CORONAVIRUS (COVID-19) ECONOMIC STIMULUS UPDATE- 8 APRIL 2020

CORONAVIRUS (COVID-19) ECONOMIC STIMULUS UPDATE- 8 APRIL 2020

Please find below an update on Federal Government stimulus packages.

JobKeeper Payment

On 5 April 2020 the Federal Government announced further updates and additional details on the JobKeeper Payment.

An extract from the JobKeeper stimulus factsheet is below:

WHAT IS THE DEFINITION OF TURNOVER ON WHICH A DROP IS MEASURED?

Turnover will be defined according to the current calculation for GST purposes and is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies. There are some modifications for businesses that are part of a GST group.

Further information on GST turnover, and how to calculate it, is available at ato.gov.au.

Under the GST law, only Australian based sales are included and therefore, only Australian based turnover is relevant. A decline in overseas operations will not be counted in the turnover test.

MY TURNOVER HAS NOT DECREASED BY 30 PER CENT THIS MONTH, BUT I BELIEVE IT WILL IN THE COMING MONTH. AM I ELIGIBLE?

You can apply for the payment if you reasonably expect that your turnover will fall by 30 per cent or more (or 50 per cent or more for businesses with a turnover of $1 billion or more) relative to your turnover in a corresponding period a year earlier. The ATO will provide guidance about self-assessment of actual and anticipated falls in turnover.

IT IS UNLIKELY THAT MY TURNOVER WILL DECREASE BY 30 PER CENT IN THE COMING MONTH, BUT CAN I APPLY LATER IF MY TURNOVER DECREASES IN ONE OF THE SUBSEQUENT MONTHS?

If a business does not meet the turnover test at the start of the JobKeeper scheme on 30 March 2020, the business can start receiving the JobKeeper Payment at a later time once the turnover test has been met. In this case, the JobKeeper Payment is not backdated to the commencement of the scheme. Businesses can receive JobKeeper Payments up to 27 September 2020.

The JobKeeper subsidy is expected to pass as legislation today. Based on what we understand, we expect the following:

  • An expanded inclusion of employees by allowing casuals who may not have worked for an employer for more than 12 months to be included.
  • The subsidy will be legislated to last for 6 months. Parliament would have to pass further legislation for it to last longer.
  • 11,000 enterprise agreements would require adjustment for the JobKeeper Payment to be implemented.
  • We expect special provisions would deny an employer the ability to compel an employee to use up their leave balances in priority to passing on the JobKeeper Payment to employees.
  • Employers will be given special rights to deal with employees that refuse a request to work if they are in receipt of a JobKeeper payment.

Commercial Tenancies

Today, the Prime Minister announced the mandatory Code of Conduct that imposes good faith leasing principles on landlords of commercial tenancies that are suffering financial stress or hardship due to COVID-19.

KEY POINTS:

  • Tenants is covered by the Code is they qualify for the Job Keeper Payment.
  • Tenant must have an annual turnover of no more than $50M.
  • Code applies from 30 March 2020 to 27 September 2020.
  • Leases must not be terminated due to non-payment of rent.
  • Landlords must offer rent reductions in proportion to reduction in tenant’s trade in two forms:
    • At least 50% of the rent reduction must be a rent waiver.
    • The balance must be a rent deferral which is amortised over the greater of 2 years or the lease term.
  • Landlords must pass on to tenants a proportionate share of benefits received from the deferral of loan payments.
  • Landlords cannot charge fees or interest on waived or deferred amounts.
  • Landlords cannot draw on tenants’ bonds.

How a tenant reports a drop in turnover to their landlord is possibly going to be a an issue. The words ‘good faith’ have been used quite a lot on aspects of the stimulus packages. How the ATO reports to a business they qualify for JobKeeper remains to be seen as well.

The Code of Conduct is available here: https://www.pm.gov.au/sites/default/files/files/national-cabinet-mandatory-code-ofconduct-sme-commercial-leasing-principles.pdf

Government’s Childcare & Early Childhood Education Relief Package

The Federal Government has just announced a relief package for the child care and early childhood education sector (‘child care sector’). The relief package is design to:

  • Provide free child care to around 1 million families and
  • Ensure that as many of the child care sector’s services can remain open for families that need to work and to support vulnerable children during the Coronavirus pandemic

Based on the Prime Minister’s Media Release of 2 April 2020, the relief package will involve additional funding for the child care sector, broadly as follows:

  1. The Government will pay 50% of the child care sector’s fee revenue (presumably, this would be paid to each eligible child care and early learning centre) up to the existing hourly rate cap.
  2. The additional funding will apply from 6 April 2020, based on the number of children who were in care during the fortnight leading into 2 March 2020, whether or not they were attending care.
  3. The additional funding will only be available as long as centres remain open and do not charge families for care.
  4. The payments made under the relief package will commence to be made at the end of next week and will be made in lieu of the Child Care and Additional Child Care Subsidy payments.
  5. Payments of higher amounts will be available in exceptional circumstances, such as where greater funding is required to meet the needs of emergency workers or vulnerable children.
  6. Until the payments are made, the Government will allow centres to waive gap fees for families who keep their children home, and families will be able to use the 20 extra absence days the Government has funded for Coronavirus-related reasons without giving up their place in a centre.
  7. The new funding arrangements will be reviewed after one month, with an extension to be considered after three months.

To find out more follow the following link: https://ministers.dese.gov.au/morrison/early-childhood-education-and-care-relief-package

If you are interested in learning more please contact either Sam Cimino, Sam Marzano or any team member on (03) 8602 6100.

Stay tuned for further developments as they occur.