COVID

The Premier of Victoria, the Hon Daniel Andrews, yesterday announced a major $3b stimulus package designed to assist Victorian businesses through the “second wave” and beyond.
This brings the Government’s total business support to over $6b. The stimulus can be broken down into four broad measures, tax relief, tax deferral, government grants and targeted expenditure. This complements the additional Melbourne city recovery fund announced today, as well as indications the severe restrictions could be eased in regional Victoria as early as tomorrow.
Tax relief
Tax relief comes in the form of:
• Waiving liquor licensing fees for 2021. This is in addition to liquor licensing fees that were waived for 2020.
• The 50% stamp duty discount for commercial and industrial property in regional Victoria will be brought forward to 1 January 2021. The discount is currently 20%, and was not scheduled to reach 50% until 1 July 2023.
• Waiving 25% of the Congestion Levy for the remainder of 2020.
• The Vacant Residential Land Tax (“VRLT”) will be waived for properties that are vacant in 2020.
VLRT is unique to Victoria, and so the temporary suspension of that tax is welcome.
Notably, potential foreign investment incentives, such as a suspension of foreign surcharges on duty and land tax, has been overlooked. We expect that the local property market may have been looking forward to some sort of help to kick-start the real estate market, particularly given the lack of ability for onsite inspections and auctions during the heavy lockdown measures in metropolitan Melbourne.

Tax relief comes in the form of:
• Waiving liquor licensing fees for 2021. This is in addition to liquor licensing fees that were waived for 2020.
• The 50% stamp duty discount for commercial and industrial property in regional Victoria will be brought forward to 1 January 2021. The discount is currently 20%, and was not scheduled to reach 50% until 1 July 2023.
• Waiving 25% of the Congestion Levy for the remainder of 2020.
• The Vacant Residential Land Tax (“VRLT”) will be waived for properties that are vacant in 2020.
VLRT is unique to Victoria, and so the temporary suspension of that tax is welcome.
Notably, potential foreign investment incentives, such as a suspension of foreign surcharges on duty and land tax, has been overlooked. We expect that the local property market may have been looking forward to some sort of help to kick-start the real estate market, particularly given the lack of ability for onsite inspections and auctions during the heavy lockdown measures in metropolitan Melbourne.

Almost 20,000 Victorian businesses have received payroll tax refunds in the last financial year worth more than $540m. The Government will now defer payroll tax for businesses with payrolls up to $10m for the entire 2020-21 financial year, providing a much needed $17b cash flow boost to businesses.
• Deferring payroll tax for businesses with payrolls up to $10 million for the full 2020-21 financial year.
• Deferring the planned increase in the landfill levy for six months.
• Deferring the outstanding balance of the Congestion Levy.
While the deferral of taxes is welcome, and is consistent with the initial government messaging around “hibernation”, our discussions with clients this time around is sounding more like survival. Tax deferrals will come home to roost in the future, and we expect that the financial impact of the lockdown measures will remain for some time, with businesses needing to plan for future tax costs at a time when cash flow may still be challenging.

Over $1.1b in cash grants will support small and medium sized businesses most affected by coronavirus restrictions, including $822m as part of the third round of the Business Support Fund. The following Government grants will also be made available, with more detail on eligibility criteria yet to come: https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-resilience-package/business-support-fund-3
• Businesses with payrolls up to $10 million will receive grants of $10,000, $15,000 or $20,000 through the Business Support Fund depending on their size. https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-resilience-package/business-support-fund-3
• Grants of between $10,000 and $30,000 for licenced venues via a Licensed Venue Fund.
• Grants of up to $20,000 for local business groups and chambers of commerce to help them help their members.
• Grants of up to $20,000 to help businesses in the Victorian alpine resorts cover their resort fees.

Even after we reach COVID Normal, many businesses will be required to change the way they do things. The Government also announced $44m in funding to help businesses recover and maximise online opportunities, such as:
• Access to digital programs such as Shopify or Squareonline, as well as training and workshops designed to help businesses adapt to online operations.
• Leveraging off “Click for Vic”, allocating $8.5m for marketing and advertising, and expanding the digital platform and its partnerships with third-party e-commerce providers to sell Victorian goods and produce.
• $15.7m export recovery package to address logistics and supply chain issues caused by the pandemic, and establish new export channels.

With restrictions pushing people out of the city, the Government has announced a $100m package to bring people back to the city in a COVID-Safe way. The package is said to support as many as 470,000 jobs.
• $30m in grants to small and medium businesses to help pay for tables, plastic screens, umbrellas and things needed for outdoor hospitality to reconfigure spaces, to convert areas like rooftops and courtyards for outdoor use.
• $30m to support COVIDSafe events and cultural activities in the CBD to attract visitors back to the city.
• $40m going towards providing physical improvements to the CBD streetscape.
There is an additional $87.5m outdoor hospitality support packager for restaurants, pubs, bars and clubs outside the CBD.
Grants of $3000 will also be available to support around 33,000 sole traders working in areas like accommodation and tourism, some non-permitted retail, media and film production, gyms, creative studios, outdoor entertainment, private museums and galleries.
As and when more detail comes to hand, we will update including details of how to apply for these measures. In the meantime, do not hesitate to contact us to discuss your specific business needs.