Coronavirus (COVID-19) | JobKeeper/Federal Government Support

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JobKeeper 2.0

The JobKeeper extension rules (JobKeeper 2.0) have been formally announced by the Morrison Government and are set to kick off this coming Monday 28 September for all eligible Australians – extending the scheme until 28 March 2021. Broadly in line with the Government’s original announcements, the extension of the scheme will see a more targeted and tapered approach with a two-tier wage subsidy and two additional Jobkeeper periods of three months each. You will still be required to demonstrate that you satisfy actual decline in turnover for each period by at least 30% (15% for ACNC registered charities).

At a glance

  • A two-tier payment rate will apply based on the worker’s average 28 day (4 week) work hours
  • The current payment rate of $1,500 per fortnight payment rate will be reduced on 28 September 2020 and further reduced on 4 January 2021
  • The decline in turnover will be retested on a quarterly basis
  • The decline in turnover test will be based on actual GST turnover instead of projected turnover
  • The accounting method will be determined by your specific circumstances and only utilises current GST turnover.
  • Employees who are hired as full-time, part-time or fixed-term employee or long-term casuals (employed for 12 months) at 1 July 2020 are eligible for the Jobkeeper extension.
  • Fairwork 10% Decline in Turnover Certificate

Eligibility – Decline in Turnover Test

Extension 1 – From September 2020 to 03 January 2021

Is for the quarter ending 30 September 2020

Businesses will need to reassess their eligibility with the reference to their actual GST turnover in the September Quarter 2020 to be eligible for the Jobkeeper Payment from 28 September 2020 to 3 January 2021.

Businesses will need to demonstrate that their actual GST turnover has fallen in September Quarter 2020 (July, August, September) relative to a comparable period (generally the corresponding quarter in 2019, being the September 2019 quarter).

Alternative turnover test is available to establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with the actual turnover in a quarter in 2019.

Extension 2 – From 4 January 2021 to 28 March 2021

Is for the quarter ending 31 December 2020

Businesses will need to further reassess their turnover to be eligible for the Jobkeeper Payment.  They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in the December quarter 2020 to be eligible for the Jobkeeper payment from 4 January 2021 to 28 March 2021.

Alternative turnover test is available to establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with the actual turnover in a quarter in 2019.

Alternative decline in turnover tests can only be used if there is not an appropriate relevant comparison period in 2019.

If the business has satisfied the basic test, it does not need to satisfy an alternative test.

There are 7 Alternative Test categories set out under the headings below and have their own turnover tests. Only one test needs to be satisfied. Please contact our office for further assistance with the below:

Business Commenced

For businesses that have commenced business after the first day of the relevant comparison period in 2019 and before 1 March 2020, with the result that the business did not exist for the whole relevant comparison period.

There are two alternative tests available to use in this category.

Business Acquisition or Disposal that changes the entity’s turnover

If your business was acquired or disposed of part of its business from the start of the relevant comparison period (including multiple acquisitions or disposals) but before the applicable turnover test period, and

The acquisition or disposal changed your entity’s current GST turnover.

Business Restructure that changed the entity’s turnover

If you restructured the whole or part of the business from the start of the relevant comparison period but before the applicable turnover test period (including multiple restructures), and

The restructure changed your businesses current GST turnover.

Business that has had a substantial increase in turnover

Use this test if your entity had a substantial increase in its current GST turnover of:

  • 50% or more in the 12 months immediately before the applicable turnover test period or before 1 March 2020, or
  • 25% or more in the 6 months immediately before the applicable turnover test period or before 1 March 2020, or
  • 5% or more in the 3 months immediately before the applicable turnover test period or before 1 March 2020.

Businesses are given a choice of choosing whether to use the period immediately before the application turnover test period or before 1 March 2020. Each will apply to compare the businesses current GST turnover for the applicable turnover test period with the average current GST turnover from the 3 months immediately before the test period or 1 March.

Business affected by drought or nature disaster

Use this test if:

  • your entity conducted business or some of your business in a declared drought or natural disaster zone during the relevant comparison period in 2019, and
  • the drought or natural disaster changed your entity’s turnover.

Business that has an irregular turnover

Use this test if:

  • for the consecutive 3-month periods ending in the 12 months immediately before the applicable turnover test period or 1 March 2020, the lowest of your entity’s current turnover for any of those 3-month periods is no more than 50% of the highest of the entity’s current GST turnover for any of those 3-month periods, and
  • the entity’s current GST turnover is not cyclical.

Sole trader or small partnership with sickness, injury or leave

Use this test if:

  • you are a sole trader or a partnership with four or fewer partners, and your entity has no employees
  • the sole trader or one of the partners has not worked for all or part of the relevant comparison period due to sickness, injury or leave, and
  • your turnover was affected as a result of the sole trader or partner not working for all or part of the period.

Current GST turnover is the amount of your sales except for the following:

  • the GST you included in sales to your customers (if any)
  • sales that are input taxed sales (for example, bank interest, sale of shares, residential rental income)
  • sales not connected with an enterprise that you carry on (for example, sale of private car)
  • sales that are not made for payment (unless a taxable supply to an associate)
  • payments for no supply (for example, JobKeeper payments)
  • gifts and donations (except for deductible gift recipients and ACNC-registered charities as discussed above)
  • sales not connected with Australia, for example
    • sales of services made through a business you carry on outside Australia
    • sales of goods purchased and sold from a place outside Australia
    • sale of real property situated outside Australia.

