As you would be aware, things have changed significantly around Australia with the recent forced shut downs of some businesses and other restrictions imposed by the Governments in an attempt stop the spread of COVID-19.
It is going to be a very tough time for all of us business owners over the next 6 to 12 months and some of us will be affected way more than others, but we want to reassure you that the team at AKW Accountants are here and will be working to ensure we are supporting all of our clients.
A key Government website that you need to be aware of is https://treasury.gov.au/coronavirus . This website contains very useful fact sheets and information for business owners and individuals (perfect for your employees).
First of all, please feel free to phone or email us anytime for support. We are here to help. We will stay in touch with you with regular update emails, and while we’re not doing face to face meetings for the time being, our team is always available to have a Zoom Meeting with you, even after business hours if needed.
Here is an article with some things you need to be aware of. (We recommend that you grab a beverage of choice as it is a long one):
- Government Stimulus Package
- Helping Employees that you have to Stand Down – Fact sheets for you to use
- JobKeeper Information and Instructions
- Our ongoing Support for you as your Accountants and Advisors
- GOVERNMENT STIMULUS PACKAGE
The Australian Government has just updated its economic stimulus package, which now totals $189 billion. The package has been marketed as a measure to provide timely support to affected workers, businesses and the broader community.
The updated key tax and stimulus measures include:
Cashflow Assistance for Businesses
- Tax-free payments of up to $100,000 for eligible small and medium businesses (i.e. with a turnover of less than $50 million that employ staff) and not for profit organisations based on their PAYG withholding obligations. This is not a cash payment, but it is a credit in the activity statement system equal to 100% of the PAYG amounts withheld from salary and wages paid to employees.
These payments will only be available to active eligible employers established prior to 12 March 2020, and you simply need to have employees for whom you withhold tax on wage payments.
First payment of up to $50,000 – Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
Second payment of up to $50,000 – To qualify for this additional payment, the business must continue to be active. Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending June 2020 and September 2020. Business that lodge on a monthly basis will be eligible for the credit for the June 2020, July 2020, August 2020 and September 2020 lodgements.
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $10,000 will still be made in the period up June 2020, and a second minimum payment of $10,000 in the period after June 2020 and up to September 2020. These payments will be applied to the first activity statement lodged in each period.
Please note that there is no registration required, this credit will be applied by the ATO after 28 April 2020
- Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.
- From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
- A time-limited 15-month investment incentive (through to 30 June 2021) will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.
Temporary Relief for Financially Distressed Businesses
- These measures are designed to give a safety net for businesses to ensure that when this crisis has passed, they can resume normal business operations. It includes lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. They include:
- A temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.
- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an 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 debtor’s petition.
- Temporary relief for directors from any personal liability for trading while insolvent.
Business Lending Guarantee
- The Government will provide a guarantee of 50% to Small and Medium Enterprise lenders for new unsecured 3 year loans of up to $250,000 per borrower to be used for working capital. These loans will be up to three 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 an asset as security for the loan.
- Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.
- The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
There is also state government loans available to Small and Medium Enterprise. Each state has their own terms. We would be happy to look into this for you and your business.
- Tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession card holders. It is estimated that around half of those who will benefit will be pensioners. These payments will commence to be automatically made from 31 March 2020.
- HELPING YOUR EMPLOYEES THAT YOU HAVE TO STAND DOWN
With the recent requirements that many businesses are to be temporarily closed, you may have to stand down many of your employees from their employment.
The good news is that the Government is providing support for individuals to assist them in the next 6 months.
The Government has expanded the access to the Jobseeker Payment and the Youth Allowance Payment so that the following people affected by the Coronavirus can immediately receive them, commencing 27 April 2020:
- permanent employees who are stood down or lose their employment
- sole traders
- self employed
- casual workers
Please refer to the fact sheets below for an excellent summary of what individuals are entitled to. We recommend providing these to your employees.
Income support for Individuals – https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet-Income_Support_for_Individuals.pdf
Payments to support households – https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Payments_to_support_households_0.pdf
Temporary early release of Superannuation – https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet-Early_Access_to_Super.pdf
- JOBKEEPER INFORMATION AND INSTRUCTIONS
The JobKeeper Payment was passed by parliament just before the Easter long weekend. The ATO released information detailing eligibility of employers and employees and step by step instructions on how to register.
Employers will be eligible for the JobKeeper payment if all of the following apply:
- On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
- You employed at least one eligible employee on 1 March 2020.
- Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).
