***as at 1 April 2020***
It is a big, scary, confusing world out there normally, let alone today, and when we work for ourselves it can feel all that more alone. But, rest assured, we're all this shit boat together sailing the choppy seas... and I am right here with you and I have been trained to read the map. We will get to the other side!
If you are feeling confident about your ability to understand Scomo and his team, then head here for the official Treasury info.
If not, then let me help translate the government info for you so you know what support might be available to you. This blog is for sole traders. Some of you might also have other/casual employment, and we will cover off the important info related to that too.
As a sole trader, you are your business, meaning you are the one legal entity. Whereas if you were operating through a Company or a Trust, that would be a separate 'being' to you, the individual. Confused already? No worries, check out this blog on the different structures.
There a few things the Government have released that might be applicable to you, and that we will go through here:
Other stuff they have on offer, but that doesn't apply to a lot of my clients so not covered in this blog (email me if you want to chat through these further!):
This is one of the 'Centrelink' support systems that has been in place for a while, but that the Government has now tweaked a bit to make it more accessible, and to give eligible people a kind of 'covid bonus'.
For the official info, check out the Government fact sheet here.
Basically, be eligible for a single $1 of the support, and then each fortnight, receive that amount for which you are eligible ($1+) and the covid bonus payment of $550.
This supplement payment (the $550) will be paid to those on other support systems beyond just Job Seeker, it's just that it is the Job Seeker one which has been tweaked to open it up to sole traders now. It used to be hard to apply for this because we weren't really seeking jobs...
If you think you might be eligible:
Some key info to consider:
Also, DON'T COMMIT FRAUD. Seems obvious, but just be honest about your past, present and forecast future reality. I also recommend having good records about how you arrived at the numbers and info you put into the application so if you get asked about it later you can easily see and remember.
For more info, check out this awesome video that my new friend (a financial coach), Kevin Smith, made for everyone. Relevant as at 23rd March 2020.
Ah yes, what we all wish we were, right?
This is a new shiny thing released by the government on the 30th of March 2020. ***legislation now released***
Check out all the official fact sheet here, and more detail for employees here, and here for employers (including sole traders we think... who are kind of 'self-employed' even though you can't technically employ yourself). Here is the actual legislation.
Job Keeper is designed to help employers keep their staff employed, but the government has kindly said this will apply to the "self-employed" too.
NEW INFO - The legislation now says ALL ENTITIES (with a few exceptions that don't really apply to my main client base).
It is basically a payment of $1,500 per employee per fortnight (pre-tax), from the government to the 'employer', for them to pay to their employee.
Who is eligible?
Tell me about this 30% drop...
We don't know the details yet, but what we believe you will need to show is that in this last quarter (or month, depending on your usual reporting cycle), you have 30% or more of a drop in total sales (income) of the business when compared the same month/quarter in 2019. If your business is new, then a drop compared to it's average/usual conditions.
NEW INFO - You (sole trader) will need to report monthly to the ATO re your earnings to ensure you are still eligible.
NEW INFO - You (sole trader) will need to show that April 2020 (eligible month) has seen a drop of 30% or more as compared to a comparable period in 2019 i.e. April 2019. The fact sheet suggests you can use alternative estimates, averages, periods etc. if you have lumpy income.
Which employees count?
Self-employed individuals will be eligible to receive the Job Keeper Payment, and we're pretty sure it will just be paid directly into your nominated account. Keep in mind this is taxable income so don't spend it all at once!
NEW INFO - You need to have registered your interest and then make monthly reports in order to get the payment in arrears from the ATO.
For those of you who employ other people, this is pretty important to understand. You will receive the $1,500 per fortnight for each of the eligible employees on your books at 1 March 2020. No sneaky back dating off stuff!
Eligible employees include:
How does it work?
How much do I receive? How much do I pay my employees?
The employer/self-employed receives $1,500 per eligible employee per fortnight, for up to 6 months, in arrears.
NEW INFO - Timing: the first 'job keeper fortnight' begins 30 March 2020, and the payments will be received by the employer in arrears (not a sexual reference). This means 'after the fact' i.e. the employer pays the employee through April, then receives a kind of 'reimbursement' from the ATO from 1 May 2020 (and so on). This arrangement is planned to end 27 September 2020.
***get in touch with us today if you need help setting this all up in your accounting software!***
If the employer chooses to/has to keep them on at their usual (higher) rate, then this acts like a subsidy - think like when the parents of the birthday girl subsidise the drinks at the 18th birthday. The government are pitching in so the employer just pays the top-up amount.
The same applies if the employee ceased work and then was re-engaged.
Also, it is up to the employer whether they will pay the extra superannuation on any amounts paid above the usual wage.
NEW INFO - What if I work in my business but I am not 'employed'?
Firstly, you should book a meeting with us to discuss pros and cons of the approach you have taken.
Secondly, it is going to be ok - the government updated the offer to cover what they refer to as business participants.
Your entity is entitled if:
Please note your entity can only have one business participant receiving the Job Keeper payment. Your entity cannot be entitled if another entity is entitled re that same individual.
Your entity needs to notify you (the individual) of the nomination to be the eligible entity.
You are an eligible business participant if:
NEW INFO - Reporting Requirements
You have 7 days from the end of the calendar month to make your reports to the 'commissioner' (AKA the ATO).
Too good to be true?
Kind of. One thing to keep in mind is that the payment from the government will be in arrears. That is not a sexy reference. In arrears kind of means after the fact. So, if cash-flow is an issue, this might help but not perfectly. As the employer, you probably need to cover the actual wages paid to employees through April, and then the subsidy will be paid by the government to the employer from the first week of May 2020.
Check out more examples at the end of this fact sheet.
I might be biased but now seems like the perfect time to put some energy into organising your finances and getting on top of your tax. This also helps me, your friendly neighbourhood accountant, to negotiate special things for you with the ATO.
Following covid, the ATO and government decided on giving us a bit of help when it comes to our reporting and tax payment obligations:
These are not automatically applied, and you need to call the ATO. If you need a hand, you know where to find me!
Phewf!! Big blog.
I hope that this has been useful to you and your friends. Please share this amongst your community too. We will endeavour to keep it up to date for you.
Feel free to email or DM me any questions you have, and please share handy links and resources you find. We're happy to collaborate and share the love and knowledge around!