Accounting method for test period

Circumstance Accounting method for test period
Unregistered entity Can choose to account on a cash or non-cash basis
Always been registered for GST and never changed accounting basis Must use same accounting basis
Is registered for GST at beginning of relevant comparison period Must use the same accounting basis that applied to the entity in the first tax period of the relevant comparison period
Became registered for GST during relevant comparison period
Changed accounting basis during or after start of the relevant comparison period
Cancelled GST registration during or after relevant comparison period
Registered for GST after the end of the relevant comparison period Must use the same accounting basis that the entity has at the beginning of its turnover test period

How much does my actual decline in turnover need to be?

Aggregated turnover was > $1 Billion 50%
Aggregated turnover was <$1 Billion 30%
ACNC-registered charities other than universities and schools 15%

Eligible Employees

Employees are eligible in the extension period if they:

  • are currently employed by an eligible employer (including if you were stood down or rehired)
  • were for the eligible employer (or another entity in their wholly-owned group) either:
    • a full-time, part-time or fixed-term employee at 1 July 2020; or
    • a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer.
  • were aged 18 years or older at 1 July 2020 (if you were 16 or 17 you can also qualify if you are independent or not undertaking full time study).
  • an Australian resident.

Some employees are not eligible if they receive certain forms of Government assistance.

Jobkeeper fortnightly Wage Condition – employees

You will satisfy the wage condition in respect of an employee for a Jobkeeper fortnight in the extension period where their gross pay will exceed the relevant Jobkeeper rate.

  • $1,200 per fortnight for all eligible employees and for eligible business participants who were working for 80 hours or more on average in the 28-day period (4 week period) ending at the end of the most recent pay cycle that ended before either 1 March 2020 or 1 July 2020. For business participants, the reference period is the month of February 2020, and
  • $750 per fortnight for other eligible employees and business participants.

Business participants will also need to provide a written declaration to the ATO confirming their hours.

Sole traders will need to notify the ATO of their hours through the business monthly declaration.

  • $1,000 per fortnight for all eligible employees and for business participants who were working for 80 hours or more on average in the 28-day period (4 week period) ending at the end of the most recent pay cycle that ended before either 1 March 2020 or 1 July 2020. For business participants, the reference period is the month of February 2020, and
  • $650 per fortnight for other eligible employees and business participants.

Business participants will also need to provide a written declaration to the ATO confirming their hours.

Sole traders will need to notify the ATO of their hours through the business monthly declaration.

There may be circumstances where the pre-March or the pre-July reference periods are not suitable for some of your eligible employees. There are alternative periods that are available.  Please contact us for further information should your employees or business participant not fit into the 80-hour reference period.

Fair Work 10% Decline in Turnover Certificate

Legacy Employers who were eligible for Jobkeeper to 27 September 2020 and will no longer be eligible for either Jobkeeper Extension 1 or Jobkeeper Extension 2 can use some of the Jobkeeper provisions in PT 6-4C of the Fair Work Act until 28 March 2021 if they can demonstrate a 10% decline in turnover. The employer will need to demonstrate the 10% decline in turnover for a relevant quarter and obtain a certificate by a tax agent or qualified accountant. Legacy employers will need to have a certificate for June 2020, September 2020 and December 2020 quarters.

Further information is available here.

How to continue receiving Jobkeeper Extension 1 payments and Important Dates

For Jobkeeper fortnights commencing 28 September 2020 and 12 October 2020 only, you have until 31 October 2020 to meet the wage condition.

If you already enrolled in Jobkeeper, you are not required to re-enrol or do anything until after 28 September 2020. You will need to check your continuing eligibility from 1 October 2020. Once confirmed, this information will need to be submitted to the ATO online.

The monthly declaration will need to be submitted to the ATO between the 1st and the 14th of each month, to receive your jobkeeper payments.

You will need to select which payment tier you’re claiming for each eligible employee or business participant by your first monthly declaration in November.

Employers will need to have all BAS lodgements up to date.

Further information is available on the Treasury’s Jobkeeper extension fact sheet.

We also encourage Employers to review the new legislative instruments issued by the Australian Government in regards to retesting the eligibility for the actual decline in turnover to continue receiving Jobkeeper payments here.

As always, please reach out to your Vincents advisor to discuss in more detail.

JobKeeper payment scheme extension fact sheet

The purpose of this Fact Sheet is to enable you to make a quick assessment of your eligibility for the Government’s JobKeeper Payment Scheme extension beyond the original end date of 27 September 2020.

JobKeeper – ATO Audit Activity

We are starting to see an increase in audit activity from the ATO who are conducting reviews and sending questionnaires to confirm the eligibility of those businesses who have applied for and received JobKeeper payments – an effort by the government to monitor fraud and abuse of their COVID-19 initiative.

These audits can be a stressful, timely, and costly process where you may benefit from our professional help and guidance.

To cover our professional fees in the event of ATO audit, enquiry, investigation, or review, we would like to share with you an opportunity to apply for audit insurance through our arrangement with Audit Shield.

