In brief – new government support measures announced to help protect employees and businesses

With COVID-19 threatening the welfare and livelihoods of businesses and their employees, Australian and state governments have introduced various measures to shield against the economic downturn. It is vital that businesses understand what support is available to them and their employees. This four-part article will examine what new measures have been introduced at the following levels:

  1. federal support for individuals;

  2. federal support for business;

  3. industry specific federal support; and

  4. state support for individuals and business.

Federal support for individuals

To support employees who have been stood down, lost their job or faced reduced hours as a result of COVID-19, the Australian Government has increased access to, and the amount of income support payments, as well as increased access to superannuation.

Income support payments

JobSeeker Payment

The JobSeeker Payment has been expanded in light of COVID-19. The payment is usually available to persons that are unemployed and looking for work or sick or injured and are unable to do their usual work, including persons whose hours of work are reduced.
 
The Australian Government has now temporarily expanded the availability of JobSeeker Payments to persons who are:

  1. permanent employees who have been stood down or lost their job;

  2. sole traders, self-employed, casual or contract workers whose income has reduced; and

  3. caring for someone who is affected by COVID-19.

Persons are not eligible to receive the JobSeeker Payment while they are accessing employer entitlements such as annual leave, sick leave or income protection insurance payments.
 
To reduce the burden, the Australian Government has suspended mutual obligation requirements for the JobSeeker Payment until 27 April 2020. These requirements required persons to look for work or do activities to help them find work.
 
Additionally, other eligibility conditions such as asset testing, one week, liquid asset test, newly arrived residents and seasonal work preclusion waiting periods have been temporarily waived.
 
To be eligible for JobSeeker Payments, a person must be below the payment cut-off threshold. This has been slightly adjusted due to COVID-19. While the threshold for individuals has remained the same, a person with a partner will now be eligible for JobSeeker Payments as long as their partner earns less than $3,068 per fortnight, around $79,762 annually, increased from about $48,000 annually.
 
The payment cut-off threshold is currently as follows:

Family situation

Payment cut-off threshold

Single, 22 or over, no children

$1,086.50

Single, 22 or over, with children

$1,164.84

Single, 60 or over, after nine months

$1,175.17

Partnered, if partner earns less than

$3,068.00

Coronavirus Supplement

Additionally, from 27 April 2020 until the end of October 2020, individuals receiving (or eligible to receive) an income support payment (such as the JobSeeker Payment) will receive an additional fortnightly Coronavirus Supplement of $550 on top of what they already receive. This additional amount will be automatically paid, with no applications required.
 
For those on JobSeeker Payments the following is the maximum fortnightly payment that can be received:

Category

Maximum Fortnightly Payment (without additional $550 payment)

Maximum Fortnightly Payment (with additional $550 payment)

Single, no children

$565.70

$1,115.70

Single, with a dependent child or children

$612.00

$1,162.00

Single, aged 60 or over, after 9 continuous months on payment

$612.00

$1,162.00

Partnered

$510.80 each

$1,060.80

Single principal carer granted an exemption from mutual obligation requirements for any of the following:

  • foster caring

  • non-parent relative caring under a court order

  • home schooling

  • distance education

  • large family

$790.10

$1,340.10


Economic Support Payments
 
Further, individuals who receive eligible payments will receive two lump sum payments of $750. The first will be paid between 12 March and 13 April 2020 and the second will be paid on 13 July 2020.
 
Eligibility for the second payment is for those persons receiving the JobSeeker Payment by 10 July 2020. However, if a person is receiving the Coronavirus Supplement, they will not be eligible for the second payment.
 
Crisis Payment
 
Finally, an additional one-off payment has also been made available to those are in severe financial hardship and either need to self-isolate or care for someone self-isolating. The payment is equal to one week of a person’s base income support payment rate. To receive this payment an individual must be eligible for an income support payment (such as the JobSeeker Payment) and experiencing severe financial hardship. This is defined as someone who is:

  1. single and whose funds total less than 2 weeks of the highest rate of their income support payment; or

  2. part of a couple and whose funds total less than 4 weeks of their highest rate income support rate.

It is recommended that applicants complete applications for income support payments online. Centrelink now allows a person to register their intention to claim payments. This allows for a person to lodge their details with Centrelink without first having to prove their identity. Once this has been completed a person will be able to create a Centrelink account on the myGov website. Applicants should assemble information such as tax file number, bank account details and payslips in advance. Due to COVID-19 applicants will no longer be required to supply an Employment Separation Certificate or prove your rental arrangements.

Early access to superannuation

A person affected by COVID-19 can also apply for early release of their superannuation from mid-April 2020. An eligible individual can access up to $10,000 before 1 July 2020. An additional amount of up to $10,000 will be available from 1 July 2020 until 24 September 2020. Tax will not be payable on the amounts released and will not affect social security benefits.

