Welcome back to our Weekly Digest. We hope you and your family are safe and doing well. Please read on for this week’s update.

Major Overhaul to Bankruptcy Laws

After the major changes to the JobSeeker and JobKeeper programs, Australia’s bankruptcy laws have been overhauled, throwing a lifeline to struggling businesses amid the COVID-19 crisis.

Under the proposed changes, businesses with liabilities of less than $1 million will be able to keep operating while they come up with a debt restructuring plan, rather than be placed in the hands of administrators.

The new rules which will become effective from 1 January 2021 follows the government’s decision earlier this month to extend its temporary insolvency and bankruptcy protection rules until the end of 2020.

Supporting Apprentices and Trainees Wage Subsidy Extended

The Supporting Apprentices and Trainees wage subsidy has been expanded and extended to include medium-sized businesses who had an eligible apprentice in place from 1 July 2020.

Eligible employers will receive a wage subsidy of up to 50% of the wages paid until 31 March 2021 worth up to $7,000 per quarter, per eligible apprentice or trainee, to manage their cash flow challenges. Subsidies will also be available to any new employer who re-engages an eligible apprentice that was displaced by an eligible small- or medium-sized business.

This may be of particular interest to employers who are not eligible for the JobKeeper extension. For professional assistance in applying for this wage subsidy or any other funding assistance, feel free to contact us.

Business Resilience Package for Victorian Businesses

The Victorian government is investing $3 billion in cash grants, tax relief, and cashflow support to aid businesses hit by the tight restrictions and help them prepare for COVID Normal. The types of support included in this package are divided into three categories: Business Support, Business Adaptation, and Waivers and Deferrals.

Included in Business Support is the third round of the Business Support Fund for small- and medium-sized business ($822 million), with applications opening on 18 September 2020.

Meanwhile, Business Adaptation involves funding, tools, and resources to help businesses adapt to COVID Normal. Tax and cashflow support amounting to $1.8 billion will be provided by the government under the Waivers and Deferrals scheme.

For a detailed rundown of the inclusions of the Business Resilience Package, click here. Let us help you assess your eligibility and gain access to government support! Get in touch with us so we can schedule a consultation.

Sole Trader Support Fund

The Victorian Government has announced the Sole Trader Support Fund for eligible non-employing businesses affected by COVID-19 restrictions. Under this scheme, sole traders will receive a grant of $3,000.

Grant applications will open in the coming days and the full list of eligibility criteria will be published soon. We will keep you updated as soon as more information is available.

The JobKeeper scheme has now changed

The JobKeeper scheme has now changed and will now operate in two separate periods:

• Extension 1: 28 September 2020 to 3 January 2021
• Extension 2: 4 January 2021 to 28 March 2021

JobKeeper Extension 1

The tier 1 payment rate of $1,200 per fortnight applies to:

• Employees who worked for 80 hours or more in the four weeks of pay periods before either 1 March 2020 or 1 July 2020
• Eligible business participants who were actively engaged in the business for 80 hours or more in February and provide a declaration.

For any other eligible employees or business participants, the tier 2 payment rate of $750 per fortnight will apply.

JobKeeper Extension 2

For extension 2, payment rates will be further reduced to:

• $1,000 per fortnight for tier 1 employees and business participants
• $650 per fortnight for tier 2 employees and business participants

The ATO website provides further information about the eligibility requirements for the extension 2 period.

Decline in Turnover Test

Both these extension periods will require satisfaction of an additional actual decline in GST turnover test as follows.

Extension 1 (28/09/2020 – 03/01/2021)
September Quarter (Jul, Aug, Sept) relative to comparable period (usually same 2019 Q)

Extension 2 (03/01/2021 – 28/03/2021)
December Quarter (Oct, Nov, Dec) relative to comparable period (usually same 2019 Q)

For further details about the eligibility requirements for the JobKeeper extension 1, please refer to the ATO website, or ask us.

How does this differ from the original JobKeeper test?

• The decline in turnover must be demonstrated for specific quarters only.
• Rather than using projected GST turnover for the relevant quarter being tested, you use your current GST turnover.
• You must allocate sales to the relevant quarter in the same way you would report these sales to a BAS if you were registered for GST.
• If you are not registered for GST, you will work out your turnover using either the GST cash or non-cash basis of accounting.

What you need to do

From 28 September 2020, you are required to:

• Determine your eligibility for the JobKeeper Extension scheme using the actual turnover test for the September quarter
• Determine if you have any new eligible employees that were not previously nominated for JobKeeper and ask them to agree to be nominated
• Work out the Tier 1 or Tier 2 rate of pay that you will be claiming for each eligible employee/eligible business participant
• Notify your eligible employees which payment rate is applicable for them
• Ensure your eligible employees/eligible business participants receive the correct rate of payment per fortnight during each of the JobKeeper Extension periods according to the two tiers of payment
• If you are registered for GST and have outstanding BAS, you will need your BAS to be lodged for the September 2019 and December 2019 quarters now (or for equivalent months, if you report monthly) so that you don’t hold up your application for the JobKeeper Extension Scheme.

The ATO has a useful one page fact sheet outlining the key changes, but please ask us if you have a question.

Get in touch

Please feel free to contact us if you have any questions.

Have a nice weekend.