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Churches and Charities

Latest Updates:

5 April 2020 – Clarification of eligibility for Charities and non-government schools.

Page Contents:
JobKeeper Payment
Cash Flow Boost to $100,000
Victorian Government Grants via the Business Support Fund

JobKeeper Payment Subsidy

17 April - To read our overview of the reporting of JobKeeper Payments via Single Touch Payroll, click here

15 April - To read our most recent article on the JobKeeper Payment, click here.

On 30 March 2020 the Government announced a $130 billion wage subsidy package, called the JobKeeper Payment.  This is the biggest Federal Government response to the COVID-19 outbreak to date, which is expected to affect six million Australians.

The general intent of the package is to keep people in their jobs during this time of disruption. The JobKeeper Payment will also support employers to maintain their connection to their employees. The scheme can be summarised as follows:

Where an eligible employer suffers a substantial decrease in revenue, they will receive a subsidy for their eligible employees of $1,500 per fortnight. They will continue to pay the employee at least $1,500 per fortnight, even if they have been stood down.

How the system will work

The JobKeeper payment will provide eligible employers with a flat payment of $1,500 per fortnight per employee over the next six months regardless of the employee’s salary.

The first payment will be received by employers from the Australian Taxation Office (ATO) in the first week of May, backdated from 30 March 2020.

Eligible employers will need to identify and notify eligible employees for the JobKeeper payment and must provide monthly updates to the ATO confirming that the employer continues to be eligible.

Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax. Employees that are already receiving this amount per fortnight will not see their salary change. It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper payment.

The payment will be paid for employees engaged as at 1 March 2020.  For most employers the ATO will use the Single Touch Payroll data to pre-populate employer and employee data.

Registration by employers

At this stage employers must register for the JobKeeper payment at the following website: www.ato.gov.au/general/gen/JobKeeper-payment

Following registration employers will be provided updates of the package’s arrangements over the coming month.

Eligible employers

Not-For-Profit employers will be eligible for the JobKeeper payment if:

  • Their organisation has a turnover of less than $1 billion and their turnover has been reduced by more than 30% relative to a comparable period a year ago (of at least a month); or

  • Their organisation has a turnover of $1 billion or more and their turnover has been reduced by more than 50% to a comparable period a year ago (of at least a month); and

  • The business is not subject to the Major Bank Levy

Turnover is defined as the same it is for GST purposes, and is reported on Business Activity Statements. Turnover includes all taxable supplies, and all GST free supplies, but not input taxed supplies.

5 April 2020 Update: Where the entity has recently commenced, or the turnover a year ago is not a representative period of normal business activity, the Taxation Office will have the discretion to consider additional factors to determine if the business has been adversely affected by COVID-19. The Taxation Office will have the power to consider alternative tests and there will be some tolerance where employers have not had a reduction in turnover that does not quite meet the thresholds.

Charities registered with the Australian Charities and Not-For-Profit Commission (ACNC), they will be eligible for the JobKeeper Payment if their estimated turnover has fallen by 15% or more relative to a comparable period.

Non-government schools and private vocational education providers are eligible to claim the JobKeeper Payment.

Employers will be required to provide information to the ATO upon registration and then provide monthly updates to the ATO.

There must be an employment relationship with eligible employees as at 1 March 2020, and the employer must confirm that each eligible employee is currently employed in order to receive the JobKeeper payment, even those that have been stood down. If the employee has been retrenched, they will have to be reinstated in order to be eligible for the JobKeeper payment.

Employers that re-engage employees will be eligible if the employee was employed on 1 March 2020.

Employee eligibility

The payment applies to full-time, part-time and casual employees who were employed by the employer on 1 March 2020.  Casuals must have been employed on a regular basis for more than 12 months as at 1 March 2020.

All eligible employees must be:

  • At least 16 years of age;
  • An Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
  • Not in receipt of a JobKeeper payment from another employer.

    Only the employee’s main employer will receive the JobKeeper payment.

Practical Considerations

Although the details are being worked out, the ATO will administer the scheme and attend to payment of the subsidy. The Single Touch Payroll System will be an integral part of the process.

Employers are required to make the minimum $1,500 per fortnight payment to employees and will be reimbursed monthly. The first reimbursement will be in the first week of May and will be backdated to 30 March. This will create some cash flow issues for affected organisations.