To access superannuation a person must be one or more of the following:

  1. unemployed;

  2. eligible to receive a JobSeeker Payment, parenting payment, special benefit or farm household allowance; or

  3. on or after 1 January 2020, the person was made redundant, their work hours were reduced by 20% or more, or for sole traders, their business was suspended or experienced a reduction in turnover of 20% or more.

A person will be required to apply directly to the ATO through myGov in order to access their superannuation. If approved, ATO will send a copy of the determination to the relevant superannuation fund and the payment will be made.

Federal support for business

In order to encourage businesses to keep employees on, the Australian Government has announced wage and cash flow subsidies for eligible businesses.

Wages subsidy

Called the JobKeeper Payment, this subsidy will see employers paid $1,500 per fortnight per eligible employee.

Every eligible employee must receive at least $1,500 per fortnight from the eligible business, before tax even if their ordinary wage is less than this amount. If an employee's ordinary wage is more than this amount, the employer must pay the difference from its own sources.

In order to qualify, a business with an annual turnover of less than $1 billion must have self-assessed that they have experienced a reduction of revenue of 30 per cent or more, since 1 March 2020, over a minimum one-month period. For businesses with an annual turnover of more than $1 billion the reduction in revenue must be 50 per cent or more. Businesses subject to the Major Bank Levy are not eligible for JobKeeper Payments.

Companies, trusts, partnerships, sole traders and not-for-profit entities are all eligible for the JobKeeper Payments.

For an employee to qualify, they must have been on the employer’s book since 1 March 2020 and be retained or continue to be engaged by that employer. Employees that have been stood down since 1 March 2020 will still be eligible to receive the JobKeeper Payment, but they can only receive $1,500 per fortnight.

Employees must be either full time or part time. Casual employees are also eligible as long as they have been with their employer for at least the previous 12 months. An employee can only receive the JobKeeper Payment from one employer.

Australian residents, New Zealand citizens in Australia who hold a subclass 444 special category visa, and migrants who are eligible for JobSeeker Payments or Youth Allowance (other) are eligible to receive the JobKeeper Payment.

Eligible businesses will receive the first JobKeeper Payment in the first week of May.

Additional legislation is required to introduce the JobKeeper Payment. Details of how a business must self-assess have not been released.

Currently, businesses can register their interest on the ATO website.

The JobKeeper Payment will affect employees' entitlements to income support payments.

Boosting Cash Flow for Employers

The Australian Government has also introduced the Boosting Cash Flows for Employers measure. Aimed at helping businesses’ and not-for-profits’ cash flow, this measure is to assist with payment of wages and other operating costs. Tax-free cash flow boosts of between $20,000 and $100,000 will be made available to businesses.

In order to qualify for this payment, the business, including not-for-profit organisations, sole traders, partnerships, companies or trusts must have:

  • held an ABN on 12 March 2020 and continue to be active;

  • an aggregated annual turnover of under $50 million (generally based on most recent income tax assessment);

  • made eligible payments that required PAYG to be withheld (even if amount required to be withheld is zero); and

  • not engaged in a scheme for the sole or dominant purpose of seeking to make the business entitled to the cash flow boost (for example by restructuring to fall under the 50 million aggregated turnover threshold) or to increase its entitlements (for example by increasing wages in a particular month).

Additionally, the business must have derived business income in the 2018-19 income year and lodged its 2019 tax return on or prior to 12 March 2020. Finally, the business must have made GST taxable, GST-free or input-taxed supplies in a previous tax period and lodged the relevant activity statement on or before 12 March 2020. Some of these requirements do not apply to registered charities.
 
The cash flow boost is calculated based on the amount of PAYG withheld. An eligible business will be entitled to receive a credit equal to 100 per cent of the withheld tax. The minimum credit is $10,000, even where the amount required to be withheld is zero, and the maximum credit is $50,000.
 
If a business lodges activity statements:

  • quarterly, it will be eligible to receive the credit for

    • quarter 3, March 2020 (lodgement due date 28 April 2020)

    • quarter 4, June 2020 (lodgement due date 28 July 2020).

  • monthly, it will be eligible to receive the credit for the lodgement periods of

    • March 2020 (lodgement due date 21 April 2020)

    • April 2020 (lodgement due date 21 May 2020)

    • May 2020 (lodgement due date 21 June 2020)

    • June 2020 (lodgement due date 21 July 2020).

An additional cash flow boost has also been announced for the periods of June to September 2020.
 
The cash flow boosts will generally be applied automatically to running balance accounts when activity statements are lodged.

Industry specific federal support

The Australian Government has also detailed industry specific support for employers and employees.

Aged care

One such area is aged care.

