods from an earlier timeframe, as stipulated by the corresponding grant.

2. Reporting method (cash versus accrual)

Recent reporting from NSW makes it clear that if a business is reporting GST on a cash basis, then that’s the same basis it should be determining any decline in turnover, and same goes for accruals.

Generally speaking, unless the grant your applying for stipulates otherwise, you should absolutely be reporting your decline in turnover with the same method you would usually report turnover to the ATO.

3. Percentage declined

Another key factor of making certain you’re eligible is by ascertaining exactly how much your revenue needs to have declined between the time periods compared.

Grants currently on offer for businesses can stipulate a decline of between 30 and 70 percent, and you’ll need to be able to show that in black and white financial data if you want to prove eligibility.

Reports in accounting software

The good news is accounting software providers offer turnover reporting that makes it easier to figure out your eligibility for support.

When it comes to MYOB & Xero, accounting software with payroll products have already been customised to make running those reports simple, and further updates are due in other products soon.

State-by-state support packages

The nature and scale of support on offer is variable and, as each is now offered on a state-by-state basis, rather than a federal basis (as in JobKeeper), central to understanding what’s on offer is keeping an eye on the relevant government website for your location.

  • Service NSW: Grants, loans and financial assistance
  • Victoria: COVID-19 grants and support
  • Business Queensland: 2021 COVID-19 business support
  • Small Business WA: Small business lockdown assistance grant
  • Business SA: Financial support for SA businesses
  • Business Tasmania: COVID-19 business support, grants and loans
  • ACT: COVID-19 economic support for business
  • NT: Business grants and funding

Ready to get started? First, speak to your accountant

The most important thing you can do in this process is reach out to a trusted advisor who knows your business.

That may be a BAS agent, bookkeeper or accountant when it comes to working out eligibility, but there are some things only an accountant may be able to help you with.

Not only is an accountant the best resource for asking detailed questions about your business health, financial forecasts and what grants you might be eligible for, in some cases they may be able to apply for support on your behalf, as well as supplying key documentation to the government to help prove your eligibility.

If you don’t already have a strong working relationship with an accountant, regardless of what size business you are, you should work to find one as soon as possible.

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