Federal COVID-19 Support Developments

Additional financial support for child care providers

On 23 August the Prime Minister and the Minister for Education and Youth issued a joint media release announcing new support measures for child care providers impacted by extended COVID-19 lockdowns.

Child care services in Commonwealth-declared hotspots will be eligible for new fortnightly payments of 25% of their pre-lockdown revenue, while outside school hours care (OSHC) services will be eligible for fortnightly payments of 40% of pre-lockdown revenue.

This measure will apply to services seven days after the hotspot is declared, where state and territory governments have directed families to keep their children at home. Where children are still allowed to attend child care, the supports will kick in four weeks after the hotspot declaration.

The new payments will immediately benefit child care services in affected areas of Sydney and the ACT and OSHC services in metropolitan Melbourne. All other services in metropolitan Melbourne, regional Victoria and regional NSW will become eligible after seven days of lockdown, with payments to be backdated to 23 August 2021.

The supports will also be available for services who meet the criteria in any future extended lockdowns. The measure is in addition to the existing Commonwealth supports – including gap fee waivers, which allow the Commonwealth Child Care Subsidy to continue even when children are not attending a child care service.

Payments will be contingent on providers:

  • expecting attendance below 50%;
  • waiving gap fees for all families whose children are not attending;
  • maintaining staffing levels;
  • agreeing to a fee freeze for the duration of support; and
  • not accessing other Commonwealth Government funded supports.

Payments are made available directly to providers. Families in affected areas are not required to do anything.

Non-assessable non-exempt income status of New South Wales and Victorian programs

The Federal Treasurer has issued the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No 2) 2021.

Its effect is to declare certain grant programs administered by NSW and Victoria as “eligible grant programs”. This means that a payment received by an entity from a specified program is non-assessable non-exempt (NANE) income.

For those who have an interest in these things, the Treasury Laws Amendment (2020 Measures No 5) Act 2020 inserted s 59-97 into the Income Tax Act 1997 (ITAA 1997) to give the eligible Minister power to declare certain grant programs as eligible for NANE treatment. Following that, a legislative determination in 2020 set out which programs were eligible for NANE treatment in the 2019–2020 year.

Earlier this year, the Treasury Laws Amendment (COVID-19 Economic Response) Act 2021 extended the tax-free status of state recovery grants to the 2021–2022 year (because s 57-97(1)(c) of ITAA 1997 only otherwise applied to grants received in 2020–2021).

Accordingly, it should be noted that the latest Declaration does not create anything new, but rather extends the status quo to the current income year (and applies it to programs that may not have earlier existed).

New South Wales

The following NSW programs now qualify as eligible grant programs, meaning payments received under them are NANE income:

  • the 2021 COVID-19 business grant;
  • the 2021 COVID-19 JobSaver payment;
  • the 2021 COVID-19 micro-business grant; and
  • the NSW Performing Arts COVID Support Package.

Victoria

The following Victorian programs now qualify as eligible grant programs, meaning payments received under them are NANE income:

  • the Alpine Resorts Support Program (Streams 1, 2 and 3);
  • the Business Continuity Fund;
  • the Business Costs Assistance Program Round Two – July Extension;
  • the Licenced Hospitality Venue Fund 2021 – July Extension; and
  • the Small Business COVID Hardship Fund.

As a reminder, the first Determination, the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No 1) 2021, listed the following Victorian grants as declared eligible grant programs:

  • the Alpine Support Program;
  • the Business Costs Assistance Program Round Two;
  • the Impacted Public Events Support Program;
  • the Independent Cinema Support Program;
  • the Licensed Hospitality Venue Fund 2021;
  • the Live Performance Support Program; and
  • the Sustainable Event Business Program.

Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas. 

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