Welcome back to our Weekly Digest. We hope you and your family are safe and doing well. Read on for this week’s update.

ATO Activity in Respect of JobKeeper and Cash Flow Boost

The ATO have started their initial enquiries in respect of businesses claiming JobKeeper and raising questions in respect of cash flow boost where it may look abnormal. If you have any concerns in respect of your claims please do not hesitate to contact us.

If you are a tax client of ours and you have taken out audit insurance, the insurance policy will cover any work in respect of these enquiries and/or audits. If you have not taken out audit insurance and would like to, please contact a Cadenze team member so we can arrange the relevant information and cover for you and your needs.

Australia To Extend Bankruptcy Protection Rules Until End of 2020

Australia will extend its temporary insolvency and bankruptcy protection rules until the end of this year, providing businesses a lifeline to recover from the impacts of COVID-19.

The rules, which were first introduced in March and originally due to expire on 30 September 2020, indicate that creditors cannot issue bankruptcy notices to businesses for debts below A$20,000.

The creditors’ notice period to act on debts could also be extended, allowing businesses to keep trading without paying rent, tax, and loans.

Contact us if you have any questions and we will help create a plan for your business.

JobKeeper 2.0 Bill Passed By Federal Parliament

The JobKeeper Amendment Bill 2020 was passed by Federal Parliament this week. Below are the key changes to the scheme:

Extending the period of operation– The JobKeeper scheme and the provisions that allow employers to temporarily vary the working arrangements (by way of JobKeeper enabling directions or agreements under Part 6-4C of the Fair Work Act 2009) will now end on 28 March 2021 instead of 28 September 2020.

New payment rates– The current JobKeeper subsidy rate for full-time workers of $1,500 a fortnight will drop to $1,200 from 28 September 2020, and then to $1,000 a fortnight from January 2021. Meanwhile, those who worked less than 20 hours per week in the relevant reference period (being the four-week pay period before either 1 March 2020 or 1 July 2020) will receive $750 from 28 September 2020, and then to $650 a fortnight from January 2021.

Legacy Employers– Employers who no longer qualify for JobKeeper after 28 September will be classified as legacy employers, and will have to satisfy a 10% decline in turnover to have access to modified JobKeeper enabling directions.

Decline in Turnover Test Certificate– Employers will need to obtain a 10% decline in turnover test certificate from an eligible financial service provider, including a BAS or Tax agent.

These modified directions include reducing an employee’s ordinary hours to a minimum of 60% of the employee’s ordinary hours as they were at 1 March 2020, but cannot result in the employee working less than two consecutive hours in a day.

A dispute can be brought before the Fair Work Commission about whether an employer holds a 10% decline in turnover certificate for the relevant period, including a dispute about whether a certificate is valid.

Penalty– A penalty of up to $13,320 for individuals and $66,600 for body corporates or employers will be imposed if an employer does not meet the 10% decline in turnover test and knowingly or recklessly tries to use the provisions or fails to notify employees that a JobKeeper enabling direction or agreement is not continuing due to not having met the requirements.

JobKeeper Turnover Test Requirements

From 28 September 2020:

• businesses looking to claim the JobKeeper payment will be required to demonstrate that they experienced a decline in turnover using actual GST turnover, rather than projected GST turnover.
• businesses will be required to reassess their eligibility with reference to their actual GST turnover in the September 2020 quarter to be eligible for the JobKeeper Payment from 28 September 2020 to 3 January 2021 (the first extension period).

From 4 January 2021:

• businesses will need to further reassess their turnover to be eligible for the JobKeeper Payment. They will need to demonstrate that they suffered a decline with reference to their actual GST turnover in the December 2020 quarter to be eligible for the JobKeeper payment from 4 January 2021 to 28 March 2021 (the second extension period).

The required decline in GST turnover percentages will remain the same:

• 30% for an aggregated turnover of $1 billion or less
• 50% for an aggregated turnover of more than $1 billion
• 15% for ACNC-registered charities other than universities and schools.

Government-backed COVID-19 Loans Extended

The government is extending its small business COVID-19 loans scheme until June 2021. If you need help to access these loans or you want to find out if you are eligible, please do not hesitate to contact us.

How Much Debt Can Your Business Take On?

During an economic downturn when business is slow, a cashflow boost in the form of debt might be necessary to maintain the smooth running of your business. While there are plenty of lending options to consider including government-backed funding schemes, you should not borrow what you cannot pay back.

So the question is: How much debt is too much?

This timely Forbes article teaches how to calculate three important metrics that will keep you honest about how much debt you can take on. However, if you need personalised advice based on your unique business situation or some help with loan applications, drop us a message.

Government Launches Business Continuity Website to Support Businesses Amid COVID-19

The Australian Government has launched the Australian Business Continuity website to support businesses with staff working remotely amid the pandemic.

The site provides free practical tools for remote communications, collaboration, workforce management, and video conferencing, as well as advice on how to best use teleworking services.

Get in touch

We are here to help, please contact us if you have questions about any of the above.