Last updated: 30 April 2020
We’ve heard from a number of small business owners asking how to provide proof of their loss of income when applying for coronavirus stimulus packages.
If you need to demonstrate the financial impact of COVID-19 in relation to your lease or to meet eligibility criteria for payments such as JobKeeper or JobSeeker Payments, here are examples of documentation you can create to meet the eligibility criteria.
Calculate your goods and services tax (GST) turnover for JobKeeper Payment
To meet the Australian Government’s JobKeeper Payment eligibility, you’ll need to provide details of your GST turnover. This is a summary of your total business income minus any excluded sales (see tip box below). This calculation can help you work out whether your projected GST turnover for a period is less than your current GST turnover for the relevant comparison period. For JobKeeper Payment eligibility the reduction must be at least 30 per cent for most small businesses.
You will need to calculate your GST turnover on either a cash or accrual basis. You can use information from your BAS lodgements, and follow the same method. Also use this method for both your nominated and comparison periods.
Tip: Your GST turnover should exclude GST on sales to your customers, input taxed sales (bank interest), gifts and donations, sales made overseas, payments for no supply, and sales not connected your business (eg, sale of private car).
The Australian Taxation Office has outlined a basic GST turnover test to help you work out your GST turnover and whether it meets the 30 per cent reduction required to meet the JobKeeper Payment eligibility.
To qualify for JobKeeper you need to select a period which is either a month or a quarter. If you want to qualify for JobKeeper Payments from 30 March, you can use either March 2020 or April 2020 as your turnover month and compare this to the same period in 2019. If you want to qualify for JobKeeper at a later stage, you can use any month from May to September 2020.
If you are using a quarterly period, the first quarter will be 1 April to 30 June 2020, or 1 July to 30 September 2020 if you want to qualify later. Again, you will need to compare to the same quarterly period in 2019.
If your business is new or had major structural business changes in 2019 you may be able to use the ATO’s alternative turnover test to meet the eligibility criteria of the JobKeeper Payment.
How to prepare a profit and loss statement for JobSeeker Payments
Services Australia has a profit and loss statement form and a business details form (for business owners who have not told Centrelink about their business before) that you need to complete as part of your application.
Documents you need to prepare ahead of completing these forms are a profit and loss (P&L) statement and a balance sheet.
If you have never prepared these documents before, here is a quick overview.
How to prepare a profit and loss statement
A profit and loss statement is a document covering a set period of time (usually monthly) that shows your business income less your expenses, and whether you’ve made a profit. There are five main components of a P&L statement:
- revenue (your sales/turnover)
- cost of goods sold (COGS)
- gross profit (revenue minus COGS)
- net profit (gross profit minus expenses)
The formula for calculating your net profit (or loss) is:
Sales – cost of goods sold = gross profit – expenses = net profit
How to prepare a balance sheet
A balance sheet provides a snapshot of your business at a particular point in time. The three sections which make up a balance sheet are details your business:
- equity/net worth
Calculate your projected revenue for negotiations with your landlord
Even if your business has not been subject to coronavirus restrictions, your trading environment could now be very different. If you are looking to enter into negotiations with your landlord to receive a rent reduction, it’s a good idea to include a forecast of your projected revenue up to (at least) the end of September 2020 in addition to any current financial statements you plan to include as part of the negotiation.
Seek assistance from your accountant or tax agent
If you need help preparing these financial records, contact your accountant or tax agent. If you don’t have an accountant, read our guide on how to choose an accountant.
For more information to help you manage disruption to your business as a result of the coronavirus pandemic, visit: smallbusiness.wa.gov.au/coronavirus