Dear Client
These are difficult times and we certainly feel for clients and their cash flow
There are a number of government support programs and I have summarised those in this email, plus I have prepared a detailed article which attempts to explain how you access that support. Click the link below to access the article.
The key initiatives are
1. Welfare support in the standard format through MyGov and Centrelink, Rules have been relaxed and payments boosted
2. JobSeeker this is for people who have lost their wages or businesses can no longer support them. Access is via MyGov and Centrelink
3. Stimulus package of between $20,000 and $100,000 for small business this is via lodgement of BAS and is misunderstood as its mainly a reimbursement of wages tax (PAYGW) paid by employers
4. JobKeeper The COVID-19 shut down crisis saw unemployment rising to 17% and 40% of businesses shut. Centrelink failed to cope and JobKeeper was launched to assist.
5. Other support includes greater deduction thresholds on claiming home office expenditure and capital deductions as detailed in the article
JobKeeper
Because of its complexity I have summarised the JobKeeper details in this email below, and provided more detail in the article you can access through the link below.
The Australian Government is providing a wage subsidy – the JobKeeper Payment- for sole traders and entities whose revenue has been significantly affected by the COVID-19 crisis. Here is a quick look at who's in the Zoo and clarify the what and how.
What
At an estimated $130 Billion, over the next six months eligible business and not for profits (NFP's) will receive $1500 per fortnight as a wage subsidy for eligible employees or self-employed Business Participants.
By offsetting some wage costs (and many cases all wage costs) JobKeeper is intended to support 6 million Australians by supporting business to retain and continuing paying staff. It is also intended to support businesses recommence business or scale up operations without the burden of rehiring when the down turn ends.
When
JobKeeper bill came into force on the 9th of April and the draft legislation was circulated last Wednesday. The administrative systems are still being built but effectively parts came into operation today.
JobKeeper payments will cover the period 30 March 2020 to 27 of September 2020 (13 fortnights) and be paid by the ATO monthly in arrears. April however is a bit messy with the scheme in start up and payments will commence after the 4th of May.
Who
A business needs to satisfy a range of eligibility requirements to receive JobKeeper payments including
· Business must have experienced a 30 % decline in modified GST turnover
· Employees need to be employed as of 1st of March 2020
The decline test will compare turnover against the same period last year. Alternative tests and ATO discretion's will apply. Wage payments must be made to nominated employees or Business participants.
Pay as you go Withholding (PAYGW) and Superannuation will continue although Superannuation s no compulsory on the $1500 JobKeeper and we estimate $200 is the minimum to be withheld from the $1500 JobKeeper.
Business operators (self-employed) who do not receive wages can also nominate to receive JobKeeper payments as a sole trader, partnership, trust or company.
How
Entities will first need to estimate whether they have or are likely to experience a decline in turnover. Once the decline in turnover is satisfied, it is taken to be satisfied for future periods.
Eligible employees will need to be identified and notified. These employees will need to complete the employee nomination notice by the end of April.
Business and tax agents (Kamran Accounting) can enrol from Monday using the business portal or ATO online services.
The rules also require that entities report monthly turnover information.
Issues
There remain aspects of the program that require clarification. There is significant interest in how the alternative turnover tests will work.
How the follow through on integrity measures will unfold and commissioners' approach to compliance is still in question.
Key Dates
From Monday 20th of April through to end of April Enrol for JobKeeper.
From Monday 4th of May, apply to claim JobKeeper and confirm the eligible employees using the data prefilled from STP, otherwise manual entry.
Conclusion
If you have concerns and questions you are not alone. We are here to guide and support you through the detail of the package as it is being made available.
Please read the article for more details on what is happening and how to proceed.
If you have any queries or concerns, we will prefer email but telephone is okay.
Yours faithfully
John Greeve
Kamran Accounting
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