As announced yesterday the Government has stepped up to the plate to announce a further major incentive to assist businesses to retain workers and, in turn, assist those workers to eat and pay the mortgage! Known as JobKeeper Payment, the key points for employers are as follows:

Timing (subject to eligibility)

  1. Commencing 30 March (yesterday!).
  2. Businesses can register their interest with the ATO now (see further below).
  3. First payments to be received by employers in the first week of May.

What is available (subject to eligibility)

  1. $1,500 per fortnight gross per ‘eligible’ employee for up to 6 months.
  2. For each employee that was on their books on 1 March 2020 and continues to be engaged by that employer, including full-time, part-time, long-term casuals and stood-down employees. Eligible casual employees are those who have been with their employer on a regular basis for at least the previous 12 months as at 1 March 2020 (ie employed before 1 March 2019 and regularly engaged).
  3. To be eligible, an employee must be an Australian citizen, holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder.
  4. Eligible employers who have stood down their employees before the commencement of the scheme will be able to participate and employees re-engaged by a business that was their employer on 1 March 2020 will also be eligible.
  5. Self-employed individuals will be eligible where they have suffered or expect to suffer a 30% decline in turnover relative to a comparable prior period (at least a month).
  6. Where employees have multiple employers only one employer will be eligible to receive the payment.

Eligibility

It is very important to note that, unlike some of the earlier measures, not all businesses will qualify for the JobKeeper Payment. In order to do so the following has to happen:

  1. The business or self-employed individual needs to demonstrate that business turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month);
  2. The business must elect to participate in the scheme by making an application to the ATO and providing supporting information demonstrating the downturn in business;
  3. The business must continue to report the number of eligible employees employed by the business on an monthly basis.

What employers need to do with the payments

  1. Eligible employers will receive the JobKeeper payments of $1,500 per fortnight per employee from the Government on behalf of their eligible employees. It is essentially a subsidy to allow employers to retain and pay staff.
  2. Employers can top-up the payment (for example, to cover the usual salary of the employee) but must pass on at least the full amount of the Jobkeeper payment, even if the employee ordinarily receives less than $1,500 per fortnight.
  3. If an employee ordinarily receives $1,500 or more per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements.
  4. If an employee has been stood down, the employer must pay at least the minimum $1,500 per fortnight before tax.
  5. PAYG Withholding will need to be deducted from the payment to the employee in the normal way.

You can access the Treasury Fact sheet here which contains some additional content and worked examples.

We are poised, safely-distanced and ready to assist you in this process. Please contact us at any time.

Piggy Bank

In uncertain times like these when government announcements are coming thick and fast and anxiety levels are increased, it can be hard to take in the detail of everything. Please contact us to talk through how these announcements can help you to stay afloat – we are on-deck and remain committed to helping all our clients get through this period and access any and all of the government assistance to which they are entitled.

Apologies in advance for information overload, however, we are of the view that we should send as much information as possible to empower everyone to disseminate the relevant bits to family members, friends, colleagues and the community-at-large as far and wide as you can.

The 2nd wave of economic stimulus measures, largely to assist small and medium businesses to keep staff employed, include:

Increased Cash Subsidy for SMEs to Continue Employing Staff (businesses turning over <$50m in 2019 Financial Year)

  • The tax-free cash subsidy to be credited against PAYG Withholding on employee wages has been increased from 50% (capped at $25,000 total subsidy) now to 100% (capped at $100,000 total subsidy), with the minimum payment increased from $2,000 to $10,000. Below is a useful example from Treasury of how it is all supposed to work…
  • We also encourage you to talk to us before you lodge your BAS/IAS in the coming months, to ensure you legally maximise your entitlements to these concessions.

Example: Sarah’s Construction Business

Sarah owns and runs a building business in South Australia and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS). Under the Government’s changes, Sarah will be eligible to receive the payment on lodgement of her BAS. Sarah’s business receives:

  • A credit of $45,024 for the March period, equal to 300 per cent of her total withholding.
  • A credit of $4,976 for the April period, before she reaches the $50,000 cap.
  • No payment for the May period, as she has now reached the $50,000 cap.
  • An additional payment of $12,500 for the June period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
  • An additional payment of $12,500 for the July period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
  • An additional payment of $12,500 for the August period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
  • An additional payment of $12,500 for the September period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.

Under the previously announced Boosting Cash Flow for Employers measure, Sarah’s business would have received a maximum payment of $25,000. Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sarah’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff.

There are further examples in the Treasury Fact Sheet here, which we encourage you to review and/or talk to us about.

Increase in Subsidies to Support Trainees and Apprentices (businesses <20 FTE Employees)

Wage subsidy of 50% of apprentice/trainee wages paid during the 9 months from 1 January 2020 to 30 September 2020.

ATO Assistance and Administrative Relief

On a case-by-case basis, including:

  • The ability to defer payment of certain taxes for up to 6 months.
  • Allowing businesses to vary PAYG Instalment amounts to zero for the March 2020 quarter and, if so, claim a refund for any instalments paid in the September 2019 and December 2019 – this is a very useful measure and you should talk to us about potentially accessing some of these funds if you need them.

SME Loan Guarantee Scheme

Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.

Further Protection for Businesses from Risk of Insolvency

  • The threshold at which creditors can issue a statutory demand on a company will temporarily be increased.
  • There will be temporary relief for directors for any personal liability for trading while insolvent.

Key Measures for Individuals

These include:

  • In addition to the $750 stimulus payment announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement (see below). This second payment will be made automatically from 13 July 2020. The first payment will be made from 31 March 2020.
  • Individuals in financial distress as a result of the Coronavirus will be allowed early access to up to $10K of their superannuation tax free. You must apply for this before 1 July 2020 through myGov. You can apply to access a further $10K from 1 July 2020 for 3 months.
  • Superannuation minimum drawdown requirements for account based pensions will be temporarily reduced by 50% for 2019-20 and 2020-21. For example, if your current minimum super pension is 4%, this has been reduced to 2%.
  • Social security deeming rates will be reduced by a further 0.25 percentage points to reflect the RBA’s rate reductions.
  • Eligibility for income support payments will be temporarily expanded for existing and new recipients of the Job Seeker payment, Youth Allowance jobseeker, Parenting payment, Farm Household allowance and Special Benefit. A ‘Coronavirus supplement’ of $550 per fortnight will be paid for 6 months and is in addition to payments already being received.

That’s a lot to take in! Please contact your friendly Halletts team member to discuss what it means for you.

…and closer to home for our ACT clients and friends, stimulus arrangements have been announced for individuals and businesses.

For individuals: a $150 rates rebate for each household; vehicle registration, public transport and parking fees to be frozen; a rebate for households receiving the utilities concession.

For businesses: a $2622 credit to commercial rates bill; $750 rebate through next electricity bill; deferral of payroll tax for payrolls up to $10m; specific industries to receive one-off 6 month waiver on payroll tax; $20m fund for infrastructure works on public buildings; funding for clubs to retain casual staff; taxi, rideshare, food and liquor licence fees waived.

Please speak to your friendly Halletts team member about how these measures might help you or your business!

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