Stimulus Package #3
Over recent days the Federal Government has made significant announcements as part of their work towards enabling businesses to “hibernate” during this difficult time, with a focus on keeping Australians in work. These measures include the $130 billion “JobKeeper Payment” wage subsidy and the agreement by National Cabinet of some “common principles” with regards to commercial and residential tenancies.
It appears the Government’s intention is to allow businesses to press “pause” on their operations, so when the threat of the virus has passed the business can restart with the assistance of the staff they had before the crisis began. The Government is keen to attempt to ensure that businesses do not accrue large amounts of debt over the time the business is hibernating or on pause.
To assist with keeping employees on the books, the JobKeeper Payment has been announced. The JobKeeper Payment is a $1,500 per fortnight wage subsidy which is paid by the Government to eligible businesses to enable them to continue to pay their eligible employees. This payment will be a flat amount of $1,500 per employee per fortnight which the employer is then required to pay the employee.
There are a number of eligibility requirements to access this payment. The main requirement is that businesses (with a turnover less than $1 billion) must be able to demonstrate a reduction in turnover of at least 30% (exact details of this test are yet to be provided).
This payment will be available to full time, part-time or long term casual (in the position for more than 12 months) employees. The payment will also be available for sole traders – whether they employ staff or not.
These payments will apply from 30 March 2020, however payments will not be received until after 1 May 2020.
The impact of this payment on the business will be different depending on whether employees have been stood down or are still being paid their usual salary, or has negotiated a different salary. In some instances, employees who are no longer earning a salary or wage will be entitled to receive the $1,500 per fortnight. Where an employee is earning an amount per fortnight that is in excess of $1,500 the JobKeeper payment operates as a subsidy with the employer only having to pay the difference between the fortnightly salary and $1,500.
Please note, the $1,500 payment is before tax and therefore the normal PAYG withholding requirements apply. There are also superannuation contribution considerations with regards to these payments as well.
What do you need to do now?
The steps required over the coming weeks include:
- Register your interest for the payment on the ATO website (you don’t have to be an eligible employer to do this)
- An online application form will follow
- In due course as information becomes available, be prepared to undertake a turnover analysis to help determine your eligibility
Commercial and Residential Tenancies
With regards to discussions around commercial and residential tenancies, a common set of principles have been agreed by the National Cabinet which underpin the business hibernation option as mentioned above.
Where businesses can show financial distress due to the coronavirus there will be a 6 month moratorium on evictions for commercial and residential tenancies. The Government encourages landlords and tenants to attempt to agree an arrangement of temporary rental relief or amendments to the lease.
Further details on the commercial and residential tenancy principles can be found on the business.gov.au website by clicking here.
As you can appreciate, this is an evolving space. The sheer volume of changes we have seen in the last three weeks alone is significant both with the amount of money being invested and the legislative change that goes with it. We will be updating our website as details become available so please check in regularly for updates.
These measures have not yet been legislated and the Prime Minister has conceded that it will be a complicated process. We expect to see legislation over the coming weeks.
If you have any questions in relation to the above please contact your Holman Hodge adviser or alternatively email us your question by clicking here.