CORONAVIRUS (COVID-19) ECONOMIC STIMLUS UPDATE – 1 APRIL 2020

CORONAVIRUS (COVID-19) ECONOMIC STIMLUS UPDATE – 1 APRIL 2020

Federal Government

On 31 March 2020 the Federal Government has announced additional details on the JobKeeper Payment.

We have received a number of queries already in respect to how to prove whether a business has incurred a drop in revenue. For example, some questions posed have been:

  • What if I was not in business 12 months ago?
  • Will my business qualify if I have lost prospective contracts?
  • How to do I prove a drop in business if I have sporadic income?

To name a few.

It seems like the ATO has taken a practical view on assessing whether a business has suffered a loss of 30% in income. They will work with each business individually to assess eligibility.

We see this as positive news.

An extract from the stimulus factsheet is below:

To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier. Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.

We are yet to clarify what occurs when a family business engages with family members who are not paid a wage, rather are in receipt of distributions of profit. In addition to this we are also seeking clarification on whether businesses have to qualify on an ongoing basis. At this stage we understand only sole traders are required to report to the ATO on an ongoing basis whether they meet the eligibility criteria.

We will keep you posted on any developments.

State Governments

The following are some announcements made by the state government in respect to grants they are providing to businesses that have suffered.

Business support fund – Victoria

The Victorian Government has launched the $500 million Business Support Fund to help small businesses survive the impacts of the coronavirus (COVID-19) pandemic and keep people in work.

Funding of $10,000 per business is available and will be allocated through a grant process.

Small businesses are eligible if they:

To find out more follow the following link: https://bit.ly/2wQ5tDW

Business grants – Melbourne CBD

In addition to the Business Support Fund, businesses located in Melbourne CBD can also make an application for a business grant.

To find out more follow the following link: https://bit.ly/3bA6wqB

If you are interested in learning more about the JobKeeper Subsidy Payment, cashflow forecasting, or for a referral to a legal professional in respect to leasing matters, please contact either Sam Cimino, Sam Marzano or any team member on (03) 8602 6100.

Please feel free to forward our email onto anyone who might appreciate this information.

Stay tuned for further developments as they occur.