The details of the third support package have now been announced by the Federal Government – estimated to be worth $130 billion, in addition to the $84 billion already committed in the earlier two packages.
JobKeeper Wage Subsidy – To help your business continue paying employee wages
Applicable period – From 30 March for up to 6 months (the 6 month period starts on 30 March, with payments commencing from the first week of May and backdated where applicable)
Businesses and Not for Profit Entities with employees, or Self Employed Individuals without employees (entities not subject to the Major Bank Levy) with: –
- Turnover < $1 billion and turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
- Turnover > $1 billion and turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month).
Eligibility – Employees
- Currently employed by the eligible employer (including those stood down or re-hired);
- Was employed by the employer at 1 March 2020;
- Full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- At least 16 years of age;
- Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
- Not in receipt of a JobKeeper Payment from another employer (employees should notify their primary employer)
- Employees that are currently in receipt of an income support payment, or have registered an intent to claim, must notify Services Australia of their new income. They may no longer be eligible for income support from Services Australia as a result of receiving the JobKeeper Payment.
- Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline. Initially, employers can register their interest in applying for the JobKeeper Payment here (ato.gov.au) from 30 March 2020.
- Provide information to the ATO on eligible employees. This includes information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax).
- For employees that were already receiving this amount from the employer then their income will not change.
- For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax.
- For those employees earning more than this amount, the employer is able to provide them with a top-up.
- Notify all eligible employees that they are receiving the JobKeeper Payment.
- Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.
Employers will need to continue paying superannuation on salary and wages even if these payments are funded by the JobKeeper subsidy. If the subsidy is merely being passed on and the employee is not actually working the payment of super is not required but may be voluntarily paid by the employer. If an employee’s wage or salary is topped up by the JobKeeper payment to $1,500 per fortnight, the employer may choose to pay super on the top up. It appears that this treatment would also apply to payroll tax and worker’s compensation insurance.
Self Employed Individuals will need to:-
- Nominate an individual to receive the payment (to the individual’s bank account) and provide that individual’s Tax File Number;
- Provide a declaration as to recent business activity; and
- Provide a monthly update to the ATO to declare their continued eligibility for the payments.
It appears that newly established businesses will not be eligible for this subsidy as it is required to demonstrate the reduction in turnover compared to a comparable period a year ago.
JobSeeker Payment – Partner Income Threshold Increased
The income threshold for an individual’s partner has been increased to $80,000 per annum for entitlement to JobSeeker Payment. This will allow many more Australians whose income has been reduced or ceased, and who are not in receipt of the JobKeeper Payment, to claim this income support.
Landlords and Tenants – Moratorium on Evictions
The Government has announced that a moratorium on evictions for the next 6 months has been agreed to be implemented by the States and Territories for both commercial and residential tenancies.
The Prime Minister has encouraged landlords, tenants and their banks to work together, to reach a solution, which will see businesses affected by this crisis survive through this hibernation period. The objective would be that the business tenants can move into recovery phase without the burden of liabilities for rents which have been accrued in full during this crisis period. There have been no further National level announcements yet in relation to further reliefs for tenants, however stand alone agreements are being reached, privately and publicly.
For example, in Western Australia the state government has announced that it will waive rent payments for small business and not for profit tenants in government owned building for the next 6 months.
We expect to see more announcements in this area from the National Cabinet.
Any such private arrangements reached must be in writing to ensure that parties have clarity on the changes in terms. If you need assistance in this regard you should refer to your lawyer or to us for a referral to a lawyer.
Bank Loan Reliefs – Deferrals for Loans up to $10m
We previously shared details of the loan repayment deferrals for 6 months, offered by Australian banks to lenders with facilities up to $3m. This threshold has now been increased to $10m, expanding this relief significantly. Businesses with facilities over $10m may be able to access the deferral, to be decided on a case by case basis.
Commercial property landlords have also been advised that they can avail of the repayment deferral, with the undertaking that they will not terminate leases or evict tenants during this crisis.
Business owners and managers are facing tough challenges, firstly understanding what the next 6 months will bring for them and secondly, understanding what actions they need to take now to protect their business and themselves. We are here to help you to work through these challenges.