JobKeeper Ends 28 March. Are you prepared?

Wayne StaalCoronavirus, Grow your business, Small Business

The federal government’s JobKeeper stimulus is set to expire on March 28.

With the economy recently bouncing back (2 quarters of consecutive growth), Treasurer Josh Frydenberg on Wednesday referred to the Treasury’s review of the scheme from last June, which found the subsidy would disincentivise work, keeping otherwise untenable businesses afloat. Accordingly, there will be no extension to Jobkeeper.

While experts have predicted “modest” job losses and a minimal impact on unemployment when JobKeeper concludes, there will obviously be some industries and businesses affected at the end of this month.

The federal government has left the door open to providing further support for businesses and industries crippled by the pandemic. Indicating, if it were to materialise, it would be announced in the “coming weeks”, Mr Frydenberg said, and would need to be temporary, and “accompanied by an exit strategy”.

JobKeeper and the Fair Work Act

JobKeeper has been the saviour for many business owners across the country. Yet many businesses receiving the subsidy do not have plans in place for 28 March 2021 when the program reaches completion.

As the JobKeeper program ends, businesses need to prepare for what they are going to do with their employees.

Key questions that need to be considered regarding employees:

  • Without the JobKeeper support, am I profitable and sustainable?
  • How will I afford to employ team members?
  • Do I need to make changes to current resources or implement strategies to grow income?
  • Are employees under JobKeeper working in key business streams that will also end once the subsidiary does?
  • Are any new employees (from 7 October 2020) eligible for other subsidies such as the JobMaker Hiring Credit, that will also assist business cashflow.

While it may seem a simple approach to terminate employment or change an employee’s position, these actions must be in line with the Fair Work Act and not contravene obligations as an employer.

Like many decisions in business, it takes time to assess the situation, evaluate options and consider risk. This process must start now because it may be too late on 29 March 2021 when JobKeeper is no longer available.

Heading into the post COVID19 support phase of the business cycle, requires you to be organised, plan ahead and start taking action before JobKeeper ends.

More assistance and information can be sourced by visting the ATO’s website. Holmans have also produced a handy guide as to how your business can survive and prosper in 2021.

ATO tipped to pounce once JobKeeper ends

With JobKeeper ending in a few weeks, small businesses have been urged to “act early” on exploring their insolvency options before the ATO moves on recouping debts.
“While the ATO has been very quiet for almost 12 months, that won’t last,” said Bradd Morelli, national managing partner at Jirsch Sutherland, a national insolvency firm. “And that’s when we expect to see the insolvency wave building.”

With the ATO’s debt book growing to $53 billion over the last year, most tax professionals expect the Tax Office to start pursuing outstanding debts once businesses receive their last JobKeeper payments in April.

Accordingly, it is crucial for business owners and directors to be proactive and to act early if they are in financial distress. There is a big difference between early intervention and a controlled process, versus, a reactive process and a forced wind up.

Talk to your accountant, and liaise with the ATO early, should you require more time and assistance paying of any ATO Debts. They tend to be supportive if you are open and communicate. Where you put your head in the sand, the consequences can be dire.

JobMaker – light at the end of the tunnel?

With the end of JobKeeper looming, the Government will continue to support employers with the launch of the JobMaker Hiring Credit scheme.

A new subsidy that will be offered to eligible employers, JobMaker, will be available to businesses who employ additional job seekers aged 16-35. It applied from 7 October last year and will run until 6 October this year.

The scheme is designed to not only help young people find their way into the job market, but also help to provide a pathway to re-employ new full time workers at a subsidised and more affordable rate than in the previous year.

It is not a perfect scheme considering it only supports a small proportion of the workforce back into employment, but the additional funds that could be unlocked might help some employers to find a way through the challenges of the year ahead.

Of course, there are complex eligibility and compliance requirements, and you should consult with trusted advisor (or the ATO directly) in relation to your businesses eligibility.

Need assistance and want to know more?
Contact Holmans today;

Holmans Noosa: (07) 5430 7600 or email info@holmans.com.au
Holmans Maroochydore: (07) 5451 6888 or email infohm@holmans.com.au