Tax Changes and COVID-19 Tax Update
Written by: Evan Lowenstein
On 21 July 2020 the Government announced that the JobKeeper Payment (‘JKP’) would be extended until 28 March 2021 (i.e., for a further six months beyond its original end date of 27 September 2020). As a result, JKPs would now be made over two separate extension periods, being:
Extension period 1:which covers the seven new JobKeeper fortnights that commence on 28 September 2020 and end on 3 January 2021;
- Extension period 2: which covers the six new JobKeeper fortnights that commence on 4 January 2021 and end on 28 March 2021.
They also announced the reduction in amounts payable, as we made mention of in our last email.
From 28 September 2020, the revised JKP scheme (referred to as ‘JobKeeper 2.0’) would be less generous (i.e., being subject to a new dual payment rate system)and would require businesses and not-for-profits to apply a new ‘Decline in Turnover Test‘ based on their actual GST turnover (as opposed to their projected GST turnover).
Furthermore, on 7 August 2020, the Government announced adjustments to JobKeeper 2.0 to take into account the damaging effects the new Stage 4 restrictions would have on Victorian businesses.
The changes are importantly being made to eligibility and an adjustment to the Turnover test.
ADJUSTMENTS TO EMPLOYEE ELIGIBILITY
From 3 August 2020, the relevant date of employment (which is used to determine an employee’s eligibility to JKPs) will move from 1 March 2020 to 1 July 2020.This is designed to increase employee eligibility for both the existing JKP scheme, as well as for the new extension periods from 28 September 2020.
Casual employees will still be required to have been employed on a regular and systematic basis for a minimum of 12 months (as is required under the existing JKP scheme).
ADJUSTMENTS TO THE ‘DECLINE IN TURNOVER TEST’
To qualify for the JKP in the extension periods, businesses will now only have to demonstrate that their actual GST turnovers have significantly decreased in the previous quarter under JobKeeper 3.0.
Specifically, to be eligible for the JKP Extension Period 1 (i.e., from 28 September 2020 to 3 January 2021), businesses only need to demonstrate a significant decline in turnover in the September 2020 quarter (whereas under the previously announced JobKeeper 2.0, they would have been required to show that they had suffered a significant decline in turnover in both the June and September 2020 quarters).
To be eligible for the JKP Extension Period 2 (i.e., from 4 January 2021 to 28 March 2021) businesses only need to demonstrate a significant decline in turnover in the December 2020 quarter (whereas under the previously announced JobKeeper 2.0,they would have been required to show that they had suffered a significant decline in turnover in each of the June, September and December 2020 quarters).
These are significant Improvements to the JKP system that will provide businesses with the confidence that they require during this difficult period.
VICTORIAN GOVERNMENT LAND TAX RELIEF AND RENTER PROTECTION
As a consequence of the extended lockdown in Victoria (especially in metro Melbourne), the Government has decided to extend the rental eviction prohibition until 31 December 2020.
It has also provided some support to landlords in the form of financial assistance and further Land Tax relief.
In addition, the Victorian Government has created the Commercial Landlord Hardship Fund to support landlords who are experiencing financial hardship due to rent loss.
This fund was created on 21st August 2020 and will last for eight weeks or until funds are exhausted.
Owners will have to lodge for hardship independently as it requires you to detail your financial situation and provide supporting documents.
Please see the attached link for information relating to requirements: Commercial Landlord .pdf
To apply for the fund, please see the below link: Commercial Landlord Hardship Fund