“Until we get a vaccine, we will all live in this COVIDSafe environment. This is now our BAU. We may not want it but it’s our new reality. As a government, we need to ensure a gradual transition to an economic recovery but also ensure those who require support can get it.”
These were the words Senator Michaelia Cash, Minister for Employment, Skills, Small and Family Business shared as a guest at Intuit QuickBooks Australia’s virtual town hall on 21 July. Cash, who holds one of the most vital government portfolios at this time of economic uncertainty, provided an economic update, details of further support small businesses impacted by the pandemic can access, and an insight into the intentions behind the government’s commitments.
Her comments came days after Treasurer Josh Frydenberg officially announced an extension of, and changes to, the JobKeeper program.
Cash joined Natira Drayton, Intuit QuickBooks VP and Country Manager for Australia, and Simeon Duncan Senior Manager, International Corporate Affairs. Thirteen hundred small business operators registered for the event, where Cash also answered questions from small business operators and advisors.
The impact of COVID-19
“COVID-19 is a once in a century shock placing immense pressure on health systems. It’s a health crisis first that has necessitated an economic response. Not just in Australia but globally, around the world. In terms of our position, Australia we have outperformed nearly every other country in both the health and economic outcomes,” said Cash.
The government has deployed measures set to cost $289 billion to fight the economic impact of the virus, with this to be spent over two years, said Cash, providing an update on where the government and the country stands today, around four months on from the government’s decision to impose restrictions on social and business activity to limit the spread of coronavirus.
Measures taken to date have so far saved an estimated 700,000 jobs, the Minister advised. However, she was sober on the outlook, saying that there’s a “long road ahead” for the country and its small businesses.
Support to date includes programs like JobKeeper, the cash flow boost program, and support for apprentices and trainees. The JobKeeper payment – the single biggest fiscal initiative ever undertaken by the government – has played a key role in supporting job retention, maintaining employment links and business cash flow, as well as providing income support to eligible employees.
“ATO data currently shows 965,000 entities have been processed for JobKeeper payments covering around 3.5 million employees. Thank you to those businesses who applied for JobKeeper so you can keep those really important connections with your employees,” said Cash.
Despite these measures, the reality is Australia remains very much in the midst of the pandemic, and economic recovery will take a while. Many businesses and individuals continue to be significantly affected by COVID-19 and related shutdowns, in particular those in Victoria who are now undergoing another severe lockdown.
“We do realise additional support is required, particularly given the situation in Victoria, so we have formally announced the extension for the next six months,” said Cash. While it had been due to end in September, the extension means small businesses will be able to tap into the payment for a further six months, until 28 March 2021.
Minister Cash said the government was being “very responsible and targeted in our investment measures” to support businesses and the economy.
JobKeeper changes – what you need to know
The status quo:
- Businesses and not-for-profits can continue to enrol for the current JobKeeper payment at any time until the program closes if their financial circumstances have changed significantly.
- Businesses with GST turnover of $1 billion or less must have experienced a 30 per cent or more decline in turnover to qualify.
- To meet the basic decline in turnover test, a business would usually compare their current monthly or quarterly GST turnover with the same period a year ago
What is changing in September?
- Program extension: Thanks to the success of the program to date, it has now been extended to 28 March 2021, meaning small businesses can continue to keep subsidised staff on payroll and maintain a connection with their employees who they may otherwise have had to let go.
- Eligibility: JobKeeper eligibility requirements and payment rates will also change in September when the program renews. Payment rate changes depend on how many hours per week the eligible employee was working prior to 1 March 2020. As the Minister put it: “There are some changes to the scheme – because there are some businesses now doing quite well. It will be tapered in the December quarter and the March quarter. This is about encouraging businesses to adapt to our new environment.
- Turnover test: From 28 September 2020, businesses and not-for-profits seeking to claim JobKeeper will be required to reassess their eligibility with reference to their actual turnover in the June and September quarters 2020. They’ll need to demonstrate that they have met the relevant continuing decline in turnover test in both of those quarters to be eligible for JobKeeper from 28 September 2020 to 3 January 2021. Businesses and not-for-profits will need to further reassess their eligibility in January 2021 for the period from 4 January to 28 March 2021. They will need to demonstrate that they have met the relevant continuing decline in turnover test in each of the previous three quarters to remain eligible for the March 2021 quarter.
- Payment rate changes: Payment rate changes vary from period to period. From 28 September 2020 to 3 January 2021 one set of payment rates apply. From 4 January to 28 March 2021 payment rates will change again. Payments vary depending on the number of hours an employee usually works. The Minister said these rates would “better align with the incomes of employees before COVID-19 hit.”
- September to January rates:
- Employee working more than 20 hours per week: for all eligible employees who, in the four weeks before 1 March 2020, were working in the business for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week, the payment rate will be $1,200 per fortnight.
- Employees working less than 20 hours per week: for employees who were working in the business for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per week in the same period the payment rate will be $750 per fortnight.
- January to March rates:
- Employee working more than 20 hours per week: for all eligible employees who, in the four weeks before 1 March 2020, were working in the business for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week, the payment rate will be $1,000 per fortnight.
- Employees working less than 20 hours per week: for employees who were working in the business for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per week in the same period the payment rate will be $650 per fortnight.
- September to January rates:
Work with your accountant – and QuickBooks
Christine, who operates Basset’s Bean Counting asked the minister what can be done to support sole traders who have been told they are ineligible for support.
Minister Cash advised Christine that many sole traders have been able to access support through JobKeeper, with sole traders making up some 40 per cent of those organisations who have received JobKeeper payment support and 12 per cent of individual recipients.
“The prime minister has said that it’s very important to include sole traders, as that allows you to keep your business open and that’s what we want you to do,” said Cash.
Suggesting that there may be further information that sole traders who have not been able to access the scheme may need to provide in order to do so, she advised: “I’d recommend you work with your accountant or Intuit Quickbooks to get that info over to the ATO. If you do still have queries, please contact my office to ensure we can see you are referred to the correct person.”
A tax boost that might have been missed
Grant, who operates Epic Rehabilitation, asked if the government intends to raise taxes to cover the cost of its JobKeeper program and other economic and business support measures. Minister Cash said that to the contrary, the government lowered taxes for this financial year.
“We fundamentally believe you can’t as a government tax your way to prosperity. At the last election we promised to legislate $158bn of tax cuts and we’ve done that…this year, that rate will go down again to 25 per cent,” said Cash.
The Minister also highlighted other updates that extend support available to small businesses, including:
- Extension of the instant asset write off in June
- Possibility of further bank loan deferrals for those in need, announced early July
- Extension of support for apprentices and trainees, announced in July
- Launch of the government’s $5 million Go Local First Campaign, encouraging consumers to shop local.
“Working together with companies like Intuit Quickbooks we’ll make a difference and we’ll get to the other side. Why? Because we’ve done it before and we will do it again. Thank you for being the job creators of this country,” said the Minister.
The virtual town hall was the latest in a series of events hosted by Intuit to help small businesses access the information they need to get through the pandemic.
“Intuit’s mission is to look for ways we can connect you with experts so you can figure out what’s next for small business,” Drayton concluded