Author: Tony Rule, Partner, TAG Financial Services
In response to Victoria moving into a Stage 4 lockdown yesterday, the Federal Government have announced a backdown on the tough new eligibility rules for businesses to continue to access Jobkeeper payments beyond 27 September 2020.
Current Environment
The landscape for business owners has deteriorated significantly over the last week with the introduction of a Stage 4 lockdown in Victoria. Politicians are “shooting from the hip” and reacting to previous mistakes in a scramble to survive. Health and Economic Policy is being developed on the run creating confusion and doubt for business and the community. Decisions are being made with no real understanding of what impact those decisions will have on us all in the medium and long term.
The challenge for business owners in the current environment is to stay focused and prioritise your actions. Cash flow is king and thankfully there have been some changes to JobKeeper that will help many businesses on this front.
There are two key changes to the JobKeeper scheme that will make it easier for business owners to claim the subsidy for the period commencing 28 September 2020.
Business Turnover
Under the previously announced extension rules, businesses were going to have to show a reduction of 30% in turnover for both the June quarter and the September quarter in order to receive payments for the December quarter. This meant that businesses that had only suffered a decline in turnover in a particular month or in only one of the two quarters would not receive JobKeeper for the December quarter.
The Federal Government have announced overnight that a business now only needs to show/predict a decline in turnover of 30% for the September quarter to be eligible for JobKeeper payments in the December quarter. Given that many businesses in Melbourne will suffer a significant decline in revenue in the September quarter as a direct result of the Stage 4 lockdowns, those businesses will be eligible for some cash flow assistance to help maintain employment through to Christmas.
Employee Criteria
Under the previously announced extension rules, the definition of an eligible employee required that as of 1 March 2020 they met various residency criteria and were:
- Full-time,
- Part-time,
- Fixed-term or
- Employed as a casual for more than 12 months
This meant that businesses were not able to access JobKeeper payments for new employees that had been recruited to replace departing employees after 1 March 2020.
Under the changes announced overnight, employees will be measured as eligible as at 1 July 2020 meaning that newer employees will also be eligible for JobKeeper payments in the December quarter meaning more support for those businesses that qualify for JobKeeper payments in the December quarter.
Other Extension Rules
All other JobKeeper extension rules announced in July will continue to apply including different payment amounts for full and part time employees and the reduction in support for full time employees (down from $1,500 to $1,200 per employee per fortnight). The details of the extension of JobKeeper previously announced in July 2020 are summarised here (www.tagfinancial.com.au/blog/2020/07/22latest-jobkeeper-announcements/)
The changes to the rules last night are set to cost another $15.6 billion (most of which will flow into Victoria), but will give much needed support to business owners in these very challenging times.
Business Owners
Now more than ever, business owners need to be focused and resolute. Decide what you are going to achieve each day. Clearly communicate your priorities to your team and clients. Establish and monitor your cash flow budget and understand when you will be running short. Commence negotiations today with employees and suppliers to ensure the best possible result.
We will be getting to each of our clients over the next few working days to discuss these changes, but please call us if you have any queries.
If you have any questions, please contact us on 03 9886 0800 or via email.
Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2020. Please do not reproduce without the expressed written consent of the author.