At a glance

Our Audit Shield service provides for the payment of our professional fees incurred in the event that you are selected for an audit, enquiry, investigation or review instigated by the Australian Taxation Office (ATO) or other relevant Australian Government authorities.

All professional fees incurred in responding to audit activity until the completion of the matter, or until your level of cover is exhausted, will be covered under our Audit Shield service.

Fees of any other external specialist (e.g. taxation lawyers) or other relevant consultants engaged are also covered.

JobKeeper payment reviews and audits have been added as an inclusion in the Audit Shield cover.

Note: Only JobKeeper payments are covered. Audits and reviews of other COVID-19 support packages are not covered unless they form part of an audit of a lodged return (i.e. BAS audit, Payroll Tax audit etc.).

Only post payment audits and reviews are covered so any issues or queries with the JobKeeper payment application process are not covered.

With our Audit Shield service, you can rest assured knowing that our professional fees will  be covered in relation to the audit activity.

The cost of being properly represented can be quite considerable depending on the circumstances. Even a simple enquiry can require hours of work.

Yes. A tax deduction should ordinarily be claimable for your participation fees.

Yes, depending on your date of payment a pro rata fee may be available. Please speak with us to discuss the specifics of this option.

Want to know more?

If you would like to know more about our Audit Shield service, please contact your Vincents advisor or our head of Business Advisory, Josip Matanovic

JobKeeper initiative extended

The Federal Government has announced that COVID-19’s JobKeeper initiative will continue until March, but payments will be cut to $1200 a fortnight.

Most businesses will have to requalify for JobKeeper by demonstrating a 30 per cent loss in revenue, with the threshold 50 per cent for major companies.

The new rates will run between September and March, and are part of the Federal Government’s overhaul of pandemic support.

Please note this latest summary is as at 21 July, 2020.

At a glance

  • $1,200 per fortnight per eligible employee who worked 20+ hours a week on average in the 4 weeks before 1 March 2020 (down from $1,500)
  • $750 per fortnight for employees who worked <20 hours a week on average over the above weeks

The rates for the above categories will reduce to:

  •  $1,000 per fortnight
  • $650 per fortnight
  • For 28 September 2020 to 3 January 2021: that actual turnover (revenue) met the continuing 30% decline in turnover test for each quarter in *both* the June and September 2020 quarters.
  • For 4 January 2021 to 28 March 2021: reassessed in January 2021, that they met the above test for each quarter for *all 3* previous quarters.

The test generally compares turnover for that quarter to the same quarter in 2019. Alternative tests may exist in certain circumstances.

It is not industry-specific.

This is the government’s recognition that many businesses continue to be severely impacted by COVID-19, but that businesses which continue to exist eventually need to be able to pay employees from their own cashflow.

JobKeeper Extension Fact Sheet

Further Information is available in the Treasury's JobKeeper Payment extension fact sheet.

Information below is accurate as at April 2020.

JobKeeper payments

The JobKeeper Payment is a payment of $1 500 per fortnight (before tax) per eligible employee that ALL eligible businesses and not-for-profit organisations affected by COVID-19 will receive monthly in arrears (i.e. after they pay staff) to enable them to retain staff.

To take advantage of this latest commitment from the Australian government to counter the economic fallout, please click on ATO web site to register. 

As always, please reach out to your Vincents advisor to discuss in more detail.

  • $1,500/fortnight job keeper payment
  • Applies to full time, part time and  casuals who have been working for a business greater than 12 months
  • Payments will flow to employers through the tax system from the  first week of May and backdated
  • If staff have been stood down they are still eligible
  • To qualify business turnover reduced by 30% or more (or 50% if >$1B)
  • Must be employed as at 1 March 2020
  • If you have applied for Job seeker you can transition across
  • No superannuation guarantee payable on the payment
Business Type Charities & Not for Profit Organisations All Businesses/Sole Traders whose Turnover < $1 Billion All Businesses whose Turnover > $1 Billion
Estimated turnover fallen or likely to Fall 15% or greater 30% or greater 50% or greater
  • Will be based on your business activity statements previously lodged.
  • Apply for payment in the month you reasonably expect turnover will fall. Guidance form ATO to come.
  • Some hefty fines where entity engages in fraud including jail and up to 75% financial penalty.

The ATO does have discretion for the consideration of additional information to set out alternative tests to assist businesses who act in good faith re estimation and are genuinely impacted.

Applies to:

  • New businesses
  • Upward Trending businesses
  • Accrual v Cash??
  • Highly variable turnover
Date Description
1 March 2020 Date on which person must be an eligible employee of employer and currently employed (includes those stood down or re-hired)
30 March 2020 JobKeeper subsidy applies to payments after this date
30 March 2020 to 12 April 2020 First 14 day fortnight period  which qualifies for subsidy. Note the payment needs to have been made to employees by 12 April 2020. There are 13 fortnights the jobKeeper payment applies to
1-8 May 2020 First week payments will be made by ATO to employers
14 Sept 2020 to 27 Sept 2020 Final 14 day fortnight period  which qualifies for subsidy. Note the payment needs to have been made to employees by 27 Sept 2020
27 September 2020 Date JobKeeper subsidy finishes
  • One partner from a partnership
  • One beneficiary of a trust where beneficiary receives distributions instead of being paid salary or wages
  • One nominated company director of an eligible business
  • One shareholder of an eligible business that pay shareholders that provide labour
  • An employee in receipt of workcover
  • Someone who is in receipt of a government allowance
  • At this stage it doesn’t appears to apply to carers or nannies who don’t hold an ABN
  • A business subject to the Major Bank Levy
  • A company in liquidation or partnership or trust or sole trader in bankruptcy

