With many businesses hard hit by coronavirus, the various government stimulus packages could make the difference between survival and collapse for both the businesses themselves and their employees, according to H&R Block director of tax communications, Mark Chapman.

So, what are the key stimulus measures available to businesses?

JobKeeper payments

“JobKeeper is an ambitious wage subsidy scheme to provide payments of $1,500 per fortnight to millions of Australians. Payments will be made via businesses impacted by the coronavirus. These businesses will be able to access a subsidy from the Government to continue paying their employees,” Chapman says.

“Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months which must then be passed on to employees.

“The subsidy started on 30 March 2020, with the first payments to be received by employers in the first week of May.

“Payments will be made to the employer monthly in arrears by the ATO. These will then be paid on to eligible employees with PAYG tax deducted in the normal way.

“Businesses are eligible for the subsidy if:

  • their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
  • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and
  • for businesses that are not able to demonstrate that their turnover is down 30% compared to a comparable period a year ago (for instance, new businesses that did not exist a year ago), the Commissioner of Taxation will have the discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the coronavirus.

“Employers must confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.

“Qualifying businesses must register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline. They will also need to provide information to the ATO on their eligible employees, including the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired).”

What will employees get?

“The government will pay a flat $1,500 per fortnight to businesses in respect of each eligible employee, including employees who have been stood down and employees who were originally let go but have since been rehired.

“The entire amount must be passed on to employees, even if they currently earn less than $1,500 per fortnight.”

Cashflow Assistance

“Tax-free payments of up to $50,000 for eligible small and medium businesses (with a turnover of less than $50 million that employ staff), based on their PAYG withholding obligations.

“This is not a cash payment, but it is a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees. The minimum payment is $10,000 and not-for-profit organisations are included in this scheme.

“The way this will work is that businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Businesses that lodge their BAS on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.

“An additional payment equal to this amount will also be available from July to October 2020. This makes the total amount available under this scheme $100,000 (and a minimum of $20,000).

“Payments will be automatically credited by the ATO through the activity statement system and will only be made to active eligible businesses established prior to 12 March 2020.

“Payments under this scheme are only available to businesses with employees. Sole traders will generally miss out unless they have employees as will businesses structured through trusts that pay trust distributions (but not wages) to family beneficiaries who work in the business.

“Stringent anti-avoidance rules are built into the scheme to ensure that non-qualifying businesses do not restructure their affairs to artificially qualify for the payments.”