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What you need to know about the COVID-19 stimulus packages

With many retail businesses hard hit by the coronavirus, the various government stimulus packages could make the difference between survival and collapse for both the businesses themselves and their employees.

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So, what are the key stimulus measures available to retail businesses?

JobKeeper payments

JobKeeper is an ambitious wage subsidy scheme to provide payments of $1,500 per fortnight to millions of Australians.

Payments will be made via businesses impacted by the Coronavirus. These businesses will be able to access a subsidy from the Government to continue paying their employees.

Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months which must then be passed on to employees.

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The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May.

Payments will be made to the employer monthly in arrears by the ATO. These will then be paid on to eligible employees with PAYG tax deducted in the normal way.

Note: A person receiving the JobKeeper payment cannot also receive the JobSeeker payment for those who have lost their jobs, announced several days before. People who have already applied for JobSeeker can withdraw and shift to JobKeeper payments if they are re-engaged by their employer.

Which businesses are eligible?

Businesses are eligible for the subsidy 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 (so, employees of the big banks are not eligible).

For businesses that are not able to demonstrate that their turnover is down 30% compared to a comparable period a year ago (for instance, new businesses that did not exist a year ago), the Commissioner of Taxation will have the discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus.

Employers must confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.

Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.

Qualifying businesses must register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline. They will also need to provide information to the ATO on their eligible employees, including the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired).

Which employees are eligible to benefit?

Employees are eligible if you:

  • are currently employed by an eligible employer (including if you have been stood down or re-hired);
  • were employed by the employer at 1 March 2020;
  • are full-time, part-time, or a long-term casual (a casual employed on a regular basis for longer than 12 months as at 1 March 2020). Casuals employed for less than 12 months are currently excluded;
  • are at least 16 years of age;
  • 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. New Zealand citizens will qualify but other temporary visa holders are currently excluded; and
  • are not in receipt of a JobKeeper Payment from another employer. You can only receive the payment from one employer so if you have multiple jobs, you will need to nominate one employer as the one to make the JobKeeper payments to you.

What will I get?

Qualifying recipients will be able to receive this payment in a number of different ways.

  • If you ordinarily receive $1,500 or more in income per fortnight before tax, you will continue to receive your regular income. The JobKeeper Payments will subsidise part or all of your income.
  • If you ordinarily receive less than $1,500 in income per fortnight before tax, your employer must pay you, at a minimum, $1,500 per fortnight, before tax. This means your normal income will rise to $1,500 per fortnight.
  • If you have been stood down, your employer must pay you, at a minimum, $1,500 per fortnight, before tax.
  • If you were employed on 1 March 2020, subsequently ceased employment and then were re-engaged by the same eligible employer, you will receive, at a minimum, $1,500 per fortnight, before tax.

Your employer must continue to pay the superannuation guarantee on your regular wages but it is up to your employer whether they pay superannuation on additional JobKeeper payments.

Your employer will notify you that you will receive the JobKeeper Payment if you are eligible.

I’m a sole trader. Do I qualify?

Businesses without employees, such as sole traders, can take part in the scheme and will need to register with the ATO.

If you meet the criteria, you will need to:

  • provide an ABN for your business;
  • nominate yourself to receive the payment
  • provide your Tax File Number and provide a declaration that your turnover has dropped by 30% compared to a comparable period (say, this time last year).

You will need to provide a monthly update to the ATO to declare their continued eligibility for the payments.

Payments of $1,500 per fortnight will be made monthly to your bank account.

Cashflow Assistance

Tax-free payments of up to $50,000 for eligible small and medium businesses (with a turnover of less than $50 million that employ staff), based on their PAYG withholding obligations.

This is not a cash payment but it is a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees. The minimum payment is $10,000 and not-for-profit organisations are included in this scheme.

The way this will work is that businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Businesses that lodge their BAS on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.

An additional payment equal to this amount will also be available from July to October 2020. This makes the total amount available under this scheme $100,000 (and a minimum of $20,000).

Payments will be automatically credited by the ATO through the activity statement system and will only be made to active eligible businesses established prior to 12 March 2020.

Payments under this scheme are only available to businesses with employees. Sole traders will generally miss out unless they have employees as will businesses structured through trusts that pay trust distributions (but not wages) to family beneficiaries who work in the business.

Stringent anti-avoidance rules are built into the scheme to ensure that non-qualifying businesses don’t restructure their affairs to artificially qualify for the payments.

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