by Charlton’s Accounting and Tax Specialists

Ain’t Nothing Going On But The Rent

Written by Chris Charlton. — Updated 29/4/20

The vast extent of government stimulus and safety net announcements have inadvertently added to the existing stress and misunderstandings of a great majority of Australians.

It is wise to focus on Government press releases and ultimately summaries based on actual legislation from non-partisan sources.

There have been numerous inaccuracies advanced by journalists and media sources, so accurate information is better obtained from the source or from a lawyer or tax accountant.

Journalists only if you are after entertainment. Politicians advancing political agenda or “FOMO” moments should be ignored.

Whilst the apparent access to financial relief appear straightforward, there are multitudes of differences manifested in our diverse lifestyles and situations.

This article is intended to assist with self-navigation and to equip yourselves with the level of knowledge required to ask the questions and have a good chance in understanding the answers [or detecting the BS].

Individuals are faced with the following dilemmas:

· Unemployed/on benefits

· Loss of job

· And/or loss of business whether or not you are a sole trader company, owner or partner.

JOBSEEKER

Centrelink provides the most basic safety net. Low income earners in general are familiar with its operation and occasionally have to access the benefits.

For those a corona virus supplement is added to their otherwise basic fortnightly payment. Those familiar with the system understand rent subsidies and other important social benefits.

It’s unlikely the situation will change for those already in the system apart from the supplement. Casual work will be even less available.

For those newly exposed to Centrelink, Jobseeker payments were initially the only option until the Jobkeeper payments were announced.

JOBKEEPER

I’ve read through the legislation passed on April 9, this provided an employee who was recently stood down/terminated/on leave, the opportunity to access $1,500 per fortnight by reconnecting with their previous employer.

This is potentially better than Centrelink which is part of the reason for announcing it. You can only benefit from one or the other. The restrictions and limits on Jobseeker are not present with Jobkeeper. If you receive Jobkeeper you may still continue to earn income from new or retained employment engagements.

SO WHAT DO YOU DO?

Individuals

Full-time and Part-Time employees

Casuals engaged by an employer for more than 12 months as of March 1st 2020

Talk to your most recent employer – the one you were registered with as an employee on 1st March 2020. Bear in mind they are not obliged to rehire you or “reconnect”.

· If your employer [one only] wishes you to reconnect with their business, that will give you $1500 per f/n. The employer needs to pay you this and receive government reimbursement probably starting first week of May. Whether you work for it or not is up to employer.

· An employer is only eligible to reconnect and pay you this if their business has reduced by 30% and can prove it to the tax office. So they will be reluctant to put you back on his books if he doesn’t know if he will be eligible. If this is the case, register for Centrelink Jobseeker as a backup plan.

· If you want to register with Centrelink you will need a CRN. you will need to go online and do this, then once you have this you can apply for the payments – it’s a two-step process. If by May your previous employer finds out he is eligible and therefore you are, you will then advise Centrelink you no longer need Jobseeker – so no double dipping.

· I will make the point that the tax office is all over this, and will easily detect any funny business.

· Casuals who have been employed for less than 12-months as of 1st March are not eligible.

More about rent and other income later.

Businesses

Small business in the context of the government packages mean one-man bands, sole traders, charities and not for profit and whilst not specifically mentioned, the vague and largely misunderstood term “contractor”.

What is essentially covered are those entities and persons who operate under an ABN. When you applied for an ABN you stated at the time that you were carrying on a business. You actually have to be running a business. Meaning, if you have an ABN and you earn income by using it, essentially you are in.

As a sole trader e.g. session musician, actor, model, online warrior etc and you get paid gross and if required/asked provide your ABN you must consider these options:

1. If you are a company [in business] with your ABN and can demonstrate a loss of more than 30% used you are ok.

2. If you only have income as a contractor under your ABN [not an employee] you are unable to go to that company that provided some/most of your “contracted” income from and ask for the re-engagement $1500 Jobkeeper. 

3. If you then decide to apply for Jobseeker, you may not be eligible here either if you have income from other sources i.e a spouse earning over $80k so be aware of this.

However, you may personally may be eligible for is the $1,500 under your own ABN given that you are carrying on business AND you can demonstrate a loss of at least 30% of your income. If not, then you don’t qualify.

Being a sole trader or employing yourself via an ABN or Company creates eligibility for Jobkeeper, for you as the employee and your other employees too.

On top of that your business, providing it lodges BAS regularly and is up to date with the ATO (or has a valid payment plan in place) and were actively in business on 1 March the $20k to $100k may be accessible on top of this.

If you are a sole trader with employees [or a charity or NFP] you should be entitled to $10k this side of June and $10k the other side of June.

The first payment of all or part of the $10k will occur second week of May.

What to do

· Make sure all lodgements are up to date, bas, super STP, personal returns etc.

· If you owe tax, immediately apply for a payment plan or stick to the one you have [apply for a variation if you need to]

· If the ATO agrees with your payment regime and you adhere to it you will get the benefits.

· If you were on STP and your BAS goes in by end of April, you have NOTHING to do the ATO can work it out

If you believe your business – including sole traders – is eligible for Jobkeeper, register with the ATO. The ATO will make contact and ask you why you believe you are eligible. They will be reasonable and flexible but will be onto any sales pitch, sob story or general BS. It’s likely that you will need a trained accountant to assist with application/explanation.

Once eligibility is agreed there will be monthly checking/forms to submit.

NSW Government

The state government has announced a one-off payment to assist. They will be looking for a 66% reduction in businesses. Its most likely that only businesses closed by the government will get this. Gyms, restaurants, beauticians, small bars etc. Payroll tax relief won’t be useful unless you have a payroll $900K p/a +. No announcement yet on land tax.

Rental

Apart from freezing evictions, we are still waiting on relief. The logical progression is for the federal government (with state government buy in), will legislate a code of conduct binding on all landlords and tenants. This is likely to contain a compulsory reduction of rent in line with business downturn. For example, if you are eligible for the Jobkeeper test by the ATO, the 30% will be the rent reduction. Arguably if your small business has been closed by the government then 100% reduction until you are allowed to reopen is a possibility. Or any combination of the above.

ABOUT THE AUTHOR

Chris Charlton loves music and is a massive metal head. He is also the Director of Chartlons, an Accounting and Tax Specialist firm with more than 35 years of experience in tax accounting, business strategy and advice. A fully registered company auditor with the Australian Securities and Investments Commission, and a registered examiner with the Law Society, Chris has also served as a non-executive Chairman and Director of a publicly listed company. Legend.

Favourite bands: Dream Theatre, Opeth, Disturbed

Favourite genre: PROG Metal

SIMA Spirit Band: Scoredatura