We asked, and you answered. Or, more accurately, we asked and you asked.
We’ve called on our readers to let us know their questions and concerns when it comes to the various government stimulus measures available for businesses affected by the COVID-19 pandemic.
After a few emails to Treasury, poring over the fact sheets available, and with a bit (ahem, a lot) of help from our network of experts, we’ve taken a look at some of the most common questions we’ve been asked about the federal government’s JobKeeper wage subsidies package.
This legislation hasn’t quite passed Parliament, so we don’t have all the answers yet. But rest assured, we are doing our best to get them.
Since this article was first published the JobKeeper legislation has passed parliament and new information is available.
If you’re still struggling to get your head around anything, feel free to drop us a line. We want our coverage to be genuinely helpful, and knowing what you want to know helps us get there.
Here are some of the questions we’ve received in the past week.
Will directors who were not paying themselves a wage, but taking payment as owners draws, be able to use the JobKeeper subsidy of $1500 per fortnight?
Our understanding is that yes, directors will be eligible for the JobKeeper package, if their business’ turnover has fallen by 30% or more.
However, according to the government, if there is more than one director of a company who receives dividends, rather than a wage, only one can be nominated for the JobKeeper allowance.
Similarly, in the case where there are multiple partners receiving a share of the profits, as it stands, only one partner will be eligible.
Sole traders, however, are eligible. You can read more about how the JobKeeper package works for them here.
If I claim the PAYGW stimulus, can I claim the JobKeeper package too?
Yes. As far as we’re aware, there’s no reason businesses can’t claim both of these stimulus measures.
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While it was largely presented as a grant, the Pay-As-You-Go withholding offering is actually effectively a rebate, available to all employers with an aggregated annual turnover of less than $50 million.
The businesses will receive 100% of the tax they paid, as per their business activity statements, and this will happen automatically for eligible businesses, from April 28.
The JobKeeper package seems to be intended to keep people in jobs, rather than strictly to ease the financial burden on businesses. So, businesses have to apply for the subsidies via the Australian Taxation Office and show their turnover has fallen by at least 30%, compared to a comparable period last year.
We understand there’s no reason you can’t be eligible for, and receive, both.
What is meant by a ‘comparable period’ when assessing revenue declines?
When it comes to determining eligibility for the JobKeeper wage subsidies, this has been a point of contention. Initially, there was some confusion over whether businesses had to have seen a 30% decline in revenue during March this year, or whether they were comparing March 2019 to March 2020.
Treasury has since clarified that the latter is correct, and it’s looking for a drop in revenue, year-on-year, when deciding if a business will be given access to the subsidies.
The ‘comparable period’ seems to relate to your own BAS reporting period. So, if you report monthly, it will be March last year. If you report quarterly, in will be the three months including March last year.
We believe the figures will indeed be based on the BAS submitted, however it’s worth noting again that the legislation has not passed yet, so this is not set in stone.
For many businesses with cyclical revenue cycles, this makes sense. However for many others, comparing revenues on an annual basis doesn’t make sense.
The government has now specified that if a business’ turnover last year does not reflect their usual revenue now, because the business has changed significantly, grown a lot, or did not exist a year ago, they may still be eligible.
“The Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the coronavirus,” Treasury said.
So, you will still have to prove the impact the coronavirus has had on your business, although we don’t know exactly how.
We’re hoping to get more clarity on this once the legislation passes.
Can I use the JobKeeper package to way staff wages if they’re on paid leave? Do they have to be working to receive it?
Our understanding is the wage subsidies are available for any employee that is still ‘on the books’ for your business, so yes, employees who are currently on leave would qualify.
It’s not currently clear whether you can use the payments to subsidise leave you are already paying, but it looks like there’s a good chance you would be able to.
It appears you would be able to pass on the JobKeeper payments to them once their leave has run out, even if there is not yet enough work for them to do.
What if I haven’t seen a decline in revenue yet, but I expect to in the near future?
This is a good question, and one we’re working on figuring out a concrete answer on.
