What you need to know about the recent changes to JobKeeper Payments and other government economic support schemes - and how they could affect your business.
A recent Australian Bureau of Statistics (ABS) survey on Business Impacts of COVID-19 found that 3 in 5 (60%) Australian businesses have sought external advice in response to the coronavirus pandemic. It was also found that 86% of said businesses were most likely to seek advice about government support measures.
Even as the economy slowly opens back up, there’s no doubt that many small business owners are still facing financial difficulties. So, in response to the needs of many SMEs, the government has decided to extend a number of its economic support and stimulus measures.
This move looks to hopefully bolster both employers and employees over the coming months, while simultaneously providing a much needed boost to the economy.
Earlier this year we published a post about “How to support your cash flow during COVID-19” in which you can find further details of these schemes. For how the schemes have been extended and updated, please see below:
The JobKeeper payment scheme, in which eligible businesses are given access to $1,500 per fortnight per employee, has been extended by a further 6 months (with changes). Eligible employers, sole traders and other entities can apply if they have been significantly affected by the coronavirus.
The wage subsidy plan, as of 21 July 2020 has been extended until March 2021. There have however been some notable changes to the eligibility criteria and payment amounts. This does not affect payments until 30 September 2020.
After September 2020, payments will be lowered in an attempt to ween employers off the scheme. Payments will be reduced as follows:
|JobKeeper Payment||Employees working more than 20hrs/week||Employees working less than 20hrs/week|
|1 March - 30 September 2020||$1,500 per fortnight||$1,500 per fortnight|
|1 October - 31 December 2020||$1,200 per fortnight||$750 per fortnight|
|1 January - 31 March 2021||$1,000 per fortnight||$650 per fortnight|
Businesses that employ staff will be required to reassess their eligibility for the JobKeeper payments with reference to their actual GST turnover in the June and September quarters 2020. If you are an employer (including not-for-profits), you will be eligible for the subsidy if your business meets the following eligibility requirements:
- Maximum annual turnover. Your business must have a turnover of less than $1 billion. It must also be reduced by more than 30% compared to a similar period (of at least a month) last year.
- Employees that meet the criteria. Eligible employers under the scheme will receive payment for each staff member that was employed on 1 March 2020. This includes current and struck-off employees. Any employee hired after this time will not qualify.
- Your business is not subject to the Major Bank Levy. Businesses subject to the Major Bank Levy are not eligible for the subsidy.
In order to apply for the scheme, employers will need to apply directly to the ATO. They will need to provide supporting information that demonstrates a downturn in their business, and will need to report the number of eligible employees they wish to pay under the scheme.
If you’re a sole trader, you will need to meet the following eligibility criteria to receive JobKeeper payments. You will also need to submit a monthly business declaration to confirm your business details, and to report turnover and expected turnover.
- You are an eligible business participant. This includes the requirement that you are actively engaged in your business as a sole trader, and are not an employee of another business (other than as a casual).
- Reduced turnover. Your turnover must have reduced (or is expected to reduce) by more than 30% compared to a similar period (of at least a month).
You can apply for JobKeeper as a sole trader through either the ATO online services via myGov, or the Business Portal. You may also use a registered Tax or BAS agent to enrol on your behalf.
The JobKeeper Payment will assist employers to continue operating by subsidising all or part of the employee's income. The ATO will make the payments to employers on a monthly basis (in arrears).
Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax until 30 September 2020. Employers are able to top-up employee payments, should they wish to do so.
The instant asset tax write-off
The instant asset write-off of $150,000, in which business owners can instantly write-off any asset purchased for business purposes in their next tax return, has been extended to 31 December 2020. This applies to all business assets purchased after 12 March 2020 and first used or installed by 30 June 2021.
Businesses looking to take advantage of the write-off must have:
- Maximum annual turnover. Your business must have a maximum aggregated annual turnover of less than $500 million.
Coronavirus SME Guarantee Scheme
The Coronavirus SME Guarantee Scheme, in which the Australian Government guarantees 50% of business loans from participating lenders, while originally set to end on 30 September 2020, is due to be extended by a second phase. The second phase will be initiated as of 1 October 2020 to 30 June 2021.
The aim of the second phase of the scheme is to support lenders’ ability to provide credit at lower interest rates, ensuring that SMEs have a helping hand in their recovery from the effects of COVID-19.
Further details of the second phase of the scheme are set to be finalised in the coming weeks.
For more information on the government’s economic response to COVID-19, please visit the ATO website.
If your business is looking for funding to support cash flow during these difficult economic times, Skippr invoice finance facility may be able to help. For further information, you can call our friendly team today on 1300 754 777.