On Monday the Federal Government released the third instalment of its economic disaster relief measures, adding another $130 billion over six months, and bringing much-needed security for employers and employees across the country.
The linchpin of the economic weapons is the ‘JobKeeper’ payment, designed for businesses that have experienced a downturn of 30 per cent or more.
It provides a $1,500 per fortnight payment per employee, paid to the employer by the ATO for up to six months, to businesses with a turnover below $1 billion that have had turnover reduced by more than 30 per cent.
The payment is intended to enable businesses to retain their full time, part time and some casual employees until business picks up again.
Sole traders are also eligible for JobKeeper payments, in lieu of their own wages.
Employees must have been on the books at 1 March, 2020, and the employer must agree to continue to “engage” them to get the payment. This eligibility includes part-time employees, and any stood-down after 1 March.
Casual employees are also eligible if they have been regularly employed for at least 12 months.
Employees must be Australian citizens, or hold the appropriate visa to access social welfare benefits.
A key point for employers is that if an employee was receiving more than $1,500 per fortnight (before tax), they must continue to be paid as before, with the employer making up the balance. Employees that were receiving less than the JobKeeper payment are to be paid the full $1,500 per fortnight.
At this point it is at the discretion of the employer as to whether superannuation is paid on top of the crisis relief income.
Businesses owners wishing to participate in the JobKeeper program must register HERE.
The next step is to complete the March 2020 BAS. The ATO will be issuing other credits based on this.
Employers will receive the JobKeeper payments directly from the ATO each month, in arrears.
This latest economic package to help soften the blow of the inevitable COVID-19 downturn follows the second stimulus announcement on 22 March, which brought the government’s spend promise total to $189 billion.
The second round was very targeted toward SMEs (small to medium enterprises) and individuals.
It enhanced the Boosting Cash Flow scheme announced 12 March, increasing the maximum payment to $100,000. This scheme is expected to benefit around 690,000 Australian businesses
Employers will receive a payment equal to 100 per cent of their salary and wages withheld in tax – up to $50,000, with the minimum payment now increased from $2,000 to $10,000.
Also, an additional payment is to be introduced in Q3 2020 that will be equal to the total of scheme payments already received, making the total for eligible entities between $20,000 and $100,000.
Businesses that are already experiencing financial distress will benefit from the government’s move to temporarily increase both the threshold at which creditors can issue statutory demands and the time in which the company must respond.
Businesses looking to undertake other plans of their own will benefit from the Coronavirus SME Guarantee Scheme, where government will provide 50 per cent guarantee to lenders on new loans to be used for working capital. SMEs must have a turnover below $50 million, and the loans are:
- Up to $250,000 per borrower
- Up to three years, with an initial six-month repayment holiday
- Unsecured finance, meaning borrowers do not have to provide an asset as security
- Subject to the lender’s usual credit assessment processes
Government is also encouraging lenders to provide credit facilities to SMEs, to be drawn if needed with no fees if not used.
At this point, with financial institutions under pressure to minimise the fallout, now is also the time to correspond with financiers and landlords to push for a better deal during the crisis.
In the short- to medium-term there are other stimulus measures likely to apply to a lot of hotel owners and operators. Financial advice should be sought for specific circumstances, but some of these measures are:
- An increase to the instant asset write-off – from $30,000 to $150,000. This is a significant incentive for businesses to purchase new assets or equipment, and receive the full tax deduction this tax return. The incentive is currently only available until 30 June
- Accelerated Depreciation: business purchases that fall outside the instant asset write off can receive accelerated depreciation deduction of 50 per cent in the first year, with traditional depreciation rates from then on
RESOURCES
Register for the JobKeeper program HERE.
The Treasury has produced a fact sheet with examples on the JobKeeper program. See HERE.
Where is the assistance for hotel [and other] landlords? My lessees have called for 75% discount on rent which is saving the hotels but potentially destroying the passive investments.
Coronavirus SME Guarantee
Upon pursuing the conditions apply to this scheme it quite clearly states that if an entity applies for the full amount available of $200,000, the Government require security.
Applying for $100 ,000 the above condition does not apply.
Please save croydon park hotel in sydney