31 March 2020

Covid-19 Update – Boosting Cash Flow for Wages




Written by Kyle Rowston-Wolcott.

Up to $100k for Small and Medium Businesses…

The Government has announced two rounds of payments for businesses paying wages, to be compensated by at least $20,000 in the next 6 months. Businesses that withhold tax on employee wages and salaries may be eligible to up to $100,000 (including the $20,000 minimum).

If you are an employer who is required to withhold tax…

You may be eligible to receive a payment equal to 100 per cent of the amount of the withheld from your employees’ salaries and wages, up to a maximum payment of $50,000. This payment will occur twice (one in April, and one in the July-October period) for a combined maximum of $100,000.

If you are an employer who inot required to withhold tax…

You may be eligible to receive the minimum payment of $10,000, even if you are not required to withhold tax.

Conditions for Payment…

The first payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.

The payments will only be available to active eligible employers established prior to 12 March 2020.

There will be a second identical payment made to eligible entities during the July-October 2020 period to further assist businesses.

To Apply…

  1. Your business must have an annual turnover under $50 million (based on your previous year);
  2. Your business must employ workers; and
  3. Your business must have been an active employer since 12 March 2020.

These applications should be completed and submitted as soon as possible to guarantee your eligibility by 28 April 2020.

For assistance in completing these applications please consult your accountant or the Government website for more information.

The contents are for informational purposes only and do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such.

Uther Webster & Evans can provide you with advice and assist you with your commercial and personal affairs call or email us to discuss.


 

31 March 2020

Covid-19 Update – The Jobkeeper Payment




Written by Kyle Rowston-Wolcott.

Up to $1,500 per fortnight (before tax) for eligible employees…

The Government will pay eligible employers a subsidy that will guarantee a minimum income for every eligible employee. This subsidy is unaffected by the employee’s previous wage and provides employers with a payment that can be directly passed to the employee or used to offset the cost of their wages for a maximum period of 6 months from 30 March 2020.

 

What about superannuation?

Superannuation is not included in this payment, though employers must still pay superannuation guarantees for current wages. They are not required to pay superannuation for any amount of the subsidy that would exceed the employee’s wages but can do so if they wish.

For example, if an employer currently pays its employee $1000 per fortnight and receives the JobKeeper payment, they must pay the current wage ($1000) plus the superannuation guarantee as well as an additional $500 (with an optional superannuation payment) to maintain the minimum income of $1500 required. Here the JobKeeper payment will offset all employee costs apart from the superannuation guarantee required for the original wage.

Who is an eligible employee?

Australian Citizens, Permanent Residents, Protected Special Category Visa Holders and non-protected Special Category Visa Holders.

All full-time and part-time employees (including those stood down and re-hired) as well as casual employees that have been with their employer for at least 12 months.

Note: to be eligible an employee must have had an employment relationship with the eligible employer as at 1 March 2020. If you are currently receiving JobSeeker payments at the moment, this may affect the employment relationship and prevent you from seeking the JobKeeper payment.

Business conditions for eligible employers…

Your business must not be subject to a Major Bank Levy; and

If your business has a turnover of less than $1 billion, you must demonstrate that your turnover will be reduced by more than 30 per cent relative to a comparable period (of at least one month) last year; or

If your business has a turnover of more than $1 billion, you must demonstrate that your turnover will be reduced by more than 50 per cent relative to a comparable period (of at least one month) last year.

Self-employed or Non-Profit?

If your business meets the above criteria and turnover tests, you will still be eligible to apply.

How to apply as an employee…

Most employees will not need to do anything more than receive a notification from their employer

However, the following employees will have additional tasks:

  1. Employees that have multiple employers must notify the employer that is their primary employer.
  2. Employees that are not Australian citizens must notify their employer of their visa status, to allow their employer to determine if they are an eligible employee.
  3. Employees that are currently in receipt of an income support payment must notify Services Australia of their new income.

How to apply as an employer…

At the time of writing, the ATO has yet to create an application portal, however, interested businesses may register their interest and receive updates from the ATO here.

Once applications open, employers will need to:

  1. Identify eligible employees for the JobKeeper Payments and provide monthy updates to the ATO;
  2. Provide information on previous turnover for a period of no less than one month during the previous year; and

Notify employees if and when the JobKeeper Payment has been approved


For assistance in completing these applications please consult your accountant or the ATO fact sheet for more information.

The contents are for informational purposes only and do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such.

Uther Webster & Evans can provide you with advice and assist you with your commercial and personal affairs call or email us to discuss.


 

31 March 2020

Covid-19 Update – Changes to Statutory Demands




Written by Kyle Rowston-Wolcott.

The temporary changes made by the Government will delay winding up proceedings based upon any new statutory demands for 6 months.

For the next 6 months…

The required minimum amount to issue a statutory demand for corporate debt has been increased from $2,000 to $20,000;

The time to respond to a statutory demand has increased from 21 days to 6 months.

This Means…

If another company owes you or your company money, your claim must be at least $20,000 to issue a statutory demand and your company may have to wait up to 6 months for a response before you can file an application to wind up the company.

To Issue a Statutory Demand…

  1. Your claim must be undisputed and have a minimum value of $20,000
  2. You must sign and complete the mandatory Form 509H as well as an accompanying Affidavit; and
  3. You must allow the debtor at least 6 months to respond to your statutory demand.

If a company fails to respond to a statutory demand within the 6-month period it will be deemed insolvent, and the creditor may apply for the appointment of a liquidator.

Given the likely increase in court proceedings following this 6-month period, it is essential to file your claims as soon as possible to pursue any outstanding debts to avoid delays when the crisis is over.

Further, if you receive a demand, don’t wait until the last moment or ignore it. If you do, you may find your company the subject of winding up proceedings.

The contents are for informational purposes only and do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such.

Uther Webster & Evans can provide you with advice and assist you with your commercial and personal affairs call or email us to discuss.


 

31 March 2020

Covid-19 Update – Changes to Insolvency




Written by Kyle Rowston-Wolcott.

The temporary changes made by the Government will effectively extend protection from unsecured creditors to 6 months for voluntary insolvency and temporarily suspend the duty for Director’s to prevent insolvent trading (see conditions below).

For the next 6 months…

There will be no liability for Directors trading in the ordinary course of business while insolvent.

Directors’ Liability for Insolvent Trading?

There will be no personal liability if directors continue to trade for the next 6 months while insolvent, so long as they continue to trade in the ordinary course of business. This means that you can continue to operate your business despite being unable to pay your debts.

For Directors to benefit from this temporary measure,

  1. The debt must be necessary to allow the business to continue during the six-month period (eg, this includes debts to pay employees and even improvements to allow your business to continue online);
  2. The debt has been incurred during the six-month period; and
  3. The debt is incurred before an administrator or liquidator is appointed during the period.

Please note:

  • Once this temporary 6-month respond period has passed your creditors may begin to wind up your company if you are deemed insolvent.
  • A failure to respond to a statutory demand will create a presumption of insolvency.
  • In addition, any dishonest or fraudulent acts in relation to insolvent trading will not be exempt from liability.

If you are a Director then it is still important to seek legal advice first before considering insolvent trading as you may not be eligible for the above temporary benefits.

If you are considering insolvency, it is also important to seek legal advice to ensure that you have fully considered all the options available to you, especially in light of the Government’s temporary measures.

The contents are for informational purposes only and do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such.

There are several strategies that can take advantage of these new laws and help extend the continuation of your business during these times.

Uther Webster & Evans can provide you with advice and assist you with your commercial and personal affairs.