The Federal Government has released the next level of support to Australians impacted by COVID-19. This latest package is estimated to cost $130 billion over the next 6 months and is part of the governments attempt to hibernate small businesses and their employees so that things can return to normal as much as possible once the virus passes.

There are two main initiatives that were announced to try and achieve this objective: –

– a $1,500 per fortnight wage subsidy payment to employers to pass onto their employees; and

– an increase to $79,000 in the upper threshold for partner’s income for eligibility to the Jobseeker payments and coronavirus supplement ensuring more out of work employees can access this payment.

Employers are eligible to access this wage subsidy payment if their turnover either has or is expected to drop by 30% or more as a result of COVID-19 (or more than 50% if the business’ turnover is more than $1 billion). These measures are yet to formally be passed in Parliament so there is no details yet as to how businesses will satisfy and prove this requirement.

The other key is that this payment applies to any full time or part time employee on the business’ books as at 1 March 2020 as well as any casual employee at that time with over 12 months service. These employees may have been stood down now as a result of the business shutting down but they will still be eligible as long as their employment has not been formally terminated. As such, it is expected if this legislation passes that many employers will look to rehire these employees.

Finally in welcome news the payment is also available for businesses without employees (i.e. businesses where owners receive their income as profit distributions). At this stage the guidance indicates these impacted businesses will provide their ABN and the applicable individual’s tax file number after declaring their recent business activity.

The payments will likely be made through the single touch payroll system so businesses who employ workers who are not using this system should start to look at their options to register into this system. It should also be noted that the $1,500 payment is a flat payment and must be passed onto employees in full. For those earning more than this, the employer appears to need to continue to pay the balance of their usual wage and for those earning less than this the employer must pay them the full amount (in effect these workers will receive more income).

The payments will not commence until 1 May however they will be backdated and paid from 30 March. Business should register their interest at the following website and it is expected the ATO will contact all registered businesses after Parliament passes this measure which will likely be next week: –

https://www.ato.gov.au/general/gen/JobKeeper-payment/

In summary this payment is intended to work in conjunction with the loan relief measures, the other small business measures (i.e. small business tax cash flow boost), expected State based rental relief and the personal Jobseeker payments (note individuals who are eligible for the Jobkeeper payments will not also receive Jobseeker payments). If you need assistance in determining the best option for you and your business, please do not hesitate to contact us.