Decline in turnover letter for COVID-19 business support sparks concern among accountants

Accountants helping small businesses apply for coronavirus support payments say new grant schemes are confusing, with guidelines regularly changing and the requirement of a so-called accountant’s letter sparking concern among the profession.

COVID-19 business support has shifted from the federally administered JobKeeper program to jointly funded schemes between the federal and state governments that are now administered by the states.

Current support includes grants, payments contingent on maintaining employee headcount and hardship payments that are either offered on a one-off or weekly basis. In Victoria, new rounds of grants have been announced for each week a lockdown is extended.

David McKellar, director of Allied Business Accountants in Melbourne, says he and his colleagues have noticed different information about the eligibility for support payments across government websites, FAQs, guidelines and application forms.

“There’s conflicting information everywhere you look,” McKellar tells SmartCompany.

In Victoria, businesses are required to demonstrate their turnover has dropped by more than 70% to be eligible for the hardship fund payments.

To demonstrate the decline in turnover, McKellar says businesses can compare a two-week period under a recent lockdown to an earlier benchmark period (which is either a two-week period in 2019, or earlier this year if the business wasn’t trading in 2019).

However, Business Victoria has conflicting information online about whether a business can in fact select the best two-week period in 2019 instead of a date range that matches the two-week period under lockdown.

“It’s the outcome of rushing out grants without enough diligence in establishing the rules and the guidelines,” McKellar says.

In New South Wales, the eligibility guidelines and application form have changed several times since the government announced the support payments in June.

Applications for New South Wales 2021 COVID grant and JobSaver payments also opened several weeks before the state government had confirmed the full details of how businesses could meet the decline in turnover test.

Another concern among accountants is the requirement of an accountant’s letter that verifies whether the decline in turnover that a business has experienced is a direct result of a coronavirus lockdown.

McKellar says the addition of the letter not only adds to his workload but also makes him responsible for determining why a business’ turnover is down.

“The reason for that decline in turnover isn’t always completely apparent to us, yet we have to declare that it is directly related to COVID shutdowns,” he says.

In some cases, McKellar says it’s easy to figure out because a business may be closed and not making any revenue. Whereas, for other businesses, he says he might not be in a position to declare that the drop in revenue is a direct result of the lockdown.

“It’s shifting responsibility on to us and potentially a liability,” he says.

“I’m not sure what happens down the track if the business gets audited and someone determines it wasn’t directly related.”