Although the latest $1,500 wage subsidy is yet to be legislated, further guidance has come from Treasury, the ATO and the Tax Practitioner Board (TPB) over the last 24 hours regarding the stimulus packages offered by the Federal Government.

The first guidance is a warning that has been sent explicitly to tax agents and accountants to avoid promoting or assisting clients in manipulating their payroll records to get additional stimulus payments. This is unfortunately a common issue as many small business clients receive their income not as wages but as distributions of profits. This is usually set up to save on administration cost and time but unfortunately both the major Federal stimulus packages have discriminated against business owners leading to pressures being applied to many tax agents and accountants. The ATO and TPB have confirmed that clients undertaking these measures will be harshly penalised and any professionals found to be engaging in any conduct facilitating or promoting these schemes will find themselves personally liable and subject to serious disciplinary action.

The second guidance has come from Treasury with further details on the $1,500 wage subsidy. Although this is yet to legislated, the guidance does appear to provide answers on many initial questions. Please check our earlier article for further information on the general eligibility criteria for this payment. Here is a summary of the significant answers provided by Treasury: – 

• employers must pay eligible employees their fortnightly payments during April to be eligible for the payments that commence in May. The monthly JobKeeper payments are made in arrears, so businesses must pay each eligible employee at least $1,500 per fortnight to receive the subsidy payment for this employee. In effect the business must have the cash flow to support the employees wages for the month before the wage subsidy payment is made. If no wages are paid, the business will not be eligible to receive the JobKeeper payments.
• the drop in turnover will be assessed based on GST data in lodged Business Activity Statements. As such, the loss in turnover will be assessed based on Australian based sales – overseas sales will be excluded. The initial test will be comparing the March 2020 BAS sales to the March 2019 BAS sales.
• the ATO Commissioner will have discretion in applying the turnover test such as circumstances where the business has not operated for 12 months, the loss in turnover is close but not quite at the required thresholds and where businesses are expected to shortly suffer the loss in turnovers.
• businesses who don’t meet the eligibility criteria initially will be able to apply at a later stage when they are eligible but will only be entitled to the payments for fortnightly periods incurred thereafter (i.e. payments will not be backdated to 30 March 2020)
• employers must notify eligible employees of their registration for the JobKeeper payments – this is crucial as although eligible employees may earn income from other sources, they must only receive one JobKeeper payment even if they were employed by multiple businesses and must nominate a primary employer from which to receive the payment from.
• the biggest news is the unfortunate confirmation that this measure will discriminate against business owners like the first stimulus package. It has been confirmed that although business owners will be able to apply for the payment only one owner will be eligible. In effect where a partnership, trust or company has multiple owners, only one nominated owner will be eligible for the payment.

Please see below for the link to the entire document for further information: –

https://treasury.gov.au/sites/default/files/2020-04/JobKeeper_frequently_asked_questions_0.pdf

If you have any queries or would like further information please do not hesitate to contact us.