Category: Small Business

Victorian Business Survival and Adaption Package

In response to the state’s extended lockdown, the Victorian government on the weekend announced a $3 billion Business Survival and Adaption Package for businesses impacted by the COVID-19 restrictions. The package is a mix of cash grants, tax relief, and cash-flow support featuring three components. 

  1. Business Support 
  • Small and medium sized business ($822 million): The third round of the Business Support Fund will provide up to $20,000 for business with a payroll of up to $10 million. Grant applications open on Friday 18 September 2020. 
  • Licensed Hospitality Business ($251 million): Grants of up to $30,000 for licensed pubs, clubs, hotels, bars, restaurants and reception centres, based on their venue capacity and location. 
  • Business Chambers and Trader Groups ($3 million): A competitive grants program to support metropolitan and regional business chambers and trader groups. 
  • Alpine businesses ($4.3 million): Grants of up to $20,000 to help alpine businesses pay a service charge to Alpine Resort Management Boards. 
  • Sole Trader Support Fund ($100 million): Grants of up to $3,000 to over 30,000 eligible sole traders who operate from a commercial premises or location to which the sole operator is the tenant or licensee. 
  1. Business Adaption 
  • $20 million voucher program to assist sole traders and small businesses in building their digital capability 
  • $15.7 million package to help Victorian exporters get their products to market and establish new trade channels. 
  • $8.5 million expansion to the ‘Click for Vic’ campaign to encourage more Victorians to support local businesses. 
  • $87.5 million Outdoor Eating and Entertainment Package to support hospitality businesses prepare for COVID Normal reopening across Victoria. 
  • $100 million Melbourne City Recovery Fund between the Victorian Government and the City of Melbourne to support Melbourne on the roadmap for reopening to COVID Normal in the lead up to Christmas and during summer. 
  1. Waivers and Deferrals 
  • $1.7 billion to defer payroll tax for businesses with payrolls up to $10 million for the full 2020-21 financial year 
  • $41 million to bring forward the 50% stamp duty discount for commercial and industrial property for all of Regional Victoria 
  • $33 million to defer the planned increase in the landfill levy for six months 
  • $30 million to waive 25% of the Congestion Levy this year, with the outstanding balance deferred. 
  • $27 million in liquor license fee waivers for 2021 
  • $6 million to waive Vacant Residential Land Tax for vacancies in 2020. 


Key Dates for July & August 2020

Key Dates for Business 

July 2020 
01 July – First day of the 2020/2021 financial year 
21 July – Monthly Activity Statements (June 2020) due for lodgement and payment 
28 July – Quarterly Activity Statements (April-June) due for lodgement and payment (if lodging by paper) 
28 July – Superannuation Guarantee Contributions (April-June) due for payment to superannuation funds or Clearing Houses 

August 2020 
11 August – Quartelry Activity Statments (April-June) due for lodgement and payment (if lodging electronically) 
21 August – Monthly Activity Statemnts (July 2020) due for lodgement and payment 
21 August – Final day for eligible monthly GST reporters to elect to report annually 
28 August – 2020/2021 Contractor Taxable Payments Annual Reports – due for lodgement

Where one of these dates falls on a weekend or a public holiday, the due date is extended to the next business day.

The Extension and Modification of JobKeeper

Today, the Prime Minister announced the extension and watering down of the wage subsidy, JobKeeper  

Points to note: 

  • Existing JobKeeper continues up until 27 September 2020 
  • From the next day, a new, modified JobKeeper scheme applies until 28 March 2021 
  • Under the new scheme, employers must reassess their eligibility with reference to actual turnover in the June and September quarters (2020) compared to the same period in 2019. That is: 

 

    • from 28 September 2020, businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020.  They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021. 
    • from 4 January 2021, businesses and not-for-profits will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021 

 

  • Monthly lodgers will use the aggregate turnover for the three-monthly Activity Statements over these quarters, and compare them to the above periods in 2019 
  • The existing decline in turnover rates must be met (i.e. 30% for businesses with a turnover of $1 billion or less, or 15% for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities) 
  • Reduced payment rates will also apply for all eligible employees and business participants.as follows: 

 

  • From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be: 

 

  • $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average, and for eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and 

 

  • $750 per fortnight for other eligible employees and business participants. 

 

  • From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be: 

 

  • $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average and for business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and 

 

  • $650 per fortnight for other eligible employees and business participants. 

