Webinar Additional Information (7 April 2020)

Top Tips

Tips from Findex

  1. Get on top of your cash flow requirements.
  2. Talk to your accountant and financier now, don’t wait until you are in trouble
  3. If you are unsure whether you are eligible for the Job keeper, then discuss with you accountant and if in doubt register- if you believe you will be affected by 30%.
  4. Job keeper – casual employees a strict 12 month rule applies, in that they must have been employed for at least 12 months
  5. Instant Asset write-off – you can have ordered or even acquired the asset before the 12 March 2020, but as long as it wasn’t first used or installed before that date. For example you could have ordered a Grader on 1 March and it was delivered on 13 March and still be eligible.
  6. Self employed persons operating through a company/Trust/partnership may still be eligible for the Job Keeper- but limited to 1 director,1 partner, 1 beneficiary.
  7. Jobkeeper is still taxable and subject to PAYGW when paid to employee, super is still required up to normal wage for continuing employees.
  8. $10,000 early access to super, only entitled to draw down once until 30 June 2020 and once after that. If doing so then better to withdraw the whole amount. Possible to repay as a non-concessional contribution etc later.

Tips from AAA Consulting

Questions/Answers

1) What happens if employees are high risk to Covid-19 working in a high-risk workplace? Two options - 1. employee decides not to work due to fear of being infected or 2. employer advises employee not to work. What are implications on pay and JobKeeper?

As at writing this answer, we do not have the legislation with respect to JobKeeper. The answer is based on the information released by the Australian Government to date. In relation to option 1, if the employer is complying with all of their work health and safety obligations and is doing all that is reasonable to provide a safe place of work and following directions such as those listed below in answer 3 then:

(a) the employee can request and the employer can agree to use any annual leave;

(b) the employee can take unpaid leave;

(c) the employer could choose with no obligation to do so pay the employee

In relation to option 2, if an employer advises an employee not to work then the employer will have to pay the ordinary wages of the employee.

We are unable to view the legislation for the JobKeeper scheme at the time of answering this question but provided that the employer has the requisite downturn and turnover then the employees should be able to claim the $1,500 per fortnight for options 1 and 2.


2) Casual employee worked for 5 months. The employer wants to retain the employee so change the contract on 31 March 2020 as part time employee, can that employee be eligible for JobKeeper payment?

At this stage, we do not have the legislation and will have to wait until we see it to check the answer. At this stage, the information that has been published by the Australian Government indicates that the employee must be eligible as at 1 March 2020 for JobKeeper. A casual employee who has only worked for 5 months as at 1 March 2020 will not be eligible and at this stage, without seeing the legislation, the employer will not be able to claim JobKeeper even if they have the prerequisite loss of turnover if they change the contract on 31 March 2020.


3) Confusions around public health directives and how this affects employees’ ability to go to work and an employer’s ability to keep a workplace in use. Some workplaces have been defined as essential and definitions for essential work have been provided by Governments. The individual asking the question asked for clarity around this.

The Prime Minister, the Hon. Scott Morrison MP, has advised that employers should allow workers to work from home wherever and whenever they can.

Safe Work Australia lists that to keep workers safe and limit the spread of COVID-19, every employer should do the following in their workplace:

  • allow workers to work from home, where possible
  • ensure physical distancing by keeping a distance of at least 1.5 metres between people
  • encourage all workers to frequently wash their hands for at least 20 seconds with soap and water by using an alcohol based hand sanitiser and to practice good hygiene
  • be aware of how to spot COVID-19 symptoms (fever, cough, sore throat and shortness of breath) and make sure workers do not come to work if they are unwell
  • make sure your workplace is regularly cleaned and disinfected
  • have signs and posters around the workplace to remind workers and others of the risks of COVID-19 and the measures that are necessary to stop its spread

There is on the website a business resource kit which for example has fact sheets for various trades such as delivery drivers, retail workers, road freight, taxis, warehousing and food processing.

https://www.safeworkaustralia.gov.au/collection/business-resource-kit-covid-19


4) Is COVID-19 a valid reason to terminate an employee on probation? Would the employer be able to reinstate the employee and claim JobKeeper?

Depending on the circumstances and the impact of COVID-19 on a particular business, for example, if there was a downturn or an inability to usefully engage an employee, then COVID-19 could be a valid reason to terminate an employee on probation. The effect of the JobKeeper announcement as far as we are able to ascertain from the information provided by the Government to date is that if you have terminated an employee, provides that if you were the employer of the employee as at 1 March 2020 and then you re-engaged that employee, then you, provided you meet the eligibility for employers regarding a downturn in turnover, will be able to re-instate the employee and claim JobKeeper.


5) When do we start making the payments (including top-ups) to employees? Can this wait until May once we have received from the Government?