An eligible employee is an employee who:

  • is currently employed by the eligible employer (including those stood down or re-hired);
  • is a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020 (or earlier if that casual worked for a business you purchased an in total has worked 12 months);
  • was aged 16 years or older at 1 March 2020;
  • was an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020 (does not apply to Temporary Skills 482 – the old 457 visa holders )
  • was a resident for Australian tax purposes on 1 March 2020; and
  • is not in receipt of a JobKeeper Payment from another employer. (requirement to nominate primary employer that person where they are claiming the tax free threshold, get a nomination from the employee)

You need to advise employees you have nominated them as eligible employees

  • Unlike the Cash Boost for Employers the JobKeeper subsidy will be not be subject to the ATO offsetting against any ATO debts
  • Likely that it will not be treated for wages for Payroll Tax and WorkCover purposes
  • Make sure you don’t treat correctly for BAS disclosure as this is where your eligibility will be monitored. Do not disclose as GST Free Supply as this is included in turnover
  • Refer to our how to videos in the hub on how to process in accounting applications like Xero and MYOB.
  • For those people that have apprentices the JobKeeper Subsidy trumps the apprentice and trainee wage subsidy previously announced

Make sure if your employee has more than 1 job that, if they tell you that you are the primary employer you check what they signed on their tax file declaration re claiming the tax free threshold and sign a statement to the effect you are the primary employer and in event it is determined you are not they pay any payments you made to them back. If in doubt speak to the ATO

  • Payment to employee will still be subject to PAYGW
  • Eligible employees must be paid minimum of $1,500 net of tax (ie $1,308 after tax if using Fortnightly Tax Table where tax free threshold claimed)
  • Wages remain subject to Superannuation Guarantee but top up is not required on employees who normally receive < $1,500 gross or those employees receiving the payment who are currently stood down
  • No backdating of payment where you only qualify in a later period. There are  13 fortnights  the payment applies to
Scenario 1 Scenario 2 Scenario 3
Scenario Explanation Employee ordinarily receives  $2,500 gross per  fortnight before super Employee still working. Ordinarily receives average  $1,000 per fortnight before super Employee stood down
Gross $2,500 $1,500 $1,500
Tax** $    540 $    192 $    192
Net $1,960 $1,308 $1,308
Superannuation Guarantee Yes. On full amount Only On amount of Normal Wages ie $1,000 No
  • Elect into it by registering interest

https://www.ato.gov.au/general/gen/JobKeeper-payment/

  • will be administered by the ATO via Single Touch Payroll (STP) where you have employees
  • If you aren’t registered for STP or fit into the other category of eligibility there will be a manual claim process

Division 3 of the Coronavirus Economic Response Package (Payment and Benefits) Rules 2020 provides, that where an entity that is carrying on business with an ABN (at 12 March 2020) and the entity and either:

  1. had assessable income for the 2018-2019 income year and lodged the income tax return by 12 March (or later time as allowed by the Commisisoner) or
  2. was registered of GST and made taxable supplies and lodged a BAS after 1 July 2018

Where this entity meets the basic or alternative test  (eligible business) can nominate one and only one  individual who is actively involved in the business, is not an employee of another entity and is:

  • a partner in a partnership;
  • a beneficiary of a trust where beneficiary receives distributions instead of being paid salary or wages;
  • a company director
  • one shareholder of an eligible business that pay shareholders that provide labour

to be an eligible business participant for the entity

The entity needs to:

  1. elect to participate (via myGovd from 20/4/20) in JobKeeper scheme
  2. provide information about the individual
  3. notify individual within 7 days of notifying Commissioner
  4. individual signs the nomination notice

NOTE: In this scenario there is NO requirement to pay the individual the $1500 per JobKeeper fortnight in order to receive the JobKeeper payment as the entitlement is based on business participation

  • https://treasury.gov.au/coronavirus/jobkeeper
  • https://vincents.com.au/covid-19/

The legislation implementing the $130 billion JobKeeper Payment subsidy scheme to support businesses and not-for-profits through the impact of Coronavirus (COVID-19) passed Parliament on 8 April 2020 and received Royal Assent on 9 April 2020.

Since the passing of the legislation superannuation guarantee obligations around JobKeeper payments have been clarified.

  • Where an employer ordinarily pays an employee less than the amount of JobKeeper it will be at the employer’s discretion whether SG contributions are calculated on the full amount of JobKeeper or the previously paid amount. (The government need to put in place a regulatory amendment to ensure this policy applies.)
  • Where an employer continues to pay an employee more than the amount of JobKeeper superannuation guarantee payments must be maintained and calculated on the amount of Ordinary Time Earnings paid to an employee.

An issue to be aware of is that because the JobKeeper payments will start prior to the end of the March 2020 quarter, SG contributions on these payments will be due by 28 April 2020, that is received by the fund or small business clearing house by 28 April 2020.

