Latest COVID-19 Govt Assistance for Businesses

Discussion in 'Accounting & Tax' started by Mike A, 30th Mar, 2020.

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  1. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    IDK. This is where a tax adviser helps as they may be able to address specific issues. As you may imagine I cant just guess and we dont offer a free public service.

    The key test of eligibilty needs to be understood yet.
    The NTAA used a interesting view that it could be based on a expectation of reduced income rather than real lost income. Until thats known you should consider all options. Best to defer standing down workers to 100% but a reduced hours engageent may be a temp manner. But if its under $1500 a F/N that may not comply. Its guesswork for now. Patience. An est 40% of the nations workforce also want to know how this works.

    Have you looked at Vic state grants of $10K ?
     

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  2. Foxy Moron

    Foxy Moron Well-Known Member

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    The trust will not have entitlement but a (non-employee) beneficiary might.
    Interesting to read page 10 of these FAQs. It mentions partners in a partnership, beneficiaries of a trust and also shareholders in a company that get compensated by way of dividend only. ie none of these types draw PAYG wages in the traditional sense.
    Normally you would think they all have no entitlement to Jobkeeper (not employees right?), yet the text suggests they can - although specifically limiting to ONE partner in a partnership, ONE beneficiary of a trust, and ONE shareholder of a company. Also ONE paid company director. So it turns out these people can get Jobkeeper in addition to eligible employees. Wowee.
    I only just stumbled across this so thought it was worth sharing for clarity - there are many, many family businesses in these situations who wouldn't even be aware of this fine print, so best they find this stuff out :)
     

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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Precisely why personal tax advice is key. Until the regulations are made its just a media release. The business income issues for a trust will also be relevant. A investment trust could never be entitled, what about one that is a blend ? The nature of activity based tests will be key to any regs and determinations.

    Its important to consider stimulus efforts are focussed on businesses, sole traders in business and affected employees. Those who rely on trust entitlements and investment returns rather than taking conventional remuneration may not be protected. The one beneficiary / shareholder rule is a flexible compromise but is sure to have a work test basis. Passive income likely excluded. And it may need that shareholder to be the sole shareholder and in receipt of $1500 each f/night which may be a corporations act and timing problem esp if there are two shareholders. That part has me confused. Some trusts may have trust deeds that are contrary to the stated ideas in the media release. eg how can a beneficicary be entitled if the deed only permits that at 30 June ?? And once in the year ?
     
    Last edited: 9th Apr, 2020
  4. Mike A

    Mike A Well-Known Member

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  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Jobkeeper laws became available last yesterday. I am waiting for sme disection of this as what was made under Regulations by the Treasurer isnt that simple of clear. It still grants broad powers to the ATO.

    One MAJOR change to what was announced. Its a all-in system. A employer cannot stand some down and keep others on jobkeeper. This is bound to pose a issue for many and could yet see staff let go. Other major concern is a entity that did not have eligible business income in the 2019 year may not be eligible.

    Benefit : Some employers will be able to elect a single sole trader, partner or working Director (even unpaid) for this measure. But its not as simple as that and post I provide later should address this. Caution : This law also has some nasty avoidance rules. eg a dormant company cant register and may be subject to extreme penalties on review. The Commissioner has ability to identify turnover ineligible applicants and can cancel entitlements at any time (even a distant future date)

    Reminder: Those who registered intention with the ATO will soon be able to actually apply. The ATO registration was a preliminary act and does not mean anyone is registered.

    Regs : Coronavirus Economic Response Package (Payments and Benefits) Rules 2020
    Explanatory : Coronavirus Economic Response Package (Payments and Benefits) Rules 2020

    Warning for monthly paid employees. The minimum is not $1500 x 2 for one month being $3,000. It is $1500 x 26 / 12 = $3250 per month.

    Info on eligible business participants. Further, depending on the type of entity the business is, the individual must have a particular role within the business. In the case of an entity that is a:

    • sole trader—the individual must be the entity;
    • partnership—the individual must be a partner in the partnership;
    • trust—the individual must be an adult beneficiary of the trust; and
    • company—either a director or shareholder in the company.