There is no date where employers have to start making the JobKeeper payments. Employers could choose to pay now and wait until they are reimbursed to recover the JobKeeper payment or they may choose to wait until they have received payment from the Government. If the employer is presently employing an employee who will be eligible for the JobKeeper payment then they will have to continue to pay them the lawful salary due and owing pursuant to the employer and employee agreement.


6) Regarding boosting cash flow. Is there anything in the works for sole traders at this stage?

A sole trader can access the JobKeeper payment of $1,500 a fortnight if their turnover is expected to drop by at least 30%. You must register for access to the scheme yourself.

The JobKeeper program is also expected to apply where the sole trader operates through a company/trust or partnership, with one director, partner or beneficiary being eligible. The JobKeeper exposure draft has reinforced this view and that only one person can be nominated.

Loans are available through either QRIDA or possibly your financial institute. There is a SME guarantee scheme (turnover under $50M) that will guarantee 50% of new loans by eligible lenders up to $250,000 (applications made before 30 September). Term of loan 3 years, 6 month initial repayment holiday, unsecured. This will provide some businesses an opportunity to gain access to short term cash flow. Access is expected to be through most lenders – but a list will be published. 


7) What assistance is available for a sole trader with no employees to stay afloat?

As for the previous question the JobKeeper payment is still available as well as early access to super drawn down of up to 2 lots of $10,000 (one before 30 June and one after 30 June but before 24 September 2020). The early access to super only requires a 20% reduction in turnover. The withdrawal of super will not be taxed. Application is through mygov.

A code of conduct for landlords and tenants has been issued by the government which can provide some rent relief for leased premises.

The temporary increase in the threshold for bankruptcy proceedings has increased from $5,000 to $20,000 which may provide some negotiation period for servicing creditors debts.

Talk to the ATO if you have outstanding debt or lodgements.


8) For businesses that haven’t been operational for 12 months, what assistance is available to them?

The critical issue is whether they are now active. If they are, then the JobSeeker scheme can still apply to them albeit any casual employees will not be eligible employees. All of the measures will still apply, you will need to just show that you have been affected. The ATO has discretion and will look to apply alternate tests to establish eligibility. I recommend that you apply and when asked, state your case and make sure you Involve you accountant in the process. 

If the business was purchased rather than commenced, then the period any casual employee served for the previous business owner counts towards the 12 months. However if it is a new business then the casual employee will be ineligible.


9) How can I apply for JobKeeper and how can I assist my subcontractors (Sole Traders mostly) in applying for JobKeeper?

To register go to the ATO web site and register your interest, there are links under support for business and employers. Subcontractors will have to apply themselves as they are not employees. Note: At the moment the link is only to register an interest in the scheme. 


10) For maintenance of equipment, is their anything available to assist while there is no turnover?

The JobKeeper exposure draft outlines the active business requirement in that there was an amount included in the entity’s assessable income in the 2018/19 year or made a taxable supply in the current year. So in a situation where you have no turnover as a result of the coronavirus measures and you had prior year turnover then you would still be eligible for the JobKeeper payments. This could allow you to continue paying your employees to undertake maintenance.

 All the other measures are still available if you had an active business. You may still be an active business albeit generating no sales.  See previous questions in relation to loan guarantees.


11) We want to engage a person that had been made redundant recently. We won’t meet the requirement that they were employed at 1 March. Is there any support that is available for us to engage this person?

The 1 March is the current criteria, the new exposure draft reflects that the employee must have been your employee as at 1 March.


12) How is JobKeeper paid to a Partnership or Sole Trader with Employees?

If you have employees, then the payment will be paid to the employer to subsidise the employees’ wage. It is expected that once registered the reimbursement will be based on the single touch payroll figures and paid one month in arrears to the employer.


13) Could you explain what flexibility regarding JobKeeper’s 30% loss in turnover threshold means?

The scheme will be administered by the tax commissioner and it is expected that there will be a lot of flexibility on this and alternate tests. The critical thing will be whether you can show that you are or will be impacted and to that extent. I expect that this will be a factual thing ie close down restaurant, loss of contract, down turn in sales last week of March/first week of April and continuing. Some form of monthly reporting is expected. If you were severely affected by the February 2019 floods, then demonstrating the down turn compared to the previous year or what has occurred very recently will all be things that you can provide to the ATO. The ATO will have the power to introduce alternate tests in the regulations.

The test outlined in the JobKeeper exposure draft refers to the GST projected turnover test in that you look at the current turnover to project the next 11 months and compare that to the previous 12 months.


14) When do we start making the payments (including top-ups) to employees? Can this wait until May once we have received from the Government?

It is expected that once registered and employees nominated, the the eligibility will be identified from single touch payroll and is a reimbursement to the employer 14 days after the end of the month. So to get the payment you had to have paid the employee.


15) Is there any funding right here right now that will bankroll the wages (350K) until we are reimbursed by the Government in May or June?

QRIDA and Government guaranteed loans (see earlier questions) could provide much needed cash flow. Much will depend on the timeliness of the process.

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04:05 PM Oct 8th @TSVEnterprise