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This afternoon, the Federal Government announced their 3rd stimulus package which is by far the biggest in terms of overall dollars injected in to the economy. They have named it the JobKeeper Payment, and the plan is to allow businesses to keep employees on the payroll so that when the economy picks up again, there won’t be a need to search for new staff etc.
Here are the key details:
- To be eligible, a business must have had a minimum downturn of at least 30% in a comparable period from the year before
- This subsidy is available to all businesses that have employees as well as sole traders
- Employees need to have been employed for 12 months to be eligible
- To participate in the scheme, businesses must register here https://www.ato.gov.au/Job-keeper-payment/
- Businesses will have to demonstrate they have suffered a downturn, and will also have to report the number of eligible employees to the ATO on a monthly basis
- An eligible business will receive $1500 per fortnight, per employee, irrespective of what the employee currently earns
- The $1500 is before tax and the employer may decide if superannuation is to be paid on top of that amount
- If an employee earns more than $1500 per fortnight, then the employee is paid as usual
- If the employee is paid less than $1500 per fortnight, then the employee will be paid $1500 before tax
- This measure will last for 6 months and will be backdated to 1 March
- All up, it is effectively worth $19,500, per employee over 6 months
- Payments are expected to be made from the first week of May
You can find the full details here.
However, there are some things we don’t have exact details on. These include:
- What if a business does not have comparative sales from the previous year because it is a new business?
- Does this include self-employed trading through a company or trust that do not pay themselves a salary?
- Are rateable subcontractors eligible?
Around Australia, the various State Governments have announced additional measures, although, unsurprisingly, they are not on the same scale as the Federal Government initiatives. If you would like to know more about the individual state measures, we have provided the links here:
As outlined in some of our earlier posts, there already have been a number of stimulus measures implemented. If you missed them, here’s a brief outline:
- All small businesses will receive access to the immediate write-off of assets up to $150,000
- Businesses that have employees (even if they are owners) will receive:
- A credit of up to $50,000 for PAYG withheld form employee salaries from 1 Jan 2020 – you will not receive this as cash, it will be deducted from your March & future Business Activity Statements
- In October 2020 you will receive a one-off payment for the same amount you have received as a credit for PAYG withheld, so if you have received $50,000, you will receive $50,000 as a one-off payment. If you have received $33,500, you will receive $33,500 etc. The maximum you will receive from the PAYG credit and one off payment in October will be $100,000 combined
- Businesses who employ but don’t withhold from wages will receive a one off payment of $10,000
- The ATO will loosen their payment terms & (potentially) lodgement dates for tax returns and activity statements
- The government will guarantee unsecured small business loans up to $250,000 on 3 year terms
Things to do right now!
- If you are eligible, make sure you register for the JobKeeper package
- Conserve as much cash as possible within the business and personally
- Trim fixed monthly costs that can be put on hold
- Negotiate rent free or reduced rent periods with your landlord/agent
- Contact your broker or lender to discuss putting your repayments on hold, including business loans, car loans, personal and home loans
- Know your rights as employers when standing down employees
- Speak to us about negotiating terms with the ATO (we are expecting more guidance from the government in the coming days)
- Move as much of your business online as possible, your clients and customers will support you. We are already receiving amazing feedback from clients about how the local community is supporting them
- Lock in a chat with us if you have further questions around the above
Some Other Things to Consider
There is a handy cash flow program available that links to Xero and Qbo (Also comes with a free trial).
Take a look at this handy blog for employers.
Once again, it is incredible to see how positive everyone is, even in this time of crisis. Please remember that we are here for you and if you feel you need something, please ask.
For accounting & business related enquiries, lock in a chat with Braden Johnston (Senior Accountant).
For loan & bank related enquiries, lock in a chat with Sam Gawenda (Senior Lending Specialist).
For super, investment & insurance related enquiries, lock in a chat with Matt Hale (Senior Financial Planner).