We will not see the full details of the subsidy for a week or so and in the meantime we are left with press releases and ATO fact sheets. We understand the two-fold intents of the subsidy are to keep people on the payroll to the greatest extent possible (which will keep people off Centrelink benefits) and to subsidise employers to encourage them to keep their staff. It does not prevent employers from making the right commercial decision about reducing hours or if there is no work, standing people down. However, when making these decisions employers should take into account the subsidy they will receive.

To the extent that the $1,500 payment is not wages but is passing on the government subsidy, SGC is not required to be paid. This can occur when an employee is normally paid less than $1,500 per fortnight or where they have been stood down.

There will undoubtedly be anomalies with the scheme but this is a bold initiative to keep employees on the books and to ensure that a work force is ready and available to bounce back.

Here are links to the Government fact sheets for employers and employees:

Fact sheet for employers:

https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_supporting_businesses_4.pdf 

Fact sheet for employees:

https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_Info_for_Employees_3.pdf

Cash Flow Boost to $100,000

The following not for profit and charities will be eligible for the Cash Flow Boost:

  • Aggregate annual turnover < $50m

  • Made payments to employees
  • Held an active ABN on 12 March 2020. However, ACNC registered charities are eligible regardless of when they are registered

  • Activity Statements lodged within 2 years of due date

The Boost will be provided as credits in the activity statement system by the Australian Taxation Office (ATO).  Where these credits result in a refund, the ATO will deliver this within 14 days

The credits will be delivered in two tranches.

  1. The first tranche of credits Cash Flow Boost 1 in the diagram below will be based on the PAYG withholding amount on the March, April, May and June 2020 Activity Statements.  Cash Flow Boost 1 will be a maximum of $50,000.

  • It will be paid from late April to July.

  • Organisations that pay salary and wages but do not have to withhold tax will receive the minimum credit of $10,000.

  1. The second credit tranche (Cash Flow Boost 2) will, in total, be the same amount as Cash Flow Boost 1, but will be delivered in equal instalments in the June – September activity statements.  To be eligible for Cash Flow Boost 2 the entity needs to remain active.

 The scheme has a minimum credits of $20,000 and maximum credits of $100,000.

The below diagram illustrates how the credits will be applied over the coming months. The top section applies to large and medium withholders that report monthly and the bottom section applies to those that pay withholding payments quarterly:

We have developed a Cash Flow Boost Calculator for you to use to determine the Cash Flow Boost credit you will receive. It can be downloaded from our website here

 

Example 1:

An employer withholds $5,000 per month from employees. The payments (as a credit against the IAS or BAS) are as follows:

  • If the employer remits PAYG quarterly


    • March: 3 x $5,000 = $15,000

    • June: $15,000

    • Total for 1st tranche - $30,000

    • The 2nd tranche payments will also total $30,000 and $15,000 will be applied against the June and September BASs

  • If the employer remits PAYG monthly


    • March: 3 x $5,000 = $15,000

    • April: $5,000

    • May: $5,000

    • June: $5,000

    • Total for 1st tranche - $30,000

    • The 2nd tranche payments will also total $30,000 and $7,500 will be applied to the June BAS, July and August IAS and September BAS

Example 2:

An employer with less than $10,000 PAYG to be reported in the March to June period, will be entitled to the minimum payments which will be paid as follows:

  • March activity statement credit $10,000

  • June and September activity statement credits of $5,000 each

Example 3:

An employer does not need to withhold any tax from wages paid to any employees will still be entitled to the minimum payments.  These will be paid as follows:

  • March activity statement credit $10,000

  • June and September activity statement credits of $5,000 each

 

 

Victorian Government Grants via the Business Support Fund

The State Government has released details of grants for business via the Business Support Fund. Grants are available to businesses significantly affected by Covid-19 shutdown restrictions.  The grants are targeted to business but could apply to Non Profit Organisations as well.

Businesses are eligible to apply for a grant through the Fund if they meet the following criteria:

  • Have been subject to closure or highly impacted by shutdown restrictions announced by the Victorian Government to-date; and

  • Employ people; and

  • Have a turnover of more than $75,000; and

  • Have payroll of less than $650,000; and

  • Hold an Australian Business Number (ABN) and held that ABN at 16 March 2020; and

  • Have been engaged in carrying out the operation of the business in the Australian State of Victoria on 16 March 2020.

Here is a link to the relevant webpage and on that page you will find a link to the application form. If you are eligible we suggest that lodge your application as soon as possible.

https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-support-fund#

 

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