Skip to main content

Client Update – COVID19 – Australian Government – Third Stimulus Package Measure

Written by Dean Robinson.

This afternoon, the Prime Minister, Scott Morrison, and the Treasurer, Josh Frydenberg, held a joint press conference at Parliament House in Canberra to announce the Australian Government’s third stimulus package response to the COVID 19 outbreak.

At the time of preparing this client update, full details were not yet available either on the Australian Taxation Office or the Treasury website. The following is my summation of the measures as announced during the press conference.

THIRD STIMULUS PACKAGE

  • A flat $1500 per fortnight Job Keeper Wage Subsidy is to be paid to employers that retain their employees through the COVID 19 outbreak.
  • This is a cash subsidy – so will be paid to your business by the Australian Government.
  • The payment applies for a maximum of 6 months.
  • Employers must pay at least the $1500 amount to their employees. The aim of the package is to ensure employers keep Australians in their jobs throughout the epidemic.
  • The measure applies to:
  1. Full time employees.
  2. Part time employees.
  3. Casual employees who have been employed for 12 months or more.
  • The measure applies irrespective of the remuneration of the employee prior to the announcement of the package. This means:
  1. There is no means testing of the payment.
  2. Presumably, casual employees who earned less than $1500 per fortnight may be able to receive up to $1500 per fortnight through this package.
  • The payment relates to employees who were employed by your business as at 1st March, 2020.
  • The payments will be first paid in May 2020 – backdated to Monday 30th March, 2020.
  • Businesses with turnover up to $1 billion per annum must be able to prove their turnover has dropped by at least 30% during the COVID 19 outbreak.
  • Registration for the scheme is to be via the ATO website. Registration is expected to commence from 31st March, 2020.
  • The Single Touch Payroll system will be used to monitor who is employed and who isn’t. As you would know, Single Touch Payroll became mandatory from 1st July, 2019.
  • Employers will self declare the 30% drop in turnover. It is my expectation that, once we are through the COVID 19 outbreak, the ATO will audit employers to prove that business turnover dropped by 30%.
  • How the 30% drop in turnover is calculated is not yet defined.
  • I would expect that if your business already qualifies for the Apprentice Wage Subsidy that was announced in the Australian Government’s Stimulus Package No. 1 on 12th March, 2020, that this second payment would not apply to those employees.
  • You will still be required to pay Superannuation Contributions on behalf of your employees during this period.
  • At this stage, we don’t know if the Job Keeper Wage Subsidy that is received by the employer will be subject to Income Tax, or not. I expect further clarification of that in the days ahead.

FURTHER DETAILS

  • I expect further details to be released overnight by the Australian Government that provides greater clarity around these measures.
  • My aim is to issue a further Client Update by 12pm on Tuesday 31st March, 2020 once the Australian Taxation Office and/or Treasury release those details.

WHAT DOES THIS MEAN FOR YOUR BUSINESS?

  • If you can prove that your business turnover has suffered as a result of the COVID 19 outbreak, you will qualify for the subsidy.
  • The Australian Government wants you, as employers, to retain as many of your employees as possible through this period.
  • If your business will not suffer as a result of the COVID 19 outbreak, and I have a number of clients whose businesses are experiencing an upturn in business right now, then you will not qualify for the subsidy.

WHAT DO YOU HAVE TO DO RIGHT NOW?

  • Right now, sit tight and wait for further details to be released.
  • Don’t jump onto the ATO’s website tomorrow to register if you have Finance Support people in your office that can assist you to register. Experience has proven in the past week that Government websites simply can’t cope with the volume of traffic right now.
  • For those that don’t have Finance Support people in your office, I will attend to the registration on behalf of your business.
  • Review your current trading and determine whether you have experienced a 30% drop in turnover since the COVID 19 outbreak – or are likely to over the coming weeks.
  • Continue to monitor your business trading situation carefully.
  • Continue to monitor your available cash carefully.
  • Be aware of some of the activities of your clients. Very sadly, I have been made aware of one large corporate that has decreed that their small business suppliers will now be waiting 180 days for payment. Not only is that unethical behaviour, it could potentially cripple some businesses.
  • If you believe that your clients are unlikely to pay you in the future, you should consider whether you continue to work for them. Getting the work is one thing – getting paid is something completely different!

COMMUNICATION

  • As I have stipulated throughout this crisis, it is important to keep all lines of communication open. As always, you may contact me as follows:

Office Phone – 02 4654 5000

Mobile Phone – 0409 207 969

Email – [email protected]

  • I will endeavour to return all calls, texts and emails as quickly as possible – and in less than 2 hours.
  • Similarly, I would ask that:
  1. You return all calls, texts and emails to me as quickly as possible.
  2. That you respond to me with any information I may request of you, as a matter of urgency.
  3. That, in the event we are meeting (whether in person, or virtually), that you do not interrupt our time together with other appointments or phone calls.

FINALLY

  • This is a significant initiative from the Australian Government aimed at preserving jobs and creating a footing for the economy to rebound after the COVID 19 outbreak has passed.
  • I am optimistic that most businesses and most individuals will come out of this event:
  1. Stronger.
  2. Kinder.
  3. Wiser.
  4. More efficient.
  5. Less wasteful.
  • In the days and weeks ahead, I will continue working with all of my clients to ensure we not only survive this situation, but we come out of it stronger.

Thank you for your efforts and time over the past week as you each grapple with your own business and personal challenges. Your roles as the owners and managers of family businesses are incredibly weighty at this point in time. However, I am here to work with you to help you now and well into the future.