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15 Aug 2020

COVID-19 Q&A

These questions and answers were generated in the recent Coping with COVID -19 webinar hosted by Repco. 

 

Q Can you define what you refer to as GST turnover?

A The GST turnover is the G1 figure on your BAS statement.   

 

Q We didn’t think we would qualify for job keeper, but now it looks like we will … is it too late to register?

A It’s not too late to register. The ATO have extended the registration period to 31st May, simply apply through MyGov or via your Accountant.   

 

Q How do I know if my business is eligible for JobKeeper?  
A To qualify for JobKeeper, you should be eligible if turnover has fallen or will likely fall by 30 per cent or more. There are various methods in place to test this decrease.  You can find more information here. 

 

Q If I choose to participate in job keeper, do I need to pay job keeper to all eligible employees?

A If a business chooses to participate, it must register all eligible employees – one in, all in.

Employees must then provide notice to the employer that they agree to be nominated and that they haven’t been nominated by another employer.

It is worth noting too that an eligible employee is someone who: 

  1. is a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020;
  2. is currently employed by the eligible employer (including those stood down or re-hired)  

You can find more information here 

 

A If my business is eligible for JobKeeper, do I HAVE to participate?

Q No, the JobKeeper scheme is not compulsory. 

 

Q Is there a certain way we need to record JobKeeper payments?

A It is important to speak to your accountant regarding the best way to record JobKeeper for your business.  You can find more information here. 

All eligible employees must be paid a minimum of $1,500 income per fortnight, before tax. Employers cannot pay their employees less than $1,500 per fortnight and be entitled to JobKeeper a payment for that employee.

If an eligible employee has not been paid $1,500 per fortnight since 30 March 2020, employers must pay a ‘top-up’ payment to those eligible employees. This applies to all eligible employees, regardless of what they were being paid previously.

If the eligible employee is paid more than $1,500 a fortnight before tax, the employer will only be reimbursed $1,500 per fortnight.

 

Q Am I required to pay Superannuation on the JobKeeper payment? 

A An employer will only need to make superannuation contributions for any amount payable to an employee in respect of their actual employment. There is no obligation to pay super on the “top up” component of JobKeeper. 

Superannuation is optional, but other entitlements do apply and remain mandatory.  An employee who is subject to a JobKeeper stand down direction accrues leave and entitlements as if the direction had not been given, and any entitlements to redundancy pay and payment in lieu of notice of termination are to be calculated as if the direction had not been given.

 

Q Our business was down 18% in March compared to last year and 35% in April. How does that compare with what’s going on in the industry?

A The panel suggested that this is broadly in line with what the industry, however it feels like we turned a bit of a corner in late April.

 

Q Due to the economic impact of COVID-19 we want to temporarily change the days and hours of work of our employees in order to continue their employment. What are our options?

A New temporary provisions have been introduced to the Fair Work Act from 9 April 2020 until 28 September 2020 (unless extended). The new provisions only apply to employers who qualify for the JobKeeper scheme and their eligible employees and include the ability to make “JobKeeper enabling directions”. This includes stand down directions to reduce their days/hours of work or directions to change their usual duties and/or their location of work.  You can find more information here.  

 

Q Can I force my employees to take their accrued annual leave during this period?

A Generally annual leave should be taken by agreement. However, there are some instances where an employer can direct their employee to take annual leave.

An employer that qualifies for the JobKeeper payment and is entitled to receive the JobKeeper payment for the employer can give the employee a request to take paid annual leave (provided the employee will have a balance of at least 2 weeks). The employee must consider the request and not unreasonably refuse it. Also, the employer and employee can agree in writing to the employee taking twice as much paid annual leave at half their rate of pay (note similar temporary amendments to modern awards). 

If you do not qualify for JobKeeper, then you will need to rely on the usual requirements for directions to take excessive annual leave. These requirements will be set out in the relevant award for award covered employees or the Fair Work Act for award free employees. If an enterprise agreement applies, you should consult the agreement. Awards such as the Vehicle Repair Services and Retail Award have strict rules relating to such directions. If there is a decline in work, now is a good opportunity to start reducing excessive annual leave liabilities if you can and with the support of the JobKeeper payment.

  

Q Before Covid-19, we were thinking about expanding into new services, like air conditioning or tyres, but now we’re not sure if this is a good idea.

A The panels view was, anything that creates NEW revenue gives you an opportunity to speed up your Covid recovery and would definitely be worth considering if you can afford it. There are honeymoon periods available on some finance repayments and so you can push the actual expense requirement beyond COVID, whilst still enjoying the revenue and tax benefits NOW. If you’ve been sub-letting or outsourcing anything, you might currently have a bit more time available now to install the equipment and properly train your staff. History suggests that businesses who have been able to invest during troubled times have generally gained a competitive edge over their rivals.

 

Q We can afford to invest in equipment right now, but we don’t know how long the effects of COVID will last.  Is this a wise move?

A The panel view was that there’s some pretty cheap finance available right now and some tax benefits could be achieved such as accelerated depreciation, and potentially an up-front GST refund.  It important that you explain to your accountant how the investment will benefit the business, such as extra revenue margin by doing certain services in-house. Talk to your accountant or a specialist business adviser.

 

Q We’ve been approached by a young apprentice that has been let go from the local Dealership. He seems like a good kid and my gut feeling is to give him a try.  What are the panels thoughts?
A General consensus from the panel was that as attracting and retaining staff is an ongoing concern in to workshops, the opportunity to add an apprentice, give the current apprentice wage subsidy this would be a strong investment.  The panel suggests reaching out to local Employment agency to see if there are any apprentices that have been laid off that.

 

Q Most of our business usually comes from word of mouth, so we don’t normally do much advertising, but I feel like we should be doing something now to help us recover and get back on track.    

A When looking to increase job intake, the panel suggested not to overlook your existing customers. Your regular customers have a lot on their mind right now and might have just overlooked the car. Some workshops have had very good outcomes with outbound phone calls, SMS and Email just to let customers know that you are open business, and to offer free pick-up and delivery or contactless servicing and stuff like that. Antidotally, most customers have been receptive to the calls and were thankful for the care and the chat.


Q Does the panel have any suggestions for what marketing works best?

A While reaching out to existing customers is a great first step, attracting new customers is also important.   Social media and Google advertising can be highly effective in this area.  It is worthwhile investigating these options. 

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