COVID-19 Coronavirus Economic Response – JobKeeper Payment Update

JobKeeper scheme update as at 9 April 2020

Legislation for the JobKeeper payment successfully passed through Parliament on Wednesday 8 April. The legislation gives the Treasurer power to make rules in relation to the JobKeeper program. These rules have not been finalised in a legislative instrument yet but Treasury have released a number of useful fact sheets and an FAQ document in the last week.

Some of the key points that have been clarified this week include:

  • The program commenced as at 30 March and ends 27 September 2020.
  • Turnover declines for businesses remain at 30% if turnover is less than $1B AUD and 50% if turnover is more than $1B AUD.
  • Turnover decline for charities registered with ACNC is set at 15%. However, Assistant Minister for Charities, Zed Seselja, stated that this threshold did not apply to universities and non-Government schools. We still await further clarity on this point.
  • The first comparison point for a decline in turnover is March 2020 against March 2019. If that does not demonstrate a requisite downturn, then there will be other ways to demonstrate and the Commissioner will have discretion to set alternative tests and consider other information.
  • Treasury has stated that there will be some tolerance where a good faith estimate of a 30%-50% decline was made but the actual decline is “slightly smaller”.
  • An employer can enter the program part way through this period but it still ends on 27 September 2020.
  • For an employee to be eligible to receive the payment, they need to have been employed with the business on 1 March 2020. If they have been terminated after that date, they need to be re-engaged and can be stood down immediately.
  • Employees have eligibility requirements as well, including in relation to their visa status, if they are not Australian citizens. Employees can only receive JobKeeper payments from one employer at a time.
  • Casual employees need to have been engaged on a ‘regular and systematic’ basis for at least 12 months as of 1 March 2020.
  • Employers are reimbursed in arrears, so eligible employees need to be paid at least $1,500 per fortnight dating from 30 March 2020 to be eligible for a reimbursement from the ATO in the first week of May. Treasury has stated that where cash flow difficulties arise, employers should speak to their banks to seek credit.
  • The ATO will be reimbursing employers monthly.
  • The payment is a before-tax amount so withholding tax will need to apply to the payments through the employer’s payroll system.
  • Superannuation Guarantee is not applicable on any surplus payment that is attributable to the JobKeeper payments.
  • It is open to sole traders and people who operate through a partnership, trust or company structure. If a structure is used, then only one person can be nominated to receive payment.
  • There will be monthly reporting and record keeping requirements which the ATO will confirm in due course.
  • There is also an anti-avoidance integrity measures so that the ATO can deny or recoup payments, if employers have artificially contrived their affairs to access payments.

There are still some matters to be further clarified by the ATO and the Treasury over the coming two weeks. It is also worth noting that so far there has only been a registration of interest done through the ATO website. The actual application process is not open yet.

We are keeping a close eye on these developments and will be happy to assist with further questions.

Mandatory Code of Conduct for Commercial Tenants and Landlords

The Federal Government has released a mandatory Code of Conduct (Code) relating to all commercial & retail leases in Australia.

The Code is designed to impose a set of good faith leasing principles between Landlords and Tenants, to aid the management of cashflow for tenants and Landlords as a result of the Coronavirus pandemic.

This Code applies to all tenancies that are suffering financial stress or hardship and are eligible for the Commonwealth Government’s JobKeeper program. Importantly, the Code should apply in ‘spirit’ to all leasing arrangements for affected businesses regardless of the JobKeeper applicability.

The objective of the Code is to share, in a proportionate, measured manner, the financial risk and cashflow impact during the COVID-19 period. It is intended that landlords will agree tailored and temporary arrangements on a case-by-case basis.

A copy of the code can be found here.

Please contact your Accru Melbourne representative on (03) 9835 8200 to assist with your intent to apply for the JobKeeper Payment.

About the Author
Daniel Arnephy
Daniel is our technical expert for all your taxation needs. His diverse network and client base allows him to continuously build his knowledge and analyse every situation he is faced with an experienced outlook.
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