Treasury has suggested that if you expect ‘in good faith’ to see a 30% decline, but actually only see, for example, a 28% decline, it will be lenient.
However, again, as the law is not finalised, we don’t know yet what will happen if you instead see a 20% decline. We can’t rule out the possibility that businesses may be asked to repay subsidy funding.
The ATO has not yet been able to comment on how the administration of the funding will work, putting many business owners under pressure to make staffing decisions without any certainty of support.
We’re keeping a close eye on developments here, and will try to offer some clarity when we can.
How do I pay my employees while I’m waiting for the subsidy payment to come through?
The answer to this will likely be different for everyone, and may involve some difficult conversations with your team. Payments will be backdated to March 30, but they’re not expected to hit business bank accounts until the first week of May.
Our understanding is that, if you have the cash to pay your employees at least $1,500 a fortnight until May, you should do so, and those wages will be subsidised later.
The most recent fact sheet suggests employers will have to satisfy payment requirements for the time covered by the scheme.
It’s not 100% clear just yet, but it appears that if an employer isn’t able to pay employees upfront, they may not be eligible.
While previously it was thought employers would be able to backpay their employees once they had the JobKeeper money, it now appears that is not the case.
Currently, Treasury advice for those that don’t have the cashflow in the interim is to speak to their bank and “discuss their options”, which we know might not be the most appealing option.
We are keeping an eye on this, and will keep you updated.
Are apprentices eligible?
Again we’re still waiting on clarification on this, but based the information available, we believe that yes, apprentices are eligible for the JobKeeper subsidy.
However, there was an additional wage subsidy package for apprentices announced in the first stimulus package, covering 50% of their wages for nine months, and backdated to January 1.
As far as we understand, anyone who employs apprentices can apply for this. Those that are also eligible for JobKeeper will be able to claim the full amount for apprentices, but that will replace the 50% subsidy.
Based on our reading, an employer can only be eligible for one or the other. So you can’t claim the apprentice subsidy for an apprentice, and the $1,500 wage subsidy for someone else.
Do employees who earn less than $1,500 a fortnight really qualify for the full subsidy payment, even if they’re not working at all? Is that fair to others who are still working in low-wage roles?
The $1,500 fortnightly wage subsidy is indeed a flat rate, no matter how much or little a particular employee typically earns. It does mean that some people will be earning significantly more than they usually would. On the plus side, at least that doesn’t come out of the employer’s pocket.
The idea seems to be that, even if they’re not actually working, this allows you to keep your employees on the books. That way, when it’s all over, they still have a job and you still have trusted staff.
It does also apply to workers who are still working, as long as the business meets the criteria.
As far as we understand, the reason the government has done it like this is because it’s an efficient and fast(ish) way of doing it. It may not be a perfect solution, but it’s the best we have right now.
Is there any incentive for employers to keep contractors on board? If I have to reduce a contractor’s hours, or lay them off completely, how can I ensure they come back when this is all over?
Unfortunately, as it stands, this situation is one that the subsidy package doesn’t really cater for.
Contractors themselves are eligible to apply for the JobKeeper payments as sole traders, if they have seen a decline in their own business revenue. However, the individual has to apply for themselves.
As contractors, even long-term ones, are not technically employees, the employer cannot claim the subsidy on their behalf.
There’s no easy answer here. We can hope that if your business has a long-standing relationship with a contractor, that will be enough for them to return when you have work available for them. However, we appreciate that doesn’t provide the certainty many of you are looking for.
Again, we are following this closely, and if new rules regarding contractors emerge, we will let you know.
Are there measures in place to protect startups that are currently raising capital to get to their next phase? We risk losing promising new tech companies because of ‘bad timing’.
The short answer is no, we don’t believe there are currently any specific protections for startups in this situation. If they have revenue coming in that has dipped by 30% or more, they will be eligible for the JobKeeper subsidies.
But, it’s currently not at all clear what happens for pre-revenue startups.
The good news is we’re hearing from several investors that VC firms are pretty cashed-up at the moment, and so closing that funding round might not be completely off the cards.
You can read more about what startups can and should be doing to weather the storm here.