COVID-19: New government support measures – what employers and employees need to know – Coronavirus (COVID-19)

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.

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.

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.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

Carlos Gouveia

Annabel Morton

Corporate advisory

Colin Biggers & Paisley