Important Update About JobKeeper Scheme
Details of the Federal Government’s
Third Tranche Economic Stimulus Package.
The scheme provides $130 billion wage subsidy for approximately 6 million employees. It is intended to assist with businesses to retain their staff and restart when the crisis is over.
Amount of subsidy
Under the scheme, businesses will receive $1500 per fortnight per employee. The JobKeeper payment is a flat payment that represents approximately 70% of the national median wage.
• Employers (including not for profit) will be eligible for the subsidy if: (a) their business has annual turnover of less than $1 billion and their annual turnover will be reduced by more than 30%, relative to a comparable period a year ago (of at least a month); or
(b) their business has an annual turnover of $1 billion or more and their annual turnover will be reduced by more than 50%, relative to a comparable period a year ago (of at least a month);
(c) The business is not subject to the major bank levy.
• The scheme includes businesses structured through companies, partnerships, trusts and sole traders.
• Sole traders;
• Casual workers who have been employed by the same worker for over 12 months;
• An employee is only eligible to receive the payment from one employer;
• Self employed individuals are able to receive this payment;
• Will apply to all employees as at 1 March 2020.
• There is no superannuation guarantee levy on the JobKeeper payment. It appears employers will have discretion in this regard.
• Excludes people on temporary work visas, but includes New Zealanders who possess a sub class 444 visa.
• If an employee ordinarily receives $1500 or more in income per fortnight before tax, they will continue to receive their regular income according to their previous workplace arrangements. The JobKeeper payment will assist their employer by subsidising all or part of their employee wages;
• If an employee ordinarily receives less than $1500 in income per fortnight, the employer must pay their employee a minimum of $1500 per fortnight before tax;
• If an employee has been stood down, their employer must pay their employee a minimum of $1500 per fortnight; and
• If an employee was employed on 1 March 2020, subsequently ceased employment with their employer and then has been reemployed by the same eligible employer, the employee will receive a minimum $1500 per fortnight before tax.
Points to note
• There will have been businesses that have made the operational decision to stand down staff as a result of the implications of the Coronavirus crisis which will not as yet meet the turnover eligibility criteria of the subsidy.
• Such businesses and the affected employees will not qualify for the subsidy until such time as a 30% reduction in turnover is discernable. Those businesses which have been forced to close as a result of the health directions of the National Cabinet will have little difficulty satisfying the eligibility criteria as in many cases their turnover has been reduced by up to 100%.
• For commercial property landlords they provide an undertaking to the bank that for the period of interest capitalisation, they will not terminate leases or evict current tenants for arrears as a result of COVID 19;
• The customer was current in terms of existing facilities 90 days prior to applying; and
• Interest is capitalised- meaning either the term of the loan is extended or payments are increased after the deferral period.
According to the ABA, these measures cover approximately 90% of commercial property owners who have loans with an Australian bank.
During this period, banks have also agreed to not enforce business loans for non financial breaches of the loan contract (e.g changes in valuations).
Effective from 30 March 2020, all proposed foreign investment into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 will require approval, regardless of value or the nature of the foreign investment. This measure will remain in place for the duration of the current crisis.
This is not advice. Clients should not act solely on the basis of the material contained in this information. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas.
The information is issued as a helpful guide to clients and for their private information.
Stay safe and well.
Romeo and the Tax Accounting Adelaide team