 

Source: Chartered Accountants Australia and New Zealand 2020

This was released from the Treasury on Friday 24 April with regards to an alternative test for service entities:

To ensure the integrity and the efficient operation of the JobKeeper payment the Government is clarifying the operation of the rules:

Changes will address the circumstances where business structures use a special purpose entity to employ staff rather than staff being directly employed by an operating entity. The Government will provide an alternate decline in turnover test for the eligibility of special-purpose service entities that provide employee labour to group members and that have not met the basic test for decline in turnover.  This alternate test will apply where an entity provides the services of its employees to one or more related entities, where those related entities carry on a business deriving revenue from unrelated third parties. The alternate test will be by reference to the combined GST turnovers of the related entities using the services of the employer entity.

JobKeeper Employee Nomination Notice

JobKeeper Payment — Information for employers

JobKeeper Nomination Notice for Eligible Business Participants

JobKeeper Payment — FAQs

JobKeeper Employee Agreement Letter Template

Cash flow assistance

Businesses and not for profit entities (NFPs) with aggregated turnover under $50 million (generally based on prior year turnover) that employ workers will be eligible to receive a minimum of $20,000 and up to $100,000.  The payments will be tax free.

First payment

Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld, up to a maximum payment of $50,000.

Eligible businesses that pay salary and wages where eligible will receive a minimum payment of $10,000, even if they are not required to withhold tax.

The payment will only be available to active eligible employers established prior to 12 March 2020.

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.

Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300%) in the March 2020 activity statement.

Type of Lodger Eligible Period Lodgement Due Date
Quarterly Quarter 3 (January, February and March 2020) 28 April 2020
  Quarter 4 (April, May and June 2020) 28 July 2020
Monthly March 2020 21 April 2020
  April 2020 21 May 2020
  May 2020 22 June 2020
  June 2020 21 July 2020

The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements. Where the credit places the business in a refund position, the ATO will deliver the refund within 14 days.

The minimum payment will be applied to the entities first lodgement.

Additional payment

To qualify for the additional payment, the entity must continue to be active.

Eligible businesses that continue to employ staff will receive an additional payment of up to $50,000 on tax withheld from employees’ salary and wages for the July to October 2020 period.

Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.

Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020.

Monthly lodgers will be eligible to receive the additional payment quarterly over their June 2020, July 2020, August 2020 and September 2020 lodgements.

Similar to the first payment, the ATO will apply a credit upon lodgement of the businesses activity statements.  Where the credit places the business in a refund position, the ATO will deliver the refund within 14 days.

Sarah’s Construction Business (lodges PAYG withholding monthly)

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. In the months of March, April, May and June for the 2019-20 income year, Sarah reports withholding of $15,008 for her employees on each Business Activity Statement (BAS).

Under the Government’s changes, Sarah will be eligible to receive the payment on lodgement of each of her BASs. Sarah’s business receives:

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

Sean’s Hairdresser Salon (lodges PAYG withholding quarterly)

Sean owns a hairdressers salon on the Gold Coast. He employs 12 hairdressers, with average salary of $50,000 per year.  Sean reports withholding of $8,788 for his employees in each of his monthly BAS.

Under the Government’s changes, Sean will be eligible to receive the payment on lodgement of his BAS. Sean’s business will receive:

  • A credit of $26,364 for the March period, equal to 300% of his total withholding.
  • A credit of $8,788 for the April period.
  • A credit of $8,788 for the May period.
  • A credit of $6,060 for the June period, before he reaches the $50,000 cap. Additionally, Sean will also receive the $12,500 for the June period, equal to 25% of his additional payment.
  • An additional credit of $12,500 for the July period, equal to 25% of his additional payment.
  • An additional credit of $12,500 for the August period, equal to 25% of his additional payment.
  • An additional credit of $12,500 for the September period, equal to 25% of his additional payment.

Sean’s business will receive a total of $100,000 in support.

Tim’s Courier Run

Tim owns and runs a small paper delivery business in Melbourne, and employs two casual employees who each earn $10,000 per year. In the March and June 2020 quarterly BAS, Tim reports withholding of $0 for his employees as they are under the tax-free threshold.

Under the Government’s changes, Tim will be eligible to receive the payment on lodgement of his BAS. Tim’s business will receive:

  • A credit of $10,000 for the March quarter, as he pays salary and wages but is not required to withhold tax.
  • An additional payment of $5,000 for the June quarter, equal to 50% of his total additional payment.
  • An additional $5,000 for the September quarter, equal to 50% of his total additional payment.

If Tim begins withholding tax for the June quarter, he would need to withhold more than $10,000 before he receives any additional payment.

Tim’s business will receive a total of $20,000 in support.

Help for the Homeless

Help for the Homeless, a registered charity, runs an op-shop to support its programs and employs 5 part-time workers with average income of $30,000 per year.  It reports total withholding of $3,510 for its employees for each quarterly BAS.

Under the Government’s changes, Help for Homeless will be eligible to receive the payment on lodgement of its BAS as it is a charity.  Help for Homeless receives:

  • A credit of $10,000 for the March 2020 quarter, the minimum payment.
  • An additional credit of $5,000 for the June quarter, equal to 50% of its total additional payment.
  • An additional credit of $5,000 for the September quarter, equal to 50% of its total additional payment.

Supporting apprentices and trainees

The Government is supporting small business to retain their apprentices and trainees by way of a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020.