30 June Trustee Resolution Minutes!

For those businesses that trade out of a Discretionary (Family) Trust it is an annual mandatory requirement of the ATO that all Discretionary Trusts prepare a Trustee Resolution Minute before 30 June each year. 

The Minute outlines who is going to be allocated the income of the trust. 

Without this Minute, the ATO will allocate all income of the Trust to the Primary Beneficiary as shown in the Trust’s Deed, or if there is no Primary Beneficiary listed on the Trust’s Deed, the Trustee of the Trust will be taxed at the highest marginal tax rate plus Medicare levy. 

As you can see, the tax consequences could be significant, which makes this Trustee Resolution Minute all the more important. 

Ensure your minutes are in order as we count down to 30 June. 

Instant Asset Write-Off – Extension Announced

Businesses will be able to access the boosted $150,000 instant asset write-off scheme for a further six months to the end of the year. 

By way of background, as part of its emergency COVID-19 fiscal package, the government quin­tupled (from $30,000) the value of assets businesses were able to instantly write -off for the ­period of March 12 to June 30, and expanded the eligibility to cover  businesses with turnover of less than $500m (up from $50m ­previously). 

Today the government will announce that the more than 3.5 million eligible businesses will now be given until December 31, 2020 to take advantage of this measure. The asset must be installed ready for use by this date. 

Although it is anticipated that this extension will be supported by Parliament, it is subject to the passage of legislation. 

 

Evidencing Your Decline in Turnover for JobKeeper

To qualify, an employer must demonstrate that its GST turnover has fallen by the following percentage compared to the same comparison period in 2019: 

  • 30% fall in turnover (for an aggregated turnover of $1 billion or less) 
  • 50% fall in turnover (for an aggregated turnover of more than $1 billion), or 
  • 15% fall in turnover (for ACNC-registered charities other than universities and schools). 

You will need to keep evidence and sufficient records to demonstrate how you calculated your projected GST turnover during the 2020 turnover test period, and your basis for estimating that it would fall by the required percentage. 

Your projected GST turnover during the 2020 turnover test period is the sum of the value (GST exclusive sale price) of all the sales you have made, or are likely to make during that period. 

For the purpose of determining sales likely to be made, the ATO will accept a calculation based on a genuine business plan, accounting budget or some other reasonable estimate based on the evidence about the projected facts and circumstances for the remainder of the turnover test period. 

Relevant evidence that would support a prediction of sales likely to be made may include: 

  • a decline in sales during the turnover test period or since 1 March 2020 as a result of government COVID-19 restrictions 
  • customers cancelling or modifying existing contracts for sales on or from 1 March 2020 
  • being required to close or pausing the business due to government COVID-19 restrictions 
  • delays in being able to get access to trading stock sourced from overseas on or from 1 March 2020 
  • evidence of your business’s reliance on tourism 
  • any consequential effect on the price of what you supply, for example, the effect on the market value of new property being sold by a developer 
  • information known to the business, whether or not publicly available 
  • economic forecasts undertaken by a reputable organisation that are relevant to your type of business 
  • the likely timing of government COVID-19 restrictions being lifted for your type of business based on government announcements. 

According to the ATO, when people make a good-faith estimate to comply and a good-faith decision that   they’re eligible, the Commissioner will be very understanding and sympathetic to their position, particularly where they have passed the benefit of the JobKeeper payment to their employees What the legislation, and the ATO are asking of businesses is to make a “good faith effort”. When the ATO considers a good faith effort has been made, even if it’s slightly wrong (i.e. less than the required downturn percentage), the ATO will not seek repayments of JobKeeper or apply penalties. 

 

 

JobKeeper Payment – Fresh Guidance on Establishing a Downturn

We’ve received many questions from subscribers around how a “downturn of turnover” will be measured for the purposes of eligibility for the coronavirus-related Job Keeper Payment.

Last night there was fresh guidance from Treasury. 

By way of background, one of the eligibility criteria for Job Keeper is that: 

• for businesses that have an annual turnover of less than $1 billion, they estimate their turnover has fallen or will likely fall by 30% or more; or  
• for businesses that have an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) they estimate their turnover has fallen or will likely fall by 50% or more; and  
• the business is not subject to the Major Bank Levy. 

