On 30 March 2020, the Australian Government released its third economic response to the coronavirus (COVID-19) which includes a new wage subsidy plan - ‘the JobKeeper payment scheme’. Please refer to this BDO Tax Technical Update for detail on the basic turnover tests, this BDO Tax Technical Update for detail on alternative turnover tests and this BDO Tax Technical Update for detail on modified turnover tests for certain group structures.
New wage subsidy plan
On 30 March 2020, the Government announced a new wage subsidy plan, where employers will receive a $1,500 per fortnight ‘job keeper payment’ before tax for each employee they keep on over the next six months. It will be available to full and part time workers, sole traders and long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020). The employees must also be either an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or workers from New Zealand on 444 visas. It will be in place for 6 months.
Eligible employers will be those with annual turnover of less than $1 billion who self-assess that have a reduction in revenue of 30 per cent or more, relative to a comparable period a year ago (minimum one-month period). Employers with an annual turnover of $1 billion or more would be required to demonstrate a reduction in revenue of 50 per cent or more to be eligible. Eligible employers include businesses structured through companies, partnerships, trusts and sole traders and not for profit entities.
The eligible employers must pay the eligible employees at least the $1,500 payment per fortnight, even if their regular wage per fortnight is less than $1,500.
The fortnightly $1,500 payment will start to be issued from 1 May 2020 and will be backdated to 30 March 2020. If employees have been stood down by their employer since 1 March 2020, they are still eligible for these payments. The payments will be delivered through the ATO. Eligible businesses can apply for the payment online and are able to register their interest via ato.gov.au from 30 March 2020.
Partner income restrictions for welfare recipients eased
Over the next six months the Government will also ease the restrictions that state anyone whose partner earns $48,000 or more is ineligible to receive the Jobseeker payment (a supplement of $550 a fortnight) and Coronavirus supplement (a one off payment of $750 to eligible income support recipients) that was announced in the Government’s first economic stimulus package.
The JobSeeker Payment is subject to a partner income test, therefore the Government is temporarily relaxing the partner income test to ensure that an eligible person can receive the JobSeeker Payment, and associated Coronavirus Supplement, providing their partner earns less than $3,068 per fortnight, around $79,762 per annum (up from $48,000 previously).
The personal income test for individuals on JobSeeker Payment will still apply.
Foreign investment framework changes
On 29 March 2020, the Federal Government announced that effective from this date proposed foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 will require approval, regardless of value or the nature of the foreign investor.
The temporary change will be achieved by reducing to $0 the monetary screening thresholds for all foreign investments under the Act. By temporarily reducing the foreign investment thresholds, the Australian Government will ensure appropriate oversight over all proposed foreign investment during this time.
The Foreign Investment Review Board (FIRB) will be working with existing and new applicants to extend timeframes for reviewing applications from 30 days to up to six months.
Bank loan repayment deferral extended
On 30 March 2020, the Australian Banking Association announced that banks will extend the 6-month loan repayment deferral package to 30,000 more businesses.
Banks raising the threshold of those who qualify for the six month deferral of loan repayments from $3 million to up to $10 million in total loan facilities.
Please contact BDO for assistance with navigating the Australian Government’s economic stimulus packages and determining your eligibility for the tax and business measures.
BDO can also help you with the development of your whole of business approach to respond to current and emerging issues arising in the current environment as well as with implementation tasks.
As certain incentives in the various economic packages will only be available for a short period of time, businesses should consider taking action as soon as practicable.
Prepare your business
How can your business respond to Coronavirus (COVID-19)?
Find out more