The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.

Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy.

Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia.

Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.

Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider. For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network provider.  Details of AASN providers in each region is available at https://www.australianapprenticeships.gov.au/

David’s Plumbing is a small business that employs 10 people, including two full-time Australian Apprentices.

Taylor is a first year Australian Apprentice, aged 20, undertaking a Certificate III qualification. She commenced her apprenticeship with David’s Plumbing on 6 February 2020. Taylor receives a weekly wage of $532.89.

Lisa is a third year Australian Apprentice, aged 29, undertaking a Certificate IV qualification. She commenced her apprenticeship with David’s Plumbing on 18 November 2017. She receives a weekly wage of $772.71.

David’s Plumbing are eligible for Supporting Apprentices and Trainees which pays 50% of the apprentices’ wages that have been paid by David’s Plumbing since 1 January 2020. David’s Plumbing will receive:

  • $9,059 subsidy for employing Taylor for 6 February 2020 to 30 September 2020; and
  • $15,068 subsidy for employing Lisa for 1 January 2020 to 30 September 2020.

Enhancing the instant asset write-off

The Government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

The IAWO is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.

This proposal applies from announcement until 30 June 2020, for new or second-hand assets first used or installed ready for use in this timeframe.

Owen owns a company, ON Point Farms Pty Ltd, through which he operates a farming business in the Central Wheat Belt of Western Australia. ON Point Farms Pty Ltd has an aggregated annual turnover of $25 million for the 2019-20 income year. On 1 May 2020, Owen purchases a second hand tractor for $140,000, exclusive of GST, for use in his business.

Under existing tax arrangements, ON Point Farms Pty Ltd is not able to immediately deduct assets costing more than $30,000 and instead would depreciate the tractor using an effective life of 12 years. Choosing to use the diminishing value method, ON Point Farms Pty Ltd would claim a tax deduction of $3,899 for the 2019-20 income year.

Under the new $150,000 instant asset write-off, ON Point Farms Pty Ltd would instead claim an immediate deduction of $140,000 for the purchase of the tractor in the 2019-20 income year, $136,101 more than under existing arrangements. At the company tax rate of 27.5%, Owen will pay $37,427.78 less tax in 2019-20.

Samantha owns a company, Sam’s Specialty Roasters Pty Ltd, through which she operates a large food processing business in Brisbane. Sam’s Specialty Roasters Pty Ltd has an aggregated annual turnover of $150 million for the 2019-20 income year. On 1 May 2020, Samantha purchases five new conveyor belts for her production facility for $40,000 each, exclusive of GST, for use in her business.

Under existing tax arrangements, Sam’s Specialty Roasters Pty Ltd is not eligible for the instant asset write-off and instead would depreciate the conveyor belts using an effective life of 15 years. Choosing to use the diminishing value method, Sam’s Specialty Roasters Pty Ltd would claim a total tax deduction of $4,456 for the 2019-20 income year.

Under the new $150,000 instant asset write-off, Sam’s Specialty Roasters Pty Ltd would instead claim an immediate deduction of $200,000 for the purchase of the conveyor belts (i.e. $40,000 for each conveyor) in the 2019-20 income year, $195,544 more than under existing arrangements. At the company tax rate of 30 %, Samantha will pay $58,663.20 less tax in 2019-20.

Backing business investment (BBI)

The Government is introducing a time limited 15 month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.

Businesses with aggregated turnover below $500 million are entitled to receive a deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.

The asset acquired must be a new asset that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (i.e. plant, equipment and specified intangible assets, such as patents) acquired after 12 March 2020 and first used or installed by 30 June 2021.

Note that BBI measures do not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

Joan and Bruce own a company, NC Transport Solutions Pty Ltd, through which they operate a haulage business on the North Coast of New South Wales. NC Transport Solutions Pty Ltd has an aggregated annual turnover of $8 million for the 2019-20 income year. On 1 May 2020, Joan and Bruce purchase a new truck for $260,000, exclusive of GST, for use in their business.

Under existing tax arrangements, NC Transport Solutions Pty Ltd would depreciate the truck using their small business simplified depreciation pool. Under the pooling rules, NC Transport Solutions Pty Ltd 4 would deduct 15% of the asset’s value upon entry to the pool, leading to a tax deduction of $39,000 for the 2019-20 income year.

Under the new BBI, NC Transport Solutions Pty Ltd would instead claim an up-front deduction of 50% of the truck’s value ($130,000) before placing the asset in their small business simplified depreciation pool. Joan and Bruce would then claim a further 15% deduction on the depreciated value of the truck ($19,500). As a result of the two deductions, Joan and Bruce are able to claim a deduction totalling $149,500 in the 2019-20 income year, $110,500 more than under existing arrangements. At the company tax rate of 27.5%, Joan and Bruce will pay $30,387.50 less tax in the 2019-20 income year.

Temporary relief for financially distressed businesses

The key features of the Government’s insolvency related package are:

  • A temporary increase in the threshold at which creditors can issue a statutory demand on a company and time companies have to respond to statutory demands they receive;
  • A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, and increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtors petition;
  • Temporary relief for directors from any personal liability for trading while insolvent; and
  • Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.

A creditor issuing a statutory demand on a company is a common way for a company to enter liquidation.  The Government is temporarily increasing the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000.  This will apply for 6 months.