On 20 March 2020, Prime Minister Scott Morrison announced four temporary measures to assist the aged care workforce. These are to provide:

  • $239.9 million ‘retention bonus’ as an incentive for workers in both residential and home care;

  • $78.3 million in additional funding for residential care to support workforce supply;

  • $26.9 million for a temporary 30 per cent increase to the Residential and Home Care Viability Supplements and the Homeless Supplement;

  • $92.2 million in additional support for home care providers and organisations that deliver the Commonwealth Home Support Program such as shopping and meal delivery services; and

  • $12.3 million in additional support for My Aged Care service.

Of particular note for employers and employees is the retention bonus for residential and home care workers. The bonus is designed to create an incentive for workers to stay with their employers through the payment of tax-free bonuses.
Direct care workers will be entitled to receive a payment of up to $800 after tax per quarter, paid for two quarters. Likewise, those who provide care in the home will be able to receive two payments of up to $600 after tax per quarter, paid for two quarters.
These payments will be made to providers to allow them to pay their workers. Part-time workers will be paid at a pro-rata rate.
 
Further details as to how the incentives will be calculated and distributed have not yet been released.
 
Apprentices and trainees
 
The Australian Government has also announced measures to ensure that apprentices and trainees remain with eligible employers. Eligible employers will be able to receive a wage subsidy reimbursed in arrears at 50 per cent of the apprentice’s or trainee’s wage.
In order to be eligible, an employer must retain an apprentice or trainee in their Australian Apprenticeship and may be:

  • a small business (with fewer than 20 employees); or

  • a small business (with fewer than 20 employees) using a Group Training Organisation.

The apprentice or trainee must have been undertaking an Australian Apprenticeship with the employer on 1 March 2020.

Any employer of any size who re-engages an out-of-trade apprentice or trainee is eligible where:

  • the apprentice or trainee was undertaking an Australian Apprenticeship on 1 March 2020, in a small business;

  • the apprentice or trainee was released from the small business; and

  • the new employer has engaged the apprentice or trainee.

The wage subsidy will cover fulltime and part-time wages paid from 1 January 2020 to 30 September 2020, or from the date of re-engagement for a displaced trainee or apprentice. Employers will be reimbursed a maximum of $7,000 per quarter, per eligible apprentice or trainee.
 
To apply for the subsidy, employers are required to contact an AASN provider.

State support for individuals and businesses

State governments have also announced support for individuals and businesses.
 
Queensland
 
In Queensland the Jobs Support Loan scheme has been introduced. Low interest loans of up to $250,000 are available to Queensland eligible business and not-for-profit organisations in order to assist with operational expenses such as employee wages, rent and rates.
 
In order to be eligible, a business must:

  • hold an ABN and be registered for GST, or an incorporated non-profit organisation;

  • have one or more equivalent full-time employees in Queensland;

  • have operated the business or non-profit organisation since 1 July 2017; and

  • have suffered a loss of income as a result of COVID-19.

The business must also:

  • be considered viable under normal business conditions;

  • be able to service the loan under normal business conditions;

  • intend to continue operations after receiving the loan; and

  • intend to use any surplus liquid reserves or normal credit sources up to normal credit limits, in conjunction with the loan to continue operations.

The business can then apply for a loan up to $100,000 with no loan security or up to $250,000 and be secured by a General Security Agreement.
 
The term of the loan is 10 years, with the first year of the loan being repayment and interest free. After this, an interest rate of 2.5 per cent will apply.
 
To apply for this loan, a business is required to apply on QRIDA online.
 
Victoria

The Victorian Government alongside the Victorian Council of Social Services and Victorian Trades Hall Council have announced a $500 million Work for Victoria Fund. The fund will allow displaced workers to apply for different types of work, ranging across public sector, local government, the not-or-profit sector and private sector employers. Details have not yet been released as to how an individual can apply.
 
Additionally, the Victorian Government has announced the Business Support Fund. Under this fund, eligible small businesses can receive $10,000 to assist with business costs, seeking financial advice, developing the business or other supporting activities.
 
To be eligible a business must:

  • have been subject to closure or highly impacted by Non-Essential Activity Directions issued by the Deputy Chief Health Officer to-date;

  • employ people;

  • have a turnover of more than $75,000;

  • have payroll of less than $650,000;

  • hold an Australian Business Number (ABN) and held that ABN at 16 March 2020; and

  • have been engaged in carrying out the operation of the business in Victoria on 16 March 2020.

To apply for this funding, businesses can apply on the Business Victoria website.
 
New South Wales
 
New South Wales has announced a $1 billion Working for NSW fund to sustain business, create new jobs and retrain employees.
 
Payroll Tax
 
All three states have implemented payroll tax relief measures.

Final thoughts

The Australian and State governments are investing heavily to ensure the survival of businesses and employees. It is important that businesses understand what options are available to them as it could be critical for them to survive the effects of the COVID-19 pandemic.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2020.