COVID-19 has had a severe impact for the economy to date and we expect that this will continue for some time. The latest predictions coming out of Government is that individuals and businesses need to prepare for this situation to continue for approx. 6 months. As such the Government has now turned their attention to support measures that will keep the engines of the economy idling, at very least. The latest measures announced on Sunday 29th and Monday 30th March are aimed at:
- Keeping people connected with their employment
- Keeping businesses operating and productive albeit in a somewhat hibernated state
The intention of these measures is clear – we are all in this together but together we can share the burden and ease the pain. The Government believes that keeping people connected with their employment will allow businesses to fire up again more quickly, enabling our economy to bounce back quicker and stronger.
There are constant media announcements regarding support available and changes being made to better protect businesses, families and individuals. We have summarised the announcements made over the last 2 days to help you to understand the most important financial changes that may affect your business and family.
Don’t hesitate to contact one of our team to discuss how these matters will directly impact you.
Sunday night’s Announcement – 29/03/2020
The PM’s press conference on Sunday included some much needed clarity regarding rental agreements:
- Moratorium on evictions for 6 months for both residential and commercial leases
- Tenants, landlords and their banks are strongly encouraged to engage with each other and negotiate an outcome that will see all parties recover once the COVID-19 threat has passed
- The ATO have released some guidance to support those with a rental agreement with their self-managed super fund – see here for further details – https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/?page=11#ReducingRent
- Legislation has not yet been released – State Governments are currently working on this.
Monday afternoon’s announcement – 30/03/2020
This announcement hailed the release of the Federal Government’s third round of stimulus/support packages and is the biggest yet, covering some $130 billion of support over the next 6 months.
There are two main aspects:
- Extension of Jobseeker eligibility Criteria – Spouse Income Test
The spouse income test has been modified so that those whose partner earns less than $79,762 a year (up from the previous figure of approx. $49,000) will now be eligible for the full Jobseeker Payment. Entitlements will reduce once partner income exceeds this threshold.
We note that legislation has not yet been released for this change, but we anticipate given the importance of this matter that the Federal Government will release something quickly.
- JobKeeper Payment – Supporting Businesses to Stay Connected with Employees
The latest support announced comes in the form of a wage subsidy for businesses that have suffered a significant downturn in business as a result of COVID-19.
Basics of Payment:
- For businesses that have suffered a downturn in business or have been forced to close as a result of COVID-19
- The Government is essentially going to be providing businesses with a subsidy to continue paying employees.
- The subsidy is a flat rate of $1500 per fortnight
- The full amount of the subsidy must be provided to employees
- Will allow businesses to stay connected to employees and quickly reactivate their operations when possible without having to hire new staff.
- First payment to be received in first week of May but back-dated to 1st March
- Payments will be made monthly in arrears.
- Will apply for a maximum of 6 months.
- Includes not-for-profit entities
- Includes businesses closed as a result of the Coronavirus (eg. pubs and beauticians)
- Sole traders with no employees are also eligible for this payment for themselves if they have experienced the below mentioned turnover reductions
- Turnover reduction:
- If turnover less than $1 billion – turnover must have reduced by more than 30% relative to a comparable period a year ago
- If turnover $1 billion or more – turnover must have reduced by more than 50% relative to a comparable period a year ago
- Covers employees:
- Engaged at 1 March 2020
- Still currently engaged (including those stood down or re-hired)
- Full time, part-time or long-term casuals
- At least 16 years of age
- Australian citizens and certain Visa Holders
- Not receiving the JobKeeper Payment from another employer
How to apply:
- Register an intent to apply via the ATO website – https://www.ato.gov.au/general/gen/JobKeeper-payment/
- Subsequently provide ATO with information on eligible employees
- Pay staff at least $1500 per fortnight (before tax)
- How does this work and what about superannuation:
- Current employees:
- Employee currently paid over the $1500 per fortnight: The business will be provided with a Jobkeeper payment of $1500. The business must pay at least this full amount to the employee. You can then continue to pay the normal wage amount, over and above the Jobkeeper amount from the business’ own funds. Employers should seek advice from a HR expert if you are wishing to negotiate a lower wage than the employee’s standard pay. Superannuation guarantee will need to be paid on the full wage paid to the employee in this situation
- Employee currently paid less than $1500 per fortnight: The business will be provided with a Jobkeeper payment of $1500. The business must pay this full $1500 to the employee. Superannuation guarantee will only need to be paid on the original wage paid to the employee in this situation NOT the higher $1500 per fortnight amount.
- Stood down or re-engaged employees:
- If eligible employee currently stood down the business will be provided with a Jobkeeper payment of $1500. The business must pay this full $1500 to the employee. Superannuation guarantee will not need to be paid on this amount
- Notify the employees they are receiving the JobKeeper Payment
- Monthly reporting is required to the ATO:
- Employers on STP: It is expected that the STP system will be used to report details to the ATO and no separate reporting will be required.
- Employers not on STP: A separate ATO portal is being created and lodgements will need to be submitted monthly to the ATO
- Current employees:
- Can only receive payment from one primary employer
- Visa Holders must advise employer of visa status to allow determination of eligibility
- Report JobKeeper Payment to Centrelink as income (may affect other entitlements and can’t get other income support amounts at same time)
The legislation has not yet been released for this change, however we anticipate given the importance of this matter the Federal Government will address this promptly.For further information:
Full Summary of Support Available
The Federal and State Governments have announced numerous support packages since the Coronavirus Pandemic came to light.
Please see here for a helpful summary of the Federal Government Support – https://treasury.gov.au/sites/default/files/2020-03/Overview-Economic_Response_to_the_Coronavirus_1.pdf
Please see here for a helpful summary of the State Government Support – https://www.business.qld.gov.au/home