The statutory time frame to respond to a creditors demand will be extended temporarily from 21 days to 6 months.  This will apply for 6 months.

The Government is also temporarily increasing the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor from $5,000 to $20,000.  This will apply for 6 months.

The time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to 6 months.  This extension will give a debtor more time to consider repayment arrangements before they could be forced into bankruptcy.  This will apply for 6 months.

Directors are personally liable if a company trades whilst insolvent.

To make sure that companies have the confidence to continue to trade through the Coronavirus health crisis, temporary relief from personal liability for insolvent trading will apply with respect to debts incurred in the ordinary course of the company’s business.  Egregious cases of dishonesty and fraud will still be subject to criminal penalties.  Any debts incurred by the company will still be payable by the company.

ASIC has the power to offer relief from some provisions or to take no action for not complying with some provisions.  This can require companies to make individual requests to ASIC, which takes time.  The Treasurer will be given a temporary instrument-making power in the Corporations Act 2001 to temporarily amend provisions of the Act to provide relief from specific obligations or to modify obligations to enable compliance with legal requirements during the crisis.

The instrument-making power will apply for 6 months, and any instrument made under this power will apply for 6 months from the date it was made.

Coronavirus SME Guarantee Scheme

Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital in an attempt to support businesses in the upcoming months.

SME’s with a turnover of up to $50 million will be eligible to receive these loans.

The Government will provide eligible lenders with a guarantee for loans with the following terms:

  • Maximum total size of loans of $250,000 per borrower.
  • The loans will be up to 3 years, with an initial 6 month repayment holiday.
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide asset as security for the loan.

The lenders’ usual credit assessment processes will apply, with the exception that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

There will be an emphasis for lenders to provide loan products that only have to be drawn if needed by the SME.  This will only incur interest on monies drawn, and if the SME does not draw down from the facility, no interest will be charged.

The Scheme will commence in early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

Income Support for Individuals – Coronavirus supplement

On 22 March 2020, the Government announced it will provide a temporary Coronavirus supplement of $550 a fortnight to new and existing income recipients from 27 April 2020 for six months.

The income support payment categories to receive the Coronavirus supplement are:

  • JobSeeker Payment (and payment progressively transitioning into JobSeeker Payment)
  • Youth Allowance
  • Parenting Payment (Partnered and Single)
  • Austudy
  • ABSTUDY (Living Allowance)
  • Farm Household Allowance
  • Special Benefit

From 20 March 2020, Sickness Allowance was closed to new entrants and was replaced by the JobSeeker Payment.  This does not mean that people who previously may have been eligible for Sickness Allowance are now unable to access income support.   JobSeeker Payment better accommodates individual circumstances, including assisting people who are sick or bereaved.

Anyone who is eligible for the Coronavirus supplement will receive the full rate of the supplement of $550 per fortnight, in addition to their regular fortnightly payment.

From 27 April 2020, there will be expanded access to the income support payments listed above.  Eligibility for JobSeeker Payment and Youth Allowance for jobseekers will also be expanded to assist:

  • Permanent employees who are stood down or lose their employment
  • Sole traders and self-employed people
  • Casual workers
  • Contract workers

The above could include a person required to care for someone infected or in isolation as a result of contact with Coronavirus.

The Government will also reduce means testing requirements and waiting times for certain payments.  In particular, asset testing for JobSeeker Payment, Youth Allowance and Parenting Payment will be waived for the period of the Coronavirus supplement.  Income testing will still apply to the person’s other payments, consistent with current arrangements.

The Coronavirus supplement will commence from 27 April 2020.

Expanded access for payments and faster claims processing will commence from 25 March 2020.

Stimulus payments to households to support growth

The Government will provide two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders.

There payments will be paid as follows:

  • The first payment will be available to eligible recipients and concession card holders at any time from 12 March to 13 April 2020 inclusive.
  • The second payment will be available to eligible recipients and concession card holders on 10 July 2020.

A person can be eligible for both the first and second support payments.  However, they can only receive one $750 payment each round, even if they qualify in multiple ways.

The payment will be exempt from taxation and will not count as income for Social Security, Farm Household Allowance and Veteran payments.

First payment

To be eligible for the first payment, you must be residing in Australia and be receiving one of the following eligible payments or hold one of the following concession cards at any time from 12 March 2020 to 13 April 2020 inclusive:

  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Parenting Payment
  • Wife Pension
  • Widow B Pension
  • ABSTUDY (Living Allowance)
  • Austudy
  • Bereavement Allowance
  • Newstart Allowance
  • Youth Allowance
  • Partner Allowance
  • Sickness Allowance
  • Special Benefit
  • Widow Allowance
  • Family Tax Benefit, including Double Orphan Pension
  • Carer Allowance
  • Pensioner Concession Card holders
  • Commonwealth Seniors Health Card holders
  • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment.
  • Veteran Gold Card holders
  • Farm Household Allowance

Where someone has lodged a claim for one of the above payments or concession cards at any time from 12 March 2020 to 13 April 2020 inclusive, and the claim is subsequently granted, they will also receive the payment.

The first payment will be paid automatically from 31 March 2020 to eligible recipients.

