Government assistance for workers
Posted by Northadvisory on April 15, 2020
On 8 April 2020, the JobKeeper Stimulus package passed through Parliament. It provides critical financial support for many struggling businesses and individuals in this difficult time.
In addition to JobKeeper, but not as highly publicised, there were other important assistance incentives announced.
- JobKeeper Payment Scheme
- Working from home – ATO’s Allowance for working from home expenses
- NSW Government Small Business Support Grant
- Code of Conduct – Leasing principles during COVID-19
Here we outline each incentive and the relevant information you need to know.
JobKeeper Payment Scheme
The JobKeeper Scheme is available for all businesses – companies, sole traders and partnerships, that can establish a significant downturn in revenue during the COVID-19 pandemic period.
To establish eligibility, a business would be expected to demonstrate that their turnover has, or will likely, fall by the specified percentage based on annual turnover. The fall is determined by a comparison to the relevant month or quarter relative to their turnover in a corresponding period a year earlier. Turnover is calculated as it is for GST purposes, and is reported on Business Activity Statements.
Where a business was not in operation a year earlier, or where their turnover in the prior year was not representative of their usual or average turnover — for example, because there was a large interim acquisition, they were newly established, were scaling up, or their turnover is typically highly variable — the Tax Commissioner will have discretion to consider additional information provided by the business to establish that they have been adversely affected by the impacts of the Coronavirus.
The Tax Commissioner will also have discretion to set out alternative tests that would determine eligibility in specific circumstances — for example, eligibility may be established as soon as a business ceases or significantly curtails its operations.
There will be some tolerance where employers, in good faith, estimate a 30% or more or 50% or more drop in turnover but actually experience a slightly smaller downturn.
Employers must elect to participate in the scheme. They will need to make an application to the Australian Taxation Office (ATO) and provide supporting information demonstrating a downturn in their business.
North Advisory will assist in this process by providing all supporting documentation and advice required.
The registration must be filled out by the employer by visiting this website.
Eligible employers will receive the payment for each eligible employee that was on their books on 1 March 2020 and continues to be engaged by that employer — including full-time, part-time, long-term casuals and stood down employees.
Employees receiving Parental Leave Pay from Services Australia are not eligible for the JobKeeper Payment. However, employees on parental leave from their employer will be eligible.
Employers will be paid $1,500 per fortnight per eligible employee.
If an employee receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements.
If an employee would otherwise receive less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.
If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.
No superannuation guarantee payments are required to be paid on any additional payment made because of the JobKeeper Payment.
Working from home – ATO’s allowance for working from home expenses
Working from home has increased dramatically during this pandemic and with that comes additional costs for employees. The ATO has released guidance on working from home expense claims.
To claim a deduction for working from home, all of the following must apply:
- You must have spent the money.
- The expense must be directly related to earning your income.
- You must have a record to prove it.
Expenses you can claim
If you work from home, you will be able to claim a deduction for the additional running expenses you incur. These include:
- electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
- cleaning costs for a dedicated work area
- phone and internet expenses
- computer consumables, for example, printer paper and ink, and stationery
- home office equipment, including computers, printers, phones, furniture and furnishings. You can claim either the –
- full cost of items up to $300
- decline in value for items over $300.
Expenses you can’t claim
If you are working from home only due to COVID-19, you:
- cannot claim occupancy expenses such as mortgage interest, rent and rates
- cannot claim the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work.
Calculating running expenses
There are three ways you can choose to calculate your additional running expenses:
- shortcut method ─ claim a rate of 80 cents per work hour for all additional running expenses
- fixed-rate method ─ claim all of these:
- a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture
- the work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery, and
- the work-related portion of the decline in value of a computer, laptop or similar device
- actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:
- working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls
- incurring additional deductible running expenses as a result of working from home.
You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.
The shortcut method rate covers all deductible running expenses, including:
- electricity for lighting, cooling or heating and running electronic items used for work, such as your computer and gas heating expenses
- the decline in value and repair of capital items, such as home office furniture and furnishings
- cleaning expenses
- your phone costs, including the decline in value of the handset
- your internet costs
- computer consumables, such as printer ink
- the decline in value of a computer, laptop or similar device.
You do not have to incur all of these expenses, but you must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19.
If you use the shortcut method to claim a deduction for your additional running expenses, you cannot claim a further deduction for any of the expenses listed above.
You must keep a record of the number of hours you have worked from home as a result of COVID-19. Examples are timesheets, diary notes or rosters.
If you use the shortcut method to claim a deduction and you lodge your 2019-20 tax return through myGov or a tax agent, you must include the note ‘COVID-hourly rate’ in your tax return.
Records you must keep
If you use the shortcut method, you only need to keep a record of the hours you worked at home, for example timesheets or diary notes.
If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses. For more information on what those records are, see Home office expenses.
NSW Government Small Business Support Grant
The NSW Government has allocated $750 million to the Small Business Support Fund as the centrepiece of a third wave of support measures to keep small businesses afloat.
To be eligible, businesses will need to:
- have between 1-19 employees and a turnover of more than $75,000
- have a payroll below the NSW Government 2019-20 payroll tax threshold of $900,000
- have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020
- be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020
- use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice
- provide appropriate documentation upon application.
Applications for a small business grant of up to $10,000 will be available through Service NSW within a fortnight and remain open until 1 June 2020.
Highly impacted industries
Eligible industries are those that have been subject to closure or are highly impacted by NSW Government health directions in relation to COVID-19 and include:
- Retail trade.
- Accommodation and food services.
- Rental, hiring and real estate services.
- Administrative and support services.
- Arts and recreation services.
Visit the Service NSW website for the online application.
Code of Conduct – Leasing principles during COVID-19
The government released a set of “good faith” leasing principles for struggling small businesses leasing commercial space.
The principles will stay in place as long as the JobKeeper Payment plan remains active.
The code is accessible to tenants that are both:
- A commercial tenant.
- An SME business (less than $50 million turnover).
If the code is accessed, the tenant can expect the following from their landlord:
- The landlord cannot terminate the lease for non-payment of rent during the COVID-19 health crisis.
- Must offer the tenant a proportionate rent reduction in the form of a waiver and deferrals based on the reduction in the tenant’s trade during COVID-19
- the rental waiver must constitute no less than 50% of the total reduction in rent payable over the COVID-19 pandemic period, and should constitute a greater proportion of the total reduction in rent payable in cases where failure to do so would compromise the tenant’s capacity to fulfil their ongoing obligations under the lease agreement
- no fees, interest or other charges should be applied with respect to rent waived.
- Must amortise the payment of the rental deferral by the tenant over the balance of the lease term and for a period of no less than 24 months.
- Must pass on any reduction in statutory charges such as land tax or council rates, or insurance to the tenant in the appropriate proportion.
- Should share any benefit it receives due to deferral of loan payments, provided by a financial institution.
- Should seek to waive recovery of any other expenses during the period the tenant is not able to trade.
- Must not use a tenant’s security deposit for the non-payment of rent.
- Permit the tenant an opportunity to extend its lease for an equivalent period of the rent waiver and/or deferral period.
- Agrees to a freeze on rent increases, except for retail leases based on turnover rent.
We understand that these changes can be difficult to navigate. We are here to help you during this difficult time. If you have any questions about these incentives, please contact our team today. Read more Financial Industry articles.