Weekly Digest – 8 April 2020
The word “uncertain” has been thrown around a lot during the COVID-19 pandemic – and that’s because almost everything around it has been. We hope you’re going well and managing to get some time away from your business during these crazy times. Here’s a recap of what’s happened this week.
On Thursday, 9 April 2020 the JobKeeper payment legislation was passed (Coronavirus Economic Response Package (Payments and Benefits) Act 2020). This is a wage subsidy aimed at helping employers keep paying their employees. Millions of workers across Australia will receive a fortnightly payment of $1,500 (before tax) through their employer. The goal is to help businesses start up quickly once this crisis is over.
There are more details and eligibility requirements of course. Please see out blog from last week (Third stimulus package the “JobKeeper Payment” package) for more details, or get in touch with us if you have any questions.
Some key points
- Employers must register their interest online
- Jobkeeper starts from the fortnight commencing 30 March 2020 and will last for a maximum of 6 months (fortnight ending 27 September 2020).
- Small businesses must prove their business turnover (projected GST turnover) is estimated to fall by 30% or more. This can be assessed on a monthly (starting March 2020) or quarterly basis (starting April 2020) and a business doesn’t need to re-assess their eligibility after qualifying.
- There is an alternative test that can be applied if the decline in turnover test is not appropriate. e.g. if a new business commenced in October or November 2019.
- Self-employed individuals will be eligible to receive the JobKeeper payment if they meet the same criteria.
- The business must have been operational on 1 March 2020.
- Employees must have been employed as at 1 March 2020 and satisfy certain criteria. Not all employees will qualify but all eligible employees are to participate in the scheme. The employer can’t select which eligible employees will participate.
- The JobKeeper Payments will be administered by the ATO and the ATO is working with software providers to have required information reported through the software’s Single Touch Payroll process.
- Whilst the JobKeeper Payment will be assessed fortnightly, the ATO will make the payment to the business monthly. This will by the 14th day of the following calendar month.
- There may be superannuation payable on the JobKeeper payments.
More information can be found here:
We have developed decision charts to assist clients with determining their eligibility, the eligible employees and the possible superannuation liabilities. As well we also have a decision chart for the self employed.
Please don’t hesitate to reach out to us to chat about this.
Rental waivers and deferrals for some commercial tenants
Prime Minister Scott Morison announced a Code of Conduct for landlords and tenants affected by COVID-19 on Tuesday, 7 April 2020. The purpose of the Code is to impose a set of good faith leasing principals for application to commercial tenancies (including retail, office and industrial) between owners/operators/other landlords and tenants.
The PM reinforced the point that landlords and tenants should “sit down and work it out.”
The code is mandatory:
- where the tenant or landlord is eligible for the JobKeeper program
- where businesses have a turnover of $50 million or less
- Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period and subsequent recovery period.
- Tenants must remain committed to the terms of their lease, subject to any amendments negotiated under this Code.
- Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals (as outlined below) of up to 100% of the amount ordinarily payable:
- Rental waivers must not be less than 50% of the agreed rent reduction amount (unless the tenant has agreed to waive this requirement).
- The balance is a rental deferral which must be spread over the term of the lease or for a period of no less than 24 months, whichever is the greater (unless otherwise agreed by the parties).
- Any reduction in statutory charges (e.g. land tax, council rates) or insurance are to be passed on to the tenant in proportion to their lease.
- No fees, interest or other charges should be applied with respect to rent waived or deferred.
- The tenant should be provided with an opportunity to extend the lease for an equivalent period of the rent waiver and/or deferral period.
- Landlords must freeze rent increases for the duration of the COVID-19 pandemic and subsequent recovery period.
- Landlords must not draw on a tenant’s security (e.g. bond, bank guarantee or personal guarantee) for the non payment of the rent.
- Landlords must not apply any prohibition, levy or penalties if tenants reduce opening hours or cease to trade due to the COVID-19 pandemic.
- A landlord should seek to share any benefit received due to deferral of loan payments with the tenant in a proportionate manner.
- Where landlords and tenants can’t reach agreement on leasing arrangements, the matter should be referred to applicable state or territory leasing dispute resolution process including Small Business Commissioners or Ombudsmen.
For more information see the government business website.
$10,000 grants for NSW businesses
On Friday 3rd April the NSW state government announced $10,000 grants as fast relief for NSW businesses that need it most. The new assistance scheme is for businesses struggling to cope with the COVID-19 shutdown, and is based on a similar scheme rolled out during the bushfires.
Premier Gladys Berejiklian said the “grants will provide a big boost, and we will make the application process easy to ensure small businesses can receive some cash-flow as soon as possible to meet pressing needs.”
To be eligible, businesses will need to:
- Have between 1-19 employees and a turnover of more than $75,000;
- A payroll below the NSW Government 2019-20 payroll tax threshold of $900,000;
- Have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020;
- Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020;
- Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice;
- Provide appropriate documentation upon application.
Applications for a small business grant of up to $10,000 will be available through Service NSW within a fortnight and remain open until 1 June 2020.
Sometimes we have to say no.
Our role is to support small businesses, but we cannot compromise our standards along the way, particularly as the effects of COVID-19 continue to rage on for our clients.
The Tax Practitioners Board together with the ATO released a clear statement that they will not look favourably on businesses who seek to become eligible for grants, loans, benefits or other assistance that they would not ordinarily be entitled to.
You will not be eligible for schemes like the Cash Flow Boost if you are found to become entitled to them when you would not ordinarily be. The statement says “any sudden changes to the characterisation of payments may cause us to investigate.”
So, if you come to us asking to change payroll, increase the amounts you’re paying, register you for PAYG-W have another request, we’re going to ask some questions. There’s nothing to worry about if you have a genuine business case for these requests, and we will always talk to you to find out what is best. We just ask you to work with us to help you get through this next stage stronger than ever. Thank you.
Are you using Zoom for conference calls or online meetings? You’ll want to be sure to read this notification from Zoom about security settings, and consider requiring a password from participants. Without a password, anyone with the meeting ID can join. Because of this loophole, many meetings have been “Zoom bombed” by uninvited participants who post inappropriate images or disrupt meetings with annoying sounds.
Time for some good news
This week’s good news story comes out of the US where a college student – Ashley Lawrence – has been sewing face masks for those with hearing impairments who rely on lip-reading. These masks have plastic windows over the wearer’s mouth so they can still communicate.
Ashley is sewing and shipping these masks to dozens of hospitals for free, backed by a GoFundMe campaign. The campaign has since been deactivated as she reached her funding goal in 2 days.
Have you got any good news stories from the week?
All the best
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!