    Common question answered. I have full time work and also have busienss icome. Is my business eligible ? no. An employment integrity test applies.
    Also at the time of nomination as an eligible business participant the individual must not also be a permanent employee of an employer. This ensures that individuals do not qualify in relation to a business as an eligible business recipient if they have a separate permanent source of employment income. Individuals who have a permanent source of employment can nominate to receive the JobKeeper payment through their permanent employer if that employer is eligible.
    Note that the integrity measuer says prmanent employment and not full time employment. If Mary was a PT employee her small business cannot claim jobkeeper. Jobkeeper may be available through that employer if they are eligible.​
     
    Last edited: 15th Apr, 2020
  6. JasonC

    JasonC Well-Known Member

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    In the explantory statement the following section is of interest to me:

    Regards,

    Jason
     
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  7. Mike A

    Mike A Well-Known Member

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    At present there is nothing in the rules that make it compulsory for an employer to select all employees for the scheme.

    See s. 9(3)(a)(ii) which says that one of the conditions to be an ‘eligible employee’ is that the individual agrees to be nominated by the entity. That doesn’t mean that the employee has been selected by the employer.

    on the ATO website it says "Before you enrol to receive JobKeeper payments, you need to notify each eligible employee that you intend to nominate them as eligible employees under the JobKeeper scheme."

    Your eligible employees

    this seems to indicate the employer has a choice as to who they "intend" to nominate. That's not a compulsory all-in

    This is one area that many are seeking clarification on as we speak.
     
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  8. FrivolousPanda

    FrivolousPanda Well-Known Member

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    This seems a bit rough for those who have a mix of a permanent part time role (1-2 days per week) for stability and at the same time run a business or is a contractor (3+ days per week). Their overall weekly income could be down by 30%+ due to their business but they won't be eligible for any support if their employer for the part time role does not meet job keeper criteria.

    I do see that the purpose may be to ensure people who have unaffected full time jobs with a small side business, do not claim job keeper.
     
  9. Mike A

    Mike A Well-Known Member

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    can't claim JobKeeper for Part Time Employees ?

    That is not accurate at all. The explanatory Statement says

    "The requirement that a person was an employee (other than a casual employee) is intended to ensure there is a minimum level of connection between the employer and the employee. In an ordinary sense, an employee other than a casual employee is a full time or part time employee."

    Refer also the ATO Website.

    Your employee is eligible under the JobKeeper Payment scheme if they:

    are employed by you (including those stood down or re-hired)

    were either a

    permanent full-time or part-time employee at 1 March 2020

    long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer

    Your eligible employees
     
    Last edited: 15th Apr, 2020
  10. FrivolousPanda

    FrivolousPanda Well-Known Member

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    My statement "they won't be eligible for any support if their employer for the part time role does not meet job keeper criteria" was not that part time roles are ineligible. If their employer providing the part time role has not been impacted by Covid, then they won't receive any job keeper benefits as their employer's turnover has not decreased by 30%+ etc. This is fair as the person's work hours has not changed for their permanent part time role. E.g. They still work 1-2 days per week and receive the same income with their employer's business continuing to operate as normal.

    However, their own business could be severely impacted by Covid hence a 30%+ decrease resulting in the person's weekly income decreasing by 30%+. E.g. their sales or contracting role has been terminated or significantly reduced (either in hours or rate)
     
  11. Mike A

    Mike A Well-Known Member

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    Why cant they claim jobkeeper if they have their own business ? People with two or more jobs are allowed to nominate which employer they want jobkeeper to apply to
     
  12. FrivolousPanda

    FrivolousPanda Well-Known Member

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    It was the point Paul raised. They can't because they have permanent employment elsewhere, albeit it's only part time. Happy to be corrected if I have misread the post.

    "Note that the integrity measuer says prmanent employment and not full time employment. If Mary was a PT employee her small business cannot claim jobkeeper. Jobkeeper may be available through that employer if they are eligible."
     
  13. Mike A

    Mike A Well-Known Member

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    What does the Explanatory Statement say

    "Also at the time of nomination as an eligible business participant the individual must not also be a permanent employee of an employer. This ensures that individuals do not qualify in relation to a business as an eligible business recipient if they have a separate permanent source of employment income."

    hope that helps
     
    Last edited: 15th Apr, 2020
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  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes - Remember that the legislative instrument includes any determination by the Treasurer and it need not be statutory law.

    Once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all of these eligible employees are covered by their participation in the scheme. This includes all eligible employees who are undertaking work for the employer or have been stood down. The employer cannot select which eligible employees will participate in the scheme. This ‘one in, all in’ rule is a key feature of the scheme.