- Your business has faced a
- 30% fall in turnover (for an aggregated turnover of $1 billion or less)
- 50% fall in turnover (for an aggregated turnover of more than $1 billion), or
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
- Your business is not in one of the ineligible categories. (https://www.ato.gov.au/general/jobkeeper-payment/employers/eligible-employers/#Ineligibleemployers
You can satisfy the fall in turnover test in two ways:
- The basic test – https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Applying-the-turnover-test/?page=2#Basic_test
- The alternative test – https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Applying-the-turnover-test/?page=3#Alternative_test
To apply the basic test, you need to:
Step 1: identify the turnover test period – To qualifiy from the start of the scheme, the turnover month used can be either March 2020 or April 2020. To qualify at a later time, the turnover month can also be May, June, July, August or September 2020, provided that the turnover month is the month in which the first fortnight for which you claim the JobKeeper payment ends, or another earlier month. (Doesn’t have to be in line with registration periods for your BAS – Monthly or Quarterly)
Step 2: identify the relevant comparison period – this period (month or quarter) is the same in 2019 that you used in Step 1
Step 3: work out the relevant GST turnover – Can be on a cash or accrual basis (doesn’t need to be the same as what you use for your BAS)
According to the ATO, projected GST turnover and current GST turnover excludes the following:
- GST you included in sales to your customers (if any)
- sales that are input taxed sales (e.g. bank interest, sale of shares, residential rental income)
- sales not connected with an enterprise that you carry on (e.g. sale of private car)
- sales that are not made for payment (unless a taxable supply to an associate)
- payments for no supply (e.g. 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
Step 4: determine which shortfall percentage applies – the shortfall percentage will need to be 30% or more
In regards to the alternate test, the ATO and the Commission are yet to determine these tests. As soon as this information is available, we will provide this to you.
You have an eligible employee if they:
- are currently employed by you the eligible employer (including if you were stood down or re-hired).
- were for the eligible employer (or another entity in their wholly owned group), either a
- permanent full-time or part-time employee at 1 March 2020; or
- long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer.
- were aged 16 years or older at 1 March 2020.
- were either
- an Australian resident (within the meaning of the Social Security Act 1991) – visit the Services Australia website – https://www.servicesaustralia.gov.au/individuals/topics/residence-descriptions/30391 for more details
- an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as at 1 March 2020.
- were not
- in receipt of any of these payments during the JobKeeper fortnight
- receiving Government parental leave or Dad and partner pay under the Paid Parental Leave Act 2010
- receiving a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work.
If they started work with you after 1 March 2020, your employee will not be eligible to claim the JobKeeper payment through your business.
If they aren’t eligible to be paid JobKeeper payments by you, they may be able to apply for support through Services Australia (https://www.servicesaustralia.gov.au/) depending on their personal circumstances.
Steps for Eligible Employers to take (see Appendix for full eligibility requirements)
Step 1 – Enrol for the JobKeeper payment (from 20 April 2020 onwards)
The business or AKW Accountants can enrol for the JobKeeper scheme:
- Register your interest and subscribe for JobKeeper payment updates – you may have done this already
- Check you and your employees meet the eligibility requirements – see below
- Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April) – see below for special rules for April
- Notify your eligible employees that you are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming JobKeeper payment through another employer or have nominated through another business.
- Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April. Keep it on file and provide a copy to AKW Accountants.
- From 20 April 2020, you can enrol with the ATO for the JobKeeper payment using the Business Portal and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April.
- In the online form, provide your bank details and indicate if you are claiming an entitlement based on business participation, for example if you are a sole trader, trust, partnership, company.
- Specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).
Step 2 – Confirm the eligible employees you will claim JobKeeper Payment for (available from 4 May 2020 onwards)
The business or AKW Accountants can apply for the JobKeeper payment for your eligible employees:
- Apply to claim the JobKeeper payment by logging in to the ATO Business Portal
- Ensure you have paid each eligible employee a minimum of $1,500 per JobKeeper fortnight before tax.
- Identify your eligible employees in the application form by:
- selecting employee details that are prefilled from your STP pay reports if you report payroll information through an STP enabled payroll solution, or
- manually entering employee details in ATO online services or the Business Portal if you do not use an STP enabled payroll solution, or
- using AKW Accountants who will submit a report on your behalf through Online services for agents.
- Submit the confirmation of your eligible employees online and wait for your confirmation email or SMS showing it has been received.
- Notify your eligible employees you have nominated them.
- The ATO will pay you the JobKeeper payment for all eligible employees after receiving your application.
- Each month, you will need to reconfirm that your reported eligible employees have not changed through ATO online services, the Business Portal or via AKW Accountants. This will ensure you will continue to receive the JobKeeper payments from the ATO. You do not need to retest your reported fall in turnover, but you will need to provide some information as to your current and projected turnover. This will be done in your monthly JobKeeper Declaration report.
- If your eligible employees change or leave your employment, you will need to notify the ATO through your monthly JobKeeperDeclaration report. If you use the ATO Business Portal, you will need a myGovID linked to your ABN in relationship Authorisation Manager (RAM). You can find out how to set this up at ato.gov.au/mygovid
What do you need to do for your employees?
