JobKeeper & Other Measures

Update

JOBKEEPER

What is the latest concerning JobKeeper?

The legislation for JobKeeper passed through parliament last week. Also, Fair Work Act (2019) was amended allowing employers who qualify for JobKeeper payments to issue direction to eligible employees to reduce their working hours and changing their duties and location of work. Employers and employees can also make agreements around the working days and the taking of annual leave.

Enrolments for JobKeeper commence Monday 20 April. If you have not registered your interest for JobKeeper, please do this so that you can be updated directly from the Australian Taxation office on the processes going forward. To register your interest clink HERE.

Treasury has released numerous Fact Sheets outlining JobKeeper and these are updated regularly. To review these Facts Sheets, click HERE.

Treasury has also released Frequently Asked Questions which may answer any questions that you may have. To review this, click HERE.

If you record your payroll through a computerised payroll system, such as Xero or MYOB, please keep monitoring the system as they will issue alerts on changes they have made to assist in reporting JobKeeper payments.

What should you start looking at?

EMPLOYERS

If you are an employer and you believe you may be entitled to JobKeeper as your turnover will decrease by more than 30% you should look at the following (see below for more information on the Turnover Test):

1. Register your interest at the link shown above.

2. Identify all eligible employees. It is best to start with those that were on the payroll as at 1 March 2020. Also review the Frequently Asked Questions link above as it outlines the criteria of an eligible employee.

3. Consider the costs of paying the employees for the next few months. It is important to note that that the JobKeeper is a reimbursement from the Taxation Office to the employer in arrears and cannot be paid in advance. Therefore, any eligible employee currently earning less than $1500 each fortnight must be paid $1,500 per fortnight in order to be eligible for the JobKeeper.

4. Employers should commence filling out the Employee Nomination Notice to give to their employees to complete and return back to you before the end of April. It is important that employees agree to nominate. These forms must be kept by employers on file for 5 years. There is no need to send these to the Taxation Office.

5. Enrolments commence 20 April 2020. If you need any assistance with this process, please do not hesitate to contact our office.

From Monday 4 May 2020, employers will be able to claim the JobKeeper and confirm the eligible employees via the online service.

SELF EMPLOYED, BENEFICIARIES OF A TRUST, PARTNER IN A PARTNERSHIP

If you are self-employed, operate a business through a Trust or a partnership, you are also eligible for JobKeeper. To be eligible, you must have been carrying on a business on 1 March 2020 and your business turnover has decreased by 30% compared on a monthly basis to last year.

Only one person is eligible to claim JobKeeper in the event of the business operating through a Trust or Partnership.

If you are eligible, please register your interest in JobKeeper by clicking HERE.

TURNOVER TEST

Turnover for this purpose is calculated on the same basis as it is for GST purposes. The decline in turnover test operates by comparing:

1. the entity's projected GST turnover for a turnover test period; with

2. the entity's current GST turnover for a relevant comparison period.

The turnover test period is:

  • a calendar month that ends after 30 March 2020 and before 1 October 2020 — i.e. from March 2020 to September 2020 (note: March has 31 days, so it ends after 30 March 2020); or
  • a quarter that starts on 1 April 2020 or 1 July 2020 — i.e. the June 2020 or September 2020 quarters.

The relevant comparison period is the comparable month or quarter in 2019 that corresponds to the entity's turnover test period.

For example, a business can compare either:

  • the whole of the month of March 2020 with March 2019; or
  • the June 2020 quarter with the June 2019 quarter.

How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier.

Test to be satisfied only once.

Once an entity satisfies the decline in turnover test and becomes eligible at a time (subject to meeting all the other eligibility conditions), there is no requirement to retest in later months.

Where an entity does not qualify for the month of March or April 2020, you can become eligible in a later month.

RECOMMENDATION

We would recommend that clients register their interest and apply for the JobKeeper system. The reason for this is that it operates on a perspective basis only. Entitlement only arises for Jobkeeper fortnights and later fortnights in which eligible employers at the time are registered prior to the end of a fortnight.

If an employer does not become eligible until a later period, you cannot backdate or claim JobKeeper payments back to 30 March 2020.

However, there is an exception for the month of April 2020. Employers may register prior to the end of April, and if you met the eligibility rules, you will receive JobKeeper payments in relation to the first two fortnights, being 30/3 – 12/4 and 13/4 – 26/4.

Therefore, it will be better to register for JobKeeper and you will receive it if you become entitled to it. If you do not become entitled to it, then there has been no harm done in applying for it.

Information relating to JobKeeper is continually being published daily as new information comes to hand.

If you need assistance with registering or applying, please do not hesitate to contact our office.

LEASE ARRANGEMENTS

Recently the Federal Government outlined the commercial tenancy Code of Conduct. This code is a good faith arrangement between the landlord and the tenant that can apply where the tenant is eligible for the JobKeeper program.

The key principals of this Code of Conduct are as follows:

1. Landlords must not terminate leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period).

2. Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100% of the amount ordinarily payable, on a case-by-case basis, based on the reduction in the tenant's trade during the COVID-19 pandemic period and a subsequent reasonable recovery period.

3. Rental waivers must be at least 50% of the total reduction in rent payable over the COVID-19 pandemic period and should constitute a greater proportion of the total reduction in rent payable in cases where failure to do so would compromise the tenant's capacity to fulfil their ongoing obligations under the lease agreement. Regard must also be had to the landlord's financial ability to provide such additional waivers. Tenants may waive the requirement for a 50% minimum waiver by agreement.

Example: Up to half could be through a deferral of rent, with this to be recouped over a period of at least 24 months in a manner that is negotiated by the parties.

o So, if the tenant's revenue has fallen by 100%, then at least 50% of total cash flow relief is rent free/rent waiver and the remainder is a rent deferral. If the qualifying tenant's revenue has fallen by 30%, then at least 15% of total cash flow relief is rent free/rent waiver and the remainder is rent deferral.

o Care should be taken to ensure that any repayment of the deferred rent does not compromise the ability of the affected SME tenant to recover from the crisis.

4. Payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater, unless otherwise agreed by the parties. For example: Where a tenant only has 3 months remaining on their lease arrangement, they may be entitled to up to 24 months to repay any of the deferred rent.

5. The tenant should be provided with an opportunity to extend its lease for an equivalent period of the rent waiver and/or deferral period.

6. Landlords may not apply interest or other charges on rent which is waived or deferred.

7. Landlords should consider waving recovering of other expenses payable by the tenant which are unable to trade.

8. Landlords may not enforce personal guarantees for no payment of rent or draw against bonds.

9. Landlords must agree to freeze rent increases other than rent based on turnover for the relevant period.

This Code of Conduct also applies to business that are leasing premises from property held within their Self-Managed Superannuation Fund. Any rent relief can only be provided if the tenant is eligible for JobKeeper. If rent relief is applied without meeting the criteria, this will mean that the fund will become non-complying, so it is important that Trustees apply these rules carefully.

Victorian State Government Land Tax Relief

The Victorian Government has announced that landlords who provide residential and commercial tenants with rent relief due to them being affected by COVID-19, may be eligible for a 25% reduction on the property's 2020 land tax.

This relief is also available to landowners who are unable to secure a tenant because of COVID-19.

However, for commercial landlords, land tax relief is allowed provided that the tenant is eligible for the JobKeeper payment.

Instructions on applying for this reduction will be issued shortly.

The State Revenue Office will also be contacting the taxpayers directly who may be eligible for a deferral on their 2020 land tax that have one non-residential property and total landholdings less than $1 million.

If you have any questions about these measures, please don't hesitate to call our office.