    Authority : Subsection 20(1) of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (the Act) provides that the Treasurer may make rules prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
    Agree there are a range of questions. eg The 2019 year income test, The apparent GST registration and more
     
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  15. Mike A

    Mike A Well-Known Member

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    lots of questions thats for sure
     
  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A eligible business participant is ONE sole trader, partner, adult trust beneficicary, company Director etc which is different to a eligible employee. - The integrity rules dont allow them to be nominated as a eligible business participant if they have permanent work at 1 March 2020 but if they are a paid employee that could be different. Or they should then be nominated by that PT employer IF that employer is entitled to claim and they agree. But not both.

    eg Fred works for NSW Fire & rescue. He also works as a sole trader electrcian. He is not stood down and is permanently employed. His sole trader income suffers a 40% decline. However the integrity rule prevents jobseeker as he is pemanently employed whether full or part time. Ignore that Fire & rescue is not eligible. The fact that Fred has permanent employent means he cannot make a claim under the eligible business particpant basis. He is only able to be eligible as a employee if that employer is eligible

    If Fred worked PT for Fire & rescue and also as a sole trader he is still permanently employed. There is no separate test of part time engagement. It is based on permanent engagement.
    Not sure why the reference is to the ATO website when this was dated prior to the law being made. Websites are a poor source for law and yet undetermined regulations.

    Fred's wife Mary has two PT jobs. She also operates as a sole trader florist. She would also be prevented from jobseeker participation as a sole trader eligible business participant. But one of the PT employers may opt to include Mary. Marys final option is jobseeker

    The words part-time ironically only appear to limit access to the measure; The requirement that casual employees cannot nominate with an employer if they were permanently employed by another employer at the time of nomination, ensures that an individual who is employed on a permanent basis (either full time or part time with an employer) must nominate their full time or part time employer under the scheme. This reflects that such employers are likely to be the individual’s ‘primary’ employer, and prevents an individual from nominating a secondary, casual employment position if their primary employment is unaffected. It appears to explain why casuals under 12mths were excluded. It is to limit double dips. As does the eligible business particpant integrity test.

    I have spent 1/3rd of today trying to explain eligible buisiness participant to many very confused people.
     
  17. craigc

    craigc Well-Known Member

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    Also likely only applies to larger employers, but beware where part of a group of companies that it is the ‘aggregated’ turnover of the group (whether local or o/s), not just the turnover of the individual company in Australia.

    Ie If part of a multinational group with group turnover exceeding $1B (Aud), the Australian company of the group must suffer a 50% decline in revenue to qualify for Jobkeeper.
    If group turnover is under $1B then the 30% decline in turnover test remains.
     
  18. Tillie

    Tillie Well-Known Member

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    This is really interesting point. I just wonder what happens if a couple months after applying and been accepted to the jobkeeper the business participants will get permanent job elsewhere, are they still entitled to continue to get the jobkeeper payment as the business partcipant?

    Also hypothetically speaking if the employee getting jobkeeper payment is finding a new permanent job elsewhere, but they do not resign from the old job, are they still eligible to continue to get jobkeeper payment from the 'old employer?
     
  19. Gockie

    Gockie Life is good ☺️ Premium Member

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    Good questions....
     
  20. Propagate

    Propagate Well-Known Member

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    Here are a few Q's I can't find an answer too.. anyone have any idea?

    1 - Job Keeper - I understand that this is taxable (for both employee and employer), regular PAYGW tax is due on the employee's behalf as it would be for an wage, but then the $1500 reimbursed to the employer is treated as "business income" as such, so company tax is payable on each $1500 received, is this correct?

    2 - Company suffers a projected 35% downturn in work, qualifies for Job Keepers for say 4 employees. Job Keepers payment is credited for a month say. Them the business reviews the eligibility for the following month, applies the test based on comparing quarters and find that job keepers payment pushed the business "income" up to only a 28% down turn, does the business then cease to become eligible for the next month of Job Keepers? (I.E. is Job Keepers income from the government to the business counted as revue in the eligibility tests).

    3 - Following on from number 2.... lets say business projected revenue is 30% down when applying the tests, then the initial Cash Boost payment lands from the ATO (tax free). Does that then count as business income and potentially push the business back out of the Job Keepers eligibility range?

    Cheers.
     

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