David Gandolfo answers your JobKeeper and business finance questions

The devil’s in the detail as businesses try to survive the COVID-19 crisis. David Gandolfo answers employers’ questions on JobKeeper Payments and other financial assistance.

David Gandolfo answers your business questions.

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With JobKeeper legislation now in place, businesses hit by the coronavirus have a new tool to keep people in jobs and be ready to relaunch when the crisis is finally over.

Many employers still have questions though about the scheme and how to keep staff engaged over an extended period without work.

They are also wanting more information about government-backed loans and the repayment holidays being offered by banks and other institutions, says business finance and small business expert David Gandolfo.

Mr Gandolfo, a partner at Quantum Business Finance, president of the Commercial and Asset Finance Brokers Association of Australia and a board member for the Council of Small Business Australia, was online today to help provide some of the answers.

Q. My son had a permanent part-time job as well as a full-time job. His FT employer continues to pay his normal wage however he cannot work doing his PT hospitality job. Can he get the JobKeeper allowance for the PT job

A. No. Generally the JK is usually, for occupations for which you claim the tax free threshold. You can only get JK for one job and generally it’s because your job has disappeared. Your son is lucky he still has FT work.

Q. My understanding is that you have to include ALL eligible employees in your submission, you can’t pick and choose who you pay the JobKeeper to from your staff. So a cafe that has six eligible employees and is only currently using the two full-timers to operate a smaller takeaway service, now has to find enough money to pay all six employees through April and early May before it receives the first payment from the ATO on 14 May?

A. JK is designed for all staff that remain connected with the business. As an employer, if you believe your business cannot carry all staff through the next six months, you have the normal ability to terminate employees that your business cannot reasonably carry. You don’t have to pre-pay till you get confirmation from the ATO. And then you can back pay provided you do it on or before 26 April and you will receive the cash for JK payments from 1 May – so the gap is effectively – one to two weeks. If you know you’re eligible, your bank may cover the cash gap for this period

Q. Is there an obligation to re-employ stood down employees once the JobKeeper payments have ended?

A. The principal purpose of JobKeeper is to keep employees connected to their business so that when the health crisis is over, the business can resume trading with its employees. That said, no one knows what the impact will be on businesses long term and so, while there is a moral obligation on business owners to keep JK employees on after the crisis is over, there is no absolute or legal obligation to do so (as some businesses may be damaged to the point of not being as viable as they were before the crisis).

Q. Our income has been deeply affected. The bank has offered to defer payments for six months and extend the life of the loan by six months. We will pay what we can. Does this sound like a good option?

A. It’s certainly prudent to reduce your outgoings wherever possible and retain as much liquidity as possible, so in most cases I would suggest this is a very good option. I’m assuming you’re talking about a business loan, but as a business owner you may also be able to defer payments on your home loan, and it’s worth asking your bank about this option as well, in turn potentially reducing the amount you need to draw from your business for your own wage.

Q. Do employers have to pay superannuation on the $1500 job keeper payment?

A. That’s a good question..... If the employee is stood down, no super requirement. If the employee is working and normally paid less than $1500, you pay super on their normal salary. (Not the $1500 new JK salary.) If the employee is working and normally paid more than $1500, you pay super on their normal salary.

Q. We are confused in relation to the qualification for the JobKeeper payment for our workers. We understand the part about the 30 per cent drop in GST recorded revenue, but do we have to suffer the drop and prove it first or provide a forecast of our expected drop? If our forecast doesn’t come true due to a change in business conditions, will we need to pay back the allowance? If so, why would anyone start paying the allowance now for laid off workers and risk having to pay it back? Currently, we only have March figures to go by and if we wait until June quarter results are in, it could be too late. So how can anyone claim to have suffered a 30 per cent quarterly drop now and receive the JobKeeper allowance?

A. Our understanding is that, you can use a forecast of a suspected drop. If that drop doesn’t happen, you may have to enter arrangements with the ATO to pay back. But such arrangements would normally take into account the capacity of the business to repay … don’t pay it now, wait till you get eligibility confirmed from ATO. If a business makes an honest mistake, they won’t be penalised. Our understanding is the employer registration forms have been issued today from ATO.

Q. The government seems to think businesses will be able to ramp up to full capacity as soon as this crisis is deemed to be over, but what if there’s still not enough work for my employees for some time after. Do you anticipate further assistance? What’s your view on how quickly businesses will get back on their feet?

A. Many businesses will have to gradually rebuild. The policy is to keep as many people employed as possible so business are in a position to recover, rebuild and reimagine their businesses. Every business is different and will recover at a different rate … it will be a mixed bag of recovery over 12 to 24 months. And sadly, some won’t recover.

Q. If there is no work for my employees but they are on the JobKeeper Payment can I direct them to do online training from home, so we’re making some use of this shutdown

A. Yes, providing training is relevant to the normal business operation and can include things like personal development, customer service training or even cyber security training … and we’re doing exactly the same in our business. You can also reinvent and expand you business, with additional training, in a new area so you can emerge in a stronger position.

Q. The information provided about Sole Traders applying for JobKeeper is very limited. Exactly what is the criteria and who can apply and more importantly when?

A. Sole Traders employing staff are able to access JobKeeper for eligible staff in the normal way provided the business can demonstrate a 30 per cent reduction in revenue and satisfies the other eligibility requirements. In addition, the sole trader is also eligible providing