Second payment

To be eligible for the second payment, you must be residing in Australia and receiving one of the abovementioned eligible payments or holding one of the concession cards that were eligible for the first payment, except for those who are receiving income support payment that is eligible to receive the Coronovirus supplement.

The second payment will be paid automatically from 13 July 2020 to eligible recipients.

Kate and Angus

Kate and Angus are a couple and are both Age Pension recipients as at 12 March 2020. As part of the Government’s economic response to Coronavirus, Kate and Angus will each receive $750, so their household will receive $1,500 in total. Payments to Kate and Angus will be made automatically from 31 March 2020.

As Kate and Angus remain both a couple and Age Pension recipients on 10 July 2020, they will each be eligible for a further $750 payment as part of the second payment initiative, so their household will receive $1,500 in total for the second payment.

This will bring their total household payments to $3,000, for both the first and second payments.

Leanne

Leanne is a single parent JobSeeker Payment recipient on 10 July 2020, receiving a single, with dependent child, rate of $612 per fortnight, a further $9.50 per fortnight for the Energy Supplement and an additional $550 per fortnight Coronavirus supplement. This brings Leanne’s fortnightly income support payment to $1,171.50.

Leanne was in receipt of the JobSeeker Payment on 30 March, so she was eligible for the first $750 payment.

As Leanne already receives the $550 per fortnight Coronavirus supplement, she will not be eligible for the second $750 payment.

Early release of superannuation

While superannuation helps people save for retirement, the Government recognise that for those significantly financially affected by the Coronavirus, accessing some of their superannuation today may outweigh the benefits of those savings until retirement.

Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.

To apply for early release, you must satisfy any one or more of the following requirements:

  • You are unemployed; OR
  • You are eligible to receive a JobSeeker Payment, Youth Allowance for jobseekers, Parenting Payment (partnered and single), Special Benefit or Farm Household Allowance; OR
  • On or after 1 January 2020:
    • You were made redundant; or
    • Your working hours were reduced by 20% or more; or
    • If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGov website: https://my.gov.au/.

Separate arrangements will apply if you are a member of a Self Managed Superannuation Fund (SMSF).

You will be able to apply for early release of your superannuation from mid-April 2020

Rachel the sole trader with a catering business.  At the end of July 2020, Rachel seeks to apply for an early release from her superannuation for the 2020-21 financial year.

Due to the economic effects of coronavirus, Rachel’s turnover for July is $5,000 compared to $10,000 on average per month for the second half of 2019.  Rachel therefore determines that her turnover has reduced by more than 20% compared to her average turnover over the last 6 months of 2019.

Rachel self-certifies that she is eligible for early release and applies to have $10,000 released from her superannuation.

Superannuation minimum drawdown rates and social security deeming rates

The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for the 2019-20 and 2020-21 financial years.

This measure will benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.

Age Default minimum drawdown rates (%) Reduced rates by 50% for the 2019-20 and 2020-21 financial years (%)
Under 65 4 2
65-74 5 2.5
75-79 6 3
80-84 7 3.5
85-89 9 4.5
90-94 11 5.5
95 or more 14 7

This measure will have no impact on the underlying cash balance for 2019-20 and a negligible impact in 2020-21.

The value of Mike’s account-based pension at 1 July 2019 was $200,000.  Under current minimum drawdown requirements, Mike is required by legislation to drawdown 5% of his account balance over the course of the 2019-20 and 2020-21 financial years.

This means Mike has to drawdown $10,000 by 30 June 2020 to comply with minimum drawdown requirements.

Following the temporary reduction in minimum drawdown requirements, Mike will now only be required to drawdown 2.5% if his account balance, that is, $5,000 by 30 June 2020.  If Mike has already withdrawn over $5,000 for 2019-20, he is not able to put the amount above $5,000 back into his superannuation account.

On 1 July 2020 the value of Mike’s account-based pension is $180,000 (after drawdowns and investment losses).  During 2020-21, Mike is required to drawdown 2.5% of his account balance, which is $4,500, instead of $9,000.

As a result of this change to minimum drawdown requirements, Mike is able to preserve his capital while still drawing an income from his superannuation.

The Government has reduced the deeming rates by a further 0.25% to reflect the latest rate reduction by the Reserve Bank of Australia.  As of 1 May 2020, the lower deeming rate will be 0.25% and the upper deeming rate will be 2.25%.

The change will benefit around 900,000 income support recipients.

Assistance for severely affected regions

The Government has set aside an initial $1 billion allocation to support those regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education. The $1 billion will be provided through existing or newly established Government programs.

This will include the waiver of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism.

As an initial measure, the Government will waive the Environmental Management Charge (EMC) for tourism businesses that operate in the Great Barrier Reef Marine Park for the remainder of 2020. The Government will also waive park entry fees for the iconic Kakadu, Uluru, and Booderee National Parks for the remainder of 2020. This will provide much needed relief for the tourism industry and further encourage visitors to these amazing places. The Government will ensure there is no reduction in revenue that goes to the management of the Great Barrier Reef Marine Park and Commonwealth National Parks. Lease payments to Traditional Owners in relation to these National Parks will not be impacted.

We are continuing to closely monitor the government’s efforts to support and protect small to medium business in these unprecedented times.  Given the fluidity of the situation we expect further announcements in due course.  As further announcements and or details are released updates will be provided.

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