JobKeeper extension welcomed, but businesses face tougher eligibility

  • Businesses —including those in Melbourne lockdown areas — could face extra eligibility challenges
  • Eligibility assessment – challenge for small business, tax agents and BAS agents
  • Banks may be tested on small business loans

22 July 2020: Tax & Super Australia (TSA) has welcomed the Federal Government’s announcement today that the JobKeeper payment will be extended. However, it says businesses, including those impacted by the second Melbourne area lockdown, will face extra difficulties meeting the tougher eligibility tests.

TSA tax counsel John Jeffreys said early details of the extension, including that it will not be industry-specific but will apply to eligible businesses across all sectors, will be a relief to many.

However, Mr Jeffreys also outlined three key points that could challenge businesses.

  • Tougher eligibility test — including for Melbourne-based businesses 

“For those businesses that are already claiming the JobKeeper subsidy, a requirement to satisfy the actual decline in turnover test for the quarters June 2020, September 2020 (and later December 2020) will mean that many businesses will fail the test and the business will no longer receive the JobKeeper subsidy.”

“This could occur, for example, in Melbourne where a business has been able to partially reopen and now must close down. It may be that for the June 2020 quarter, the business will not have suffered a 30% decline in turnover, but in following quarters it continues to have a significant decline in turnover. Given that the effect of COVID-19 on the Australian economy continues to be severe, such businesses could struggle to survive without the JobKeeper subsidy.”

  • Eligibility assessment – challenge for small business, tax agents and BAS agents

“Businesses will need to assess their eligibility for the JobKeeper subsidy at the end of September, in advance. This will be a major challenge for small businesses and for those maintaining their accounting systems.”

“Because the September turnover must be based on actual GST supplies, the accounting for hundreds of thousands of businesses will need to be kept up-to-date. This will place a good deal of pressure on small business owners, BAS agents, tax agents and accountants.”

  • Banks tested on small business loans

“The reduction of the JobKeeper subsidy will test the resolve of banks to be able to support their small business customers. Banks will want their customers to be able to prove that they are able to continue making the necessary payments on loans from the bank given the reduced subsidy.”

Mr Jeffreys added that the Federal Government faced an unprecedented challenge to provide support amid a situation that continues to evolve. “Despite the thought that the government should support selected industries, the government has decided not to do this but to simply maintain the existing decline in turnover tests (with some adjustments),” Mr Jeffreys said.

“This does save the complexity of having to draw boundaries between those industries that will receive the subsidy and those that won’t. Such boundaries always create complexity and confusion.”

“One thing is certain — tax and accounting professionals have been crucial to helping individuals and businesses to navigate and access the Federal Government’s stimulus package. They will continue to do a tremendous job helping their business clients with these measures.”

For comment, please contact TSA tax counsel John Jeffreys:
Mobile: 0416 250 461
Email: jjeffreys@taxandsuperaustralia.com.au

For a PDF of this media release, click here.

About Tax & Super Australia 
Tax & Super Australia (TSA) is a not-for-profit organisation that provides practical tax, super and accounting information for about 3,600 members and a broader tax community of more than 15,000 people. It is based in Melbourne but has members all over Australia. Most of its members are tax agents, accountants and super professionals. 

COVID-19 information for members and businesses
Tax agents and accountants are central to helping businesses access and navigate COVID-19 stimulus payments. TSA has been providing information and holding webinars to help members (and non-members) and their business clients through the crisis. 

TSA has created a COVID-19 Essentials page that provides crucial information and practical updates to help members, businesses and the broader tax community to navigate their way through the stimulus packages. https://www.taxandsuperaustralia.com.au/TSA/Resources/COVID-19_Essentials/TSA/Resources/COVID-19_Essentials.aspx

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