Treasury has indicated that the decline in turnover test is linked to the GST turnover test in particular the projected GST turnover – which will take into account anticipated decline in revenue. The test requires a business to measure its projected GST turnover and compare this to what is termed a relevant comparison period. If this equals or exceeds the following thresholds, the entity satisfied the decline in turnover test: 
• ACNC-registered charities – 15%; 
• entities with turnover less than $1bn – 30%; 
• entities with turnover greater than $1bn – 50%. 
There is scope for the ATO to apply an alternative test to different classes of entities. 
The turnover test period must be a calendar month that ends after 30 March 2020 and before 1 October 2020, or a quarter that starts on 1 April or 1 July 2020. The relevant comparison period must be the period in 2019 that corresponds to this turnover test period. 
Further ATO guidance will be forthcoming 
The turnover numbers must be reported to the ATO before any payments will start, though there is a transitional rule for the first 2 JobKeeper fortnights. 
The key take-away points are while, at this stage, this is Treasury guidance: 

• the test/comparison period vis-à-vis 2019 to 2020– spans from April to the end of September 
• if 2019 is not representative of typical turnover, another comparison period may be considered 
• the ATO is willing to exercise its discretion where there are anomalous cases.

Job Keeper Payment and Establishing a Downturn

Employers will be eligible for the Job Keeper subsidy if: 

  • their business has a turnover of less than $1 billion and their turnover has fallen by more than 30 per cent; or 
  • their business has a turnover of $1 billion or more and their turnover has fallen by more than 50 per cent; and 
  • the business is not subject to the Major Bank Levy. 

Since this measure was announced, we’ve been inundated with questions around how a business can establish that it has suffered a 30 per cent downturn.  

Ultimately, this won’t be clear until at least next Wednesday when the legislation is introduced into Parliament.

The latest guidance from Treasury is as follows:

To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier. Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.

With the legislation to be unveiled next week, we will keep you updated on this very important matter.

 

Job Keeper Plan Announced


Prime Minister Scott Morrison, on 30/03/2020, has announced a $130 billion support package to help employers and employees.  

The idea behind these measures is that employers will retain their employees and have them working where they can.  However, if there is no work available due to Coronavirus related downturn or closures, then these employers retain their employees on this payment for up to six months so that employees stay connected to their employers.  

There will be a $1,500 per fortnight Job Keepers Payment. 

  • This will be paid to the employer, who will then pay their employee; 
  • An individual cannot received the Job Seekers Payment as well as the Job Keepers Payment; 
  • This is a flat rate for everyone; 
  • This applies to full time workers, part time workers, sole traders and casual employees that have been with their employer for more than 12 months; 
  • Any employee that has been stood down from 1 March 2020 can be eligible for these payments; 
  • Payments will be made from 1 May 2020 onwards, however, they will be backdated to today, 30 March 2020; 
  • Employers can start making these payments as of today from their own funds, and they will be reimbursed back to today’s date; 
  • Every business will be eligible where they have seen a decrease in turnover of 30% of more (50% if your business turnover is more than $1.1 billion); 
  • Employers must register with the Tax Office to receive these payments (businesses can do this themselves directly on the ATO website, alternatively your bookkeeper can provide assistance, if you do not utilise the services of a bookkeeper, your accountant can provide this assistance); 
  • The ATO will have a registration button on their website ato.gov.au very soon; 
  • The Single Touch Payroll system will be used to process payments to employees; 
  • New Zealander’s on a 444 Visa will be eligible for these payments; 
  • This is intended to be a scheme that lasts for up to six months; 
  • Employers can top up their employees wages; 
  • There is no Super Guarantee paid on this payment. 

More Coronavirus Relief for Business

Over the weekend (29/03/2020), more relief was announced for business including:  

  1. Deferral of Loan Repayments 

A little over a week ago, the Australian Banking Association announced a six-month deferral of all loan repayments for small businesses hit by the coronavirus pandemic. 

On the weekend, this relief has now been extended to all businesses that have loans of up to $10 million. That accounts for just on 98% of all Australian businesses that have loans with Australian banks 

  1. Commercial Tenancies 

National Cabinet agreed to a moratorium on evictions over the next six months for commercial and residential tenancies in financial distress who are unable to meet their commitments due to the impact of coronavirus. 

Commercial tenants, landlords and financial institutions are encouraged to sit down together to find a way through to ensure that businesses can survive and be there on the other side. As part of this, National Cabinet agreed to a common set of principles, endorsed by Treasurers, to underpin and govern intervention to aid commercial tenancies as follows: 

  • a short term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies impacted by severe rental distress due to coronavirus;
  • tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease; 
  • the reduction or waiver of rental payment for a defined period for impacted tenants; 
  • the ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress; 
  • commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus; 
  • landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements; and 
  • cost-sharing or deferral of losses between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance.