q4 financial | JobKeeper Update
By now we are all getting a little more used to challenges that COVID-19 has brought about from a health, and a business, perspective. We’ve had many conversations with clients over the last few weeks, and what impresses us all is that despite the gloomy outlook many clients are remaining positive.
Our job is to support you wherever possible. We are endeavouring to call everyone to discuss their position and help them understand how to navigate a way forward. It costs nothing to talk to us about any of your concerns. If you need further help please pick up the phone.
Tuesday night also saw the long awaited announcement on commercial tenancies. In short, if the tenant has suffered a 30% reduction in turnover (which makes them eligible for the JobKeeper payment) then they have to provide rent relief to the tenant in the form of a combination of a rent relief and rent deferral.
As an example, before Covid-19 you were paying $10,000 rent per month. If your turnover has fallen by 50% as a result of the pandemic, your landlord needs to reduce the rent you pay by 50%. Half of the reduction ($2,500) will not be payable and the other $2,500 will be deferred until after the pandemic has passed. The deferred amount will be payable over the term of the lease or 12 months, whichever is the greater.
This is a good result if you are the tenant, but not so great if you are the landlord, supposedly at the end of the food chain. We do wonder if the Government will put pressure on the Banks to actually forgo some of their revenue as opposed to purely deferring it, like what they are legislating for landlords.
Last night also saw the JobKeeper Legislation passed through parliament, mostly unchanged from the Prime Ministers initial announcement.
We have received many questions regarding this package and have compiled some of the more common ones to assist in understanding what has been legislated.
Q. I am a Director and not receiving a salary. Do I qualify for the JobKeeper allowance?
A. Yes, this has now been confirmed by Treasury.
Q. How is the 30% turnover reduction calculated?
A. The first test is against the same period the previous year but the Government recognises this might not be accurate. The Tax Commissioner also has the discretion to set out alternative tests that would establish eligibility in specific circumstances. The Commissioner will also have the discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.
Q. I don’t have any employees am I eligible for the JobKeeper allowance?
A. Yes, this has been confirmed in the legislation.
Q. When will I get the first payment of cash from the PAYGW initiative and how much?
A. This will be in the March BAS. If for example your monthly PAYG Withholding for January, February and March was $12,500 per month, this equates to a total of $37,500 to be paid on your March BAS along with your GST liability of say $20,000. Bringing the total to $57,500. As such when your BAS is payable, you will only have to pay the $20,000.
Q. Do I still have to lodge my Payroll Tax return even though no payroll tax is payable?
A. Yes, lodge as you always do and list your wages per normal.
Q. Can I start paying myself additional wages in March to optimise my position?
A. Given you are most likely reporting monthly wages under Single Touch Payroll the ATO already have your past data and any changes will be immediately evident. This is not a strategy we would recommend.
Q. Can I ask a team member who I employ fulltime to work less hours?
A. Yes, there is draft legislation being presented to parliament which is to change the Fairwork Act during the pandemic. This will allow the employer to change hours and remuneration to suit the amount of work that an employee can reasonably do and where this can be done.
We will continue to keep you updated as we receive more information around legislation and the Government’s response to COVID-19.
We do want to remind clients, that with many businesses now working from home it does introduce potential new risks due to cyber-attacks. It is recommended that you talk to your IT consultant to make sure each team member has sufficient virus protection in place for their home computers to ensure your data and IT systems remain secure.
Despite these unsettling times, we hope you enjoy a break over Easter.
Grant Titman and Kelly Hill
A CPA and Director of q4 financial, Grant Titman brings leadership and the disciplined energy of an endurance runner to deliver ‘big picture’ outcomes for his firm and his clients.
Grant’s expertise includes and extends well beyond achieving profitability and growth for his clients’ businesses. His focus is squarely on helping his clients to achieve three key goals: extract wealth from their business; set and achieve long-term wealth objectives; and ultimately, enjoy financial freedom.