- You need to identify which employees you intend to claim the JobKeeper payment for and tell them you intend to claim the JobKeeper payment for them.
- You need to provide these employees with the JobKeeper employee nomination notice and ask them to return it to you by the end of April if you want to claim JobKeeper payment for April.
- If your employees have multiple employers, they can usually choose which employer they want to nominate through. However, if your employees are long-term casuals and have other permanent employment, they cannot nominate you.
- They cannot receive the JobKeeper payment from more than one employer.
- If an employee is currently receiving an income support payment, they must notify Services Australia (Centrelink) of their new income to avoid incurring a debt that they will have to repay.
Step 3 – Paying your eligible employees
How to pay
- You need to re-start or continue to pay your eligible employees at least $1,500 a fortnight in line with your existing pay cycle through your existing payroll solution.
When to pay
- You should pay your employees for each JobKeeper fortnight you plan to claim for. The first fortnight is from 30 March – 12 April and each JobKeeper fortnight follows after that.
(IMPORTANT – For the first two fortnights (30 March – 12 April, 13 April – 26 April), we will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you by the end of April. This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.
- If you usually pay your employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight.
- If your eligible employees change or leave your employment, you need to notify the ATO.
How much to pay
- You must pay the minimum $1,500 before tax to each eligible employee per fortnight to claim the JobKeeper payment for that fortnight.
- If your eligible employees earn less than $1,500 per fortnight before tax, you must pay them at least $1,500 for each fortnight to claim the JobKeeper payment. This is a ‘top up’ of their salary or wages and will ensure they remain eligible.
- You cannot pay your employees less than $1,500 per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 before tax per fortnight.
- If your eligible employees earn more than $1,500 per fortnight, you should continue to pay them their regular salary or wages. However, you will only receive $1,500 for each eligible employee. Any amount you pay above $1,500 per fortnight is not subsidised by the JobKeeper payment.
- If an employee has been stood down after 1 March 2020, you can start paying them $1,500 per fortnight to qualify for the JobKeeper payment for that employee.
- If an employee ceased working for you after 1 March 2020, you can re-engage them and pay them at least $1,500 per fortnight. You will only be eligible to claim for the fortnights after you re-engaged your employee from the date they were re-engaged – you cannot claim retrospectively
- If you usually pay your employees monthly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a four-week pay cycle, your employees must have received at least $3,000 for every four-week period.
- All JobKeeper payments are assessable income of the business that is eligible to receive the payments.
- The JobKeeper payment is not subject to GST.
New rules are being introduced by the government with the intention to not require super guarantee to be paid on additional payments that are made to employees as a result of JobKeeper payments. The ATO will confirm this once legislation or regulations are in place.
What you cannot do
- You cannot claim the JobKeeper payment on behalf of employees who were not paid at least $1,500 before tax during each JobKeeper payment period.
- You cannot claim the JobKeeper payment in advance. The JobKeeper payment is a reimbursement from ATO to an employer in arrears and cannot be paid in advance in any circumstances.
Step 4 – ATO will commence making payments from the first week of May
- The business will receive a payment from the ATO of $1,500 per employee per fortnight as long as the business and its employees meet the eligibility criteria.
- The ATO will pay you for each eligible employee monthly in arrears beginning in May 2020. Payments will be made from the first week of May.
- An employer will usually get $3,000 a month per eligible employee for the two fortnightly periods in that month.
So what can you do now?
1. Ensure you are registered for the Business Portal.
2. Review your turnover changes and potential eligibility.
3. Decide if you are going to enrol in this program. It is voluntary.
4. Discuss with your employees and have them complete Nomination Forms.
Please ensure that the information you are working with is from a trustworthy source such as the ATO or Treasury websites.
The ATO has advised that those “Business Participants” (This is for sole traders, partners, beneficiaries (adult), and directors that receive their income through alternative means to wages) applying for the JobKeeper payment, this can be done through your MyGov Account if you are a Sole Trader.
We highly encourage you to register and work through this process yourself as the business owner.
If you need any assistance along the way, please feel free to make contact with us and have a chat. We can assess what work will be necessary to cover your requirements and provide you a quote if applicable.
- OUR ONGOING SUPPORT
Our team will be working from their homes. We want to reassure you that we have 100% capacity to continue helping you and your business.
Please continue to phone or email us.
These are times when we need to stay calm and rely on reliable news sources and information from State and Australian Government websites. What you see on social media may be panicky and unreliable information – stay away from this!
There are still deadlines we will need to meet for you so that you can receive the Government Stimulus Package amounts that you are entitled to.
Our team at AKW Accountants are here to help you.