When brewery owner Richard Jeffares heard about the Morrison government’s wage subsidy scheme he began making plans to bring back stood-down staff.
But on reading the fine print, Jeffares soon realised his Victoria-based business TWØBAYS Brewing Co. was not strictly eligible for the $130 billion program.
“I’d like to put my casuals back on to keep them associated with our business, but it’s hard for me to do that if there’s a risk I’m not going to see that money again,” Jeffares tells SmartCompany.
Announced Monday, the taxpayer-funded wage subsidies will provide $1,500 fortnightly payments to businesses for each full-time, part-time and casual staff member with 12 months tenure on their books.
But only firms that can demonstrate at least a 30% drop in year-on-year revenue for March are strictly eligible, and while assurances have been made that program administrators at the tax office will exercise discretion, many firms are concerned they won’t be approved.
Established in 2018, TWØBAYS has grown considerably since its inception, and particularly since March last year, as its gluten-free craft beer has begun to get traction in the market.
But the coronavirus crisis has savaged his prospects — 30-40% of Jeffares’ turnover is derived from a hospitality sector that’s largely shut down in recent weeks.
The business owner has resorted to standing down staff and cutting hours, but expects the real dive in his turnover to hit in April, a month outside of the wage subsidy eligibility criteria.
“We’re expecting April to be horrible … I don’t have work for our full-time employees,” he says.
Jeffares is one of more than 500,000 businesses which have expressed interest in applying for the wage subsidies so far, amid an unprecedented level of pain in the economy amid the COVID-19 pandemic.
April’s “leap of faith”
But businesses unsure about whether they meet the eligibility requirements now face the possibility of a month-long wait before knowing whether they’ll be able to access wage payments.
“It’s a leap of faith,” Jeffares says about the prospect of keeping staff on in the hope of receiving back-paid wage subsidies.
Parliament will sit next Wednesday to consider, and likely ultimately pass, legislation enacting the wage subsidies.
From there, the ATO is expected to launch an official registration process, begin considering applications, and ultimately start making payments. Cash is expected to start flowing from the first week of May.
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But the ATO is unable to comment on its administration philosophy or intentions before the legislation is passed, complicating matters for business owners under the pump to make resourcing decisions.
Focus on inclusion
Australian small business and family enterprise ombudsman Kate Carnell has been involved in talks with the federal government and the ATO about the program and tells SmartCompany there remains a prevailing focus on inclusion, rather than exclusion.
“What the government is trying to do here is pretty clear: they’re trying to help sole traders and businesses generally operate at some level,” Carnell says.
“If what you’re doing in business is in line with that, trying to keep people engaged and attempting to revamp your business at the other end of this crisis, then I think there’s a very high chance you will be approved.”
With hundreds of thousands of cases to sift through, the practicality of tax office discretion has also come up, but while Carnell says it will be a “challenge” for the ATO, it isn’t looking to rule people out.
“They’re taking the approach that they’re attempting to help people and include people rather than excluding people,” she says.
“If they take that view it wouldn’t take them very long to determine.”
ATO considers guidelines
Carnell has put a variety of case studies to the ATO in an attempt to get more clarity about eligibility requirements.
Businesses which have not been trading for more than 12 months, high-growth startups, and firms which have just started to decline, are among those being asked about.
Options such as looking at trading trends over the last three to six months are being discussed as the tax office prepares to draft additional guidelines for staff, who will be considering hundreds of thousands of individual applications in the coming months.
It appears as though businesses which don’t strictly qualify should prepare to make a reasonable case for why they should be included and make whatever other revenue data they have available.
It comes as Opposition Small Business Spokesperson Brendan O’Connor calls on the Morrison government to provide additional clarity about eligibility criteria.
“While we welcome the package, the Government must urgently clarify eligibility guidelines because, at the moment, a number of worthy businesses seem to miss out on the payment,” O’Connor said in a statement.
“In this environment, the need for speed is vital. Small businesses need urgent, clear and public information.”
O’Connor sent a letter to Small Business Minister Michaela Cash earlier this week, outlining Labor’s intention to support the wage subsidy scheme, but expressing a desire to clear up confusion about potential edge cases.
Carnell agrees additional clarification is needed, but says there’s also a need for businesses to be realistic as well.
“We have to accept this will be ongoing clarification, there’s always another case or another situation we hadn’t quite thought of,” she says.
“It is inevitable there will be gaps, and what they’re saying is they’re going to try and fill them.
“There are things that won’t be obvious on a fact sheet, because they’re learning too.
“So it’s important to come back to the intent of the policy … and who they say they want to cover,” Carnell said.