The Prime Minister has revealed how businesses will be supported in keeping their employees in work despite the revenue hit so many have taken from the pandemic from October onwards.
Currently supporting over 3.5 million Australians, and initially scheduled to end in late September, the PM announced an extension of the scheme for a further six months, albeit at a reduced rate.
All businesses looking to continue to avail themselves of the scheme will need to show a decrease in revenue of 30 per cent more on pre-COVID levels to be eligible for ongoing support, with that test being levied each quarter.
In the October quarter the payment for eligible employees will come down from $1500 per fortnight to $1200 per fortnight. Additionally, there will be a new level of JobKeeper relief for those working 20 hours a week or fewer, with a payment of $750 per fortnight for those employees – this new benchmark has been introduced to avoid the loophole seen in recent months of some workers who only work a couple of shifts a week earning more now that they did before the pandemic.
The scheme will scale back further in the January 2020 quarter, with the payments coming down to $1000 per quarter for full-time employees and $600 per fortnight for those working no more than 20 hours per week.
The announcement has been broadly welcomed by key stakeholders in the small-business sector.
Elinor Kasapidis, CPA Australia’s tax policy adviser, said, “The Government’s approach to tapering JobKeeper payments will be well received by many and is what we had suggested to enable affected businesses to adjust in an orderly way.
“The advance notice is welcomed as many businesses will require professional advice to determine the best course of action and what they might need to do to requalify. The orderly withdrawal of JobKeeper also gives many businesses extra time to reboot and permanently change the way they operate, just as consumers have changed how and when they buy goods and services,” Kasapidis said.
Mark Molesworth, Tax Partner at BDO in Australia said the extension will help many businesses but could mean that some will no longer be viable.
“With a ‘fiscal cliff’ predicted for the end of September, when these schemes were to have finished, it’s clear that a parachute was needed to provide ongoing support to overcome the impact of the coronavirus pandemic,” Molesworth said.
“But an extension alone will not be enough for some businesses. Lowering the rates will mean that less support goes to businesses as a wage subsidy. This might make some that are currently surviving no longer viable. Similarly, where JobKeeper is acting as an income supplement to individuals, the reduction in support may lead to less money spent in the economy, which would have a flow-on effect for the viability of many businesses.
“The Government may need to recalibrate if larger swathes of Australia have to be locked down again,” Molesworth added.
And Greg Ellis, CEO of MYOB, said, “JobKeeper has been a lifeline for small business, with MYOB’s recent Business Monitor research showing 84% of small business owners that were eligible for the program reported the subsidy allowed them to continue trading.
“As we struggle to contain the spread of the virus, the negative economic impact continues to hurt our small businesses.”We are still seeing impact for our customers across all sectors, most markedly in the decline in invoices issued versus a pre-COVID baseline. Last week, the number of invoices created was down 25 per cent on average across all industries, the hardest hit being arts and recreation (-34 per cent), healthcare and social assistance (-33 per cent) and admin and support services (-32 per cent).
“The extension of JobKeeper, and the sensible renewed eligibility test, will ensure small-business owners have the best possible chance of success, and even more importantly will provide continued employment for many thousands of Australians, Ellis concluded.
