The Victorian and Commonwealth governments have announced additional support for Victorian businesses that continue to feel the effect of five lockdowns.
The package, which will be administered by the Victorian government, comprises the reintroduction of the Commercial Tenancy Relief Scheme and the establishment of five new support programs: the Business Continuity Fund, the Licensed Hospitality Venue Fund, the Small Business COVID Hardship Fund and the Alpine Business Support Program.
Support for Business
The Victorian and Commonwealth governments have announced an additional $400 million in support for Victorian businesses. While the enabling legislation and a lot of other detail is still to come, we provide an overview of what’s on offer below.
Commercial Tenancy Relief Scheme
The Commercial Tenancy Relief Scheme has been reinstated with effect from 28 July 2021 and will continue to operate until January 2022.
Small and medium businesses with an annual turnover of less than $50 million that can demonstrate a decline in turnover of at least 30% due to COVID-19 will be able to claim a significant rent reduction.
Landlords will be mandated to provide rent relief proportional to the tenant’s decline in turnover. For example, a business with a turnover of 50% of its pre-pandemic level can only be charged 50% of its rent. At least half of any rent relief must be in the form of a waiver. The other half could be provided in the form of a deferral.
The Victorian Small Business Council (VSBC) will provide a mediation service where tenants and landlords cannot reach an agreement. With effect from 28 July, landlords will not be able to lock out or evict eligible tenants without permission from the VSBC.
While we expect the Government to once again rely on GST concepts to determine a decline in turnover, we do not know the periods that will be measured, if it will be a one-time test, or what evidence tenants will be required to provide to landlords to support a request for rent relief. It is possible that tenants will be required to obtain a letter from their accountant or tax agent to confirm their decline in turnover for the relevant period.
Landlord Hardship Fund
An $80 million hardship fund has been established to assist landlords who provide rent relief to their tenants. While the details are yet to be released, the previous scheme was limited, providing grants of up to $3,000 for landlords with less than $3m in taxable landholdings and who were able to demonstrate financial hardship as a result of giving rent relief.
Unlike the previous iteration of the Commercial Tenancy Relief Scheme, there has been no announcement yet as to whether landlords who provide rent relief to their tenants will be offered any further land tax relief. We note that the State Revenue Office is continuing to accept late applications for 2021 land tax relief up until 31 December this year but that the 2021 relief is currently limited to 25% of the land tax payable in respect of the relevant land. In light of the reintroduction of the Commercial Tenancy Relief Scheme, we believe that the government should extend the 2021 land tax relief scheme to allow landlords to seek an additional 25% relief.
Business Continuity Fund
The Business Continuity Fund will deliver grants of up to $5,000 to businesses in 24 eligible sectors including gyms, cafes and restaurants that continue to be affected by capacity limits imposed as a result of health restrictions.
Businesses that are located in the CBD are eligible for an additional $2,000 in recognition of reduced foot traffic due to office density limits.
To be eligible to receive this funding, businesses must have received or been eligible for the Business Cost Assistance Program. Payments to previous recipients of the Business Cost Assistance Program will be processed automatically.
Eligibility
To be eligible businesses must:
- be located within Victoria;
- operate in an eligible sector included in the list of eligible ANZSIC classes for this program;
- have incurred direct costs because of the restrictions and cannot fully operate remotely;
- have an annual Victorian payroll of up to $10 million in 2019-20 on an ungrouped basis;
- have been registered for GST on Thursday 15 July 2021;
- hold an Australian Business Number (ABN) and have held that ABN at 15 July 2021; and
- be registered with the responsible Federal or State regulator.
Employing businesses must also:
- be registered with WorkSafe Victoria; and
- attest that the business is supporting its workers to access any paid leave entitlements, or if a person can work from home, to work from home during the circuit breaker action, and supporting their casual workers where possible.
Licensed Hospitality Venue Fund
The Licensed Hospitality Venue Fund 2021 – July extension will deliver grants of up to $20,000 for licensed venues who continue to be impacted by COVIDSafe restrictions.
An additional $2,000 is again available for businesses that are located in the CBD.
To be eligible to receive this funding, venues will need to have received or been eligible for the licensed Hospitality Venue Fund 2021. The grants will automatically rollover for previous recipients.
Eligibility
To be eligible for a grant, an applicant must:
- operate a licensed bar, restaurant, pub, club, hotel, café or reception centre that is registered to serve food and alcohol (Premises) located in Victoria on 15 July 2021;
- hold a general or late night (general), full club, restaurant and cafe, producer’s or on-premises or late night (on-premises) liquor licence as of 15 July 2021;
- provide a Class 2 or 3 Service Sector Certificate of Registration under the Food Act 1984 that is valid in 2021 for serving food on the same premises;
- have been registered for GST on Thursday 15 July 2021;
- hold an Australian Business Number (ABN) and have held that ABN at 15 July 2021; and
- be registered with the responsible Australian or Victorian regulator.
For employing businesses only, the applicant must confirm that the business is supporting its workers (including casual workers, where possible) to access any paid leave entitlements, or if a person can work from home, to work from home during the Victorian Government COVIDSafe restrictions.
Businesses that hold a food certificate but not a liquor licence are not eligible for a grant under this program. Similarly, businesses that hold a liquor licence but do not have a food certificate for the same premises are also not eligible for a grant under this program.
Small Business COVID Hardship Fund
The Small Business COVID Hardship Fund has been established to provide support for small businesses that have not been eligible for relief under existing business support measures. Businesses with a payroll of up to $10 million and that have experienced a 70% or greater decline in revenue will be eligible for grants of up to $5,000.
Alpine Business Support
The Victorian government has also announced that grants of between $5,000 and $20,000 will be available for 430 Alpine based businesses that have had their trade affected by travel restrictions during the peak winter season.
The Alpine Business Support Scheme will also provide an additional $5 million to support alpine resort operators and management boards.
What are the next steps?
Clients seeking further information or assistance should contact their Pitcher Partners representative.
