What does it mean for you?
On 30 March 2020, the Federal Government released its Third Stimulus package. Also, the Victorian Government has grants available for small businesses. On top of these announcements, the Australian Government and the Australian Taxation Office have released some guidelines relating to dealings with commercial tenancies and your Self-Managed Superannuation Fund.
Businesses will be able to claim a fortnightly payment from the Government for $1,500 per eligible employee from 30 March 2020 for a period of 6 months. The first payment is expected to be paid by the first week of May.
Are you an eligible employer to receive this?
Self Employed individuals with no employees and Not for Profit entities that meet the $1b test can apply for the JobKeeper Payment.
Who is an eligible employee?
What are the obligations of the employer?
Employer with employees on different wages.
Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The employees are:
Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees. In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
Employer with employees who have been stood down without pay.
Zahra runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.
Zahra's turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three beauticians for up to six months. Zahra will maintain the connection to her employees and be in a position to quickly resume her operations.
Zahra is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahra whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.
If Zahra's employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.
VICTORIAN STATE GOVERNMENT TAX RELIEF
On 28 March 2020, the Victorian Premier announced a new Government grant of $10,000 that will be available to small Victorian business operators that employ staff.
To be eligible to apply for the grant, the business will need to:
To obtain a grant, eligible businesses need to apply online via the Business Victoria website by 1 June 2020.
Bank Loan Repayment Deferral
The Australian Banking Association (ABA) announced that banks will extend the 6-month loan repayment deferral package to 30,000 more businesses. Businesses with total business loan facilities of up to $10m (up from the $3m small business threshold) will now be able to defer principal and interest repayments for loans attached to their business for 6 months.
The ABA said banks have also agreed to not enforce business loans during this 6-month period for non-financial breaches of the loan contract (such as changes in valuations). The new measures will apply in all sectors of the economy, and on an opt-in basis, under the conditions that:
Please ensure that you communicate with your bank to ensure that you are getting these benefits.
COMMERCIAL PROPERTY MATTERS
Tenants – 6-month moratorium on Evictions
A common set of principles have been provided to aid commercial property tenancies as follows:
NOTE – This also applies to Self-Managed Superannuation Fund arrangements who lease property to a related party. The Australian Taxation Office has confirmed that it will not take compliance action for the 2019-20 and 2020-21 financial years where an SMSF landlord gives a tenant (who is also a related party) a temporary rent reduction during this period. Without this Australian Taxation Office concession, an SMSF with real property investment would typically contravene the SIS Act (and trigger the non-arm's length income provisions) if the trustee charges a related party a price that is less than market value. Therefore, ensure that 9 months' rent is paid at market value for the period 1st July 2019 – 31st March 2020 and if you are affected by Coronavirus, ensure that any variation from the lease agreement is documented.
More support to come
This latest support package is unlikely to be the last as the Government responds to a rapidly evolving health crisis and progressive shutdown of all but essential economic activity.
If you have any questions about your investment strategy or entitlements to government payments, please don't hesitate to call our office.