COVID-19 – Latest Economic Response for Businesses
The latest response to the ongoing COVID-19 (Coronavirus) pandemic from the government, with schemes being put in place to assist small businesses – both owners and their employees.
JobKeeper Payment program:
The Government is introducing a subsidy program to support employees and businesses – The JobKeeper Payment.
Designed to help businesses affected by COVID-19, it aims to:
- cover the costs of their employees’ wages, so that more employees can retain their job and continue to earn an income
- enable operations to being again quickly without having to rehire staff, when the time comes
The Payment will also be available to the self-employed.
The Government will provide $1,500 per fortnight per employee for up to 6 months.
Employers must elect to participate in the scheme, by applying to the Australian Taxation Office (ATO) and provide supporting information demonstrating a downturn in their business.
In addition, they must report the number of eligible employees in the business on a monthly basis.
Eligible employers will receive the payment for each eligible employee that was on their books on 1 March 2020 and continues to be engaged by that employer – including full-time, part-time, long-term casuals and stood down employees.
Employers (including non-for-profits) will be eligible if:
- their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
- their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
- the business is not subject to the Major Bank Levy.
Employees will be eligible if:
- they are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder;
- they had been stood down but are re-engaged by a business that was their employer on 1 March 2020.
If employees have multiple employers – only one employer will be eligible to receive the payment:
- the employee will need to notify their primary employer to claim on their behalf. The claiming of the tax free threshold will in most cases be sufficient notification that an employer is the employee’s primary employer
- if they have suffered or expect to suffer a 30 per cent decline in turnover relative to a comparable prior period (of at least a month)
Eligible employers will be paid $1,500 per fortnight per eligible employee.
Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment (to reach their usual wage).
Where employers participate in the scheme, their employees will receive this payment as follows:
- an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of their employees income;
- an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax;
- an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax;
- an employee was employed on 1 March 2020, ceased employment, but then has been re-engaged by the same eligible employer, they will receive, at a minimum, $1,500 per fortnight, before tax.
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Payments will be made to the employer monthly in arrears by the ATO.
The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May.
Businesses will be able to register their interest in participating in the Payment from 30 March 2020 on the ATO website.
Specific measures in place that may help assist small businesses include:
- Increasing the instant asset write-off threshold from $30,000 to $150,000, effective immediately until 30 June 2020. This will also be expanded to include businesses with aggregated annual turnover of less than $500 million (up from $50 million).
- providing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
- Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.
- The measures are designed to support business sticking with investment they had planned, and encouraging them to bring investment forward to support economic growth over the short term.
- Boosting cash-flow for employers by providing up to $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses. This payment will be tax free. This is a GRANT, you will not have to pay it back.
- Supporting small business to retain their apprentices and trainees, by applying for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain a trainee, the subsidy will be available to a new employer that employs a trainee.
The government grants will be issued automatically, based on business activity statements or instalment activity statements from 28 April 2020.