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Coronavirus Economic Response Package (Payments and Benefits) Bill 2020
Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 Exposure Draft
On April 8 2020, the Bill to legislate “Coronavirus Economic Response Package” (the scope of this including the already announced Jobkeeper payments) was introduced into Parliament. Separately an Exposure Draft of the “Treasury” rules was made available, this providing more detail on eligibility and payments.
The Bill (which has passed both houses) provides significant flexibility for Treasury to make ongoing rules and for the ATO to administer.
We have set out below a broad summary of the main points from the Bill and Exposure Draft and shall provide later further comments on other matters including GST Turnover and the application to business owners not receiving salary and wages.
The legislation
Payment Method
Payments will generally be made to the entity by the ATO crediting the financial institution account nominated by the entity.
If no such account has been nominated, payments will generally be made to the financial institution account as disclosed in the entity’s most recent income tax return.
The ATO may also direct that a payment is to be made in another way, including by crediting an amount to the running balance account of the entity. This may arise where the ATO wishes to delay the payment to verify information relating to the entity’s entitlement to the payment.
Repayment Obligations
Where an entity receives a payment but subsequently (having regard to the Rules) is not entitled to all or part of the payment then this is to be refunded and General Interest will be charged.
However, the ATO is given remission powers and may determine that an entity is not liable to repay an amount. This is designed to give the ATO flexibility where an entity is perhaps slightly under the 30% turnover reduction threshold.
The Explanatory Memorandum refers to ‘honest mistakes’ and the entity not retaining any personal benefit.
The liability to repay may also be jointly extended to other entities (e.g. public accountants – possibly?) where:[/vc_column_text][vc_column_text]
- you have reasonably relied on a statement by others;
- the other entity did not take reasonable care;
- the other entity benefitted; and
- it is reasonable for the other entity to be jointly and severally liable.
[/vc_column_text][vc_column_text]Record Keeping
Pre and Post-payment Records must generally be retained by an entity for 5 years from the date of the payment. If an entity does not meet the payment record keeping requirements, the entity is taken to have never been entitled to the payment, subject to the exercise of the Commissioner’s discretion.
Schemes
If one or more entities enter into or carry out a scheme for the sole or dominant purpose of obtaining a payment, then the Commissioner may determine that the entity was never entitled to the payment.
Exposure Draft of the “Rules”
Payment Periods
Eligibility for Jobkeeper payments is determined fortnightly.
The Jobkeeper fortnight for the purpose of the payments is as follows:
(a) the fortnight beginning on 30 March 2020 (which is a Monday); and
(b) each subsequent fortnight, ending with the fortnight ending on 27 September 2020.
If the regular period of payment for employees exceeds a fortnight, the payments are to be allocated to a fortnight in a ‘reasonable’ manner.
For an entitlement arising in the first or second Jobkeeper fortnight, the entity must notify the Commissioner in the ‘approved form’ (details still to be confirmed as to the nature of this form) by the end of the second fortnight.
For an entitlement arising on any other fortnight, the entity must notify the Commissioner by the end of the fortnight.
Turnover test
An entity needs to satisfy the decline in turnover test at various test times.
This occurs where an entity’s ‘projected’ GST turnover for a turnover test period (month or quarter) is 30% or more down on the entity’s GST turnover for the comparable period in the 2019 income year.
The Commissioner also has the power to determine for classes of entities (eg those with no appropriate relevant comparison period) an alternate decline in turnover test.
The turnover test period must be a calendar month that ends after 30 March 2020 and before 1 October, or a quarter that starts on 1 April 2020 or 1 July 2020. Our preliminary view is that this indicates that entities may have the option to choose which periods to use.
More to come on GST turnover.
Eligible Employees (employed on 1 March)[/vc_column_text][vc_column_text]Eligible individuals must:
- reside in Australia and be either an Australian citizen or the holder of a permanent visa or special category visa holder, or
be a resident of Australia for tax purposes and hold a Subclass 444 Visa - must be 16 or over on 12 March 2020
- must give the entity a notice in the approved form stating that they satisfy the requirements and agree to be nominated by the entity as an eligible employee
- must not have given a nomination notice to any other entity
- must not be receiving paid parental leave or dad and partner pay, be incapacitated or receiving workers compensation payments
[/vc_column_text][vc_column_text]Long term Casual Employees:
For casual employees, they must have been employed on a ‘regular and systematic’ basis during the 12 months that ended on 12 March.
Where businesses change hands, there is the ability to treat the entity that now employs the individual as having employed the individual at the requisite earlier time.
Working Non-Employees (Business Owners)
In order for an individual, who is not an employee, to receive a Jobseeker payment, the eligibility requirements are as follows:
The individual must be “actively engaged” in the business carried on by the entity; and
The individual is covered by column 2 of the applicable item of the following table:[/vc_column_text][mk_table]
| Item | Column 1 If the entity is a … |
Column 2 The individual must be … |
|---|---|---|
| 1 | Sole trader | The entity |
| 2 | Partnership | A partner in the partnership |
| 3 | Trust | An adult beneficiary of the trust |
| 4 | Company | A shareholder in or a director of the company |
[/mk_table][vc_column_text]Finally we note significant, ongoing testing, reporting and nomination obligations.
As usual please do not hesitate to contact the Trove team if guidance is needed.
These comments are high level and should not be relied on without further consideration of your circumstances.[/vc_column_text][mk_button dimension=”flat” corner_style=”rounded” size=”medium” url=”https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6533″ target=”_blank” align=”none”]Bill[/mk_button][mk_button dimension=”flat” corner_style=”rounded” size=”medium” url=”https://trovegroup.com.au/wp-content/uploads/2020/04/ed-rules.pdf” target=”_blank” align=”none”]Exposure Draft[/mk_button][/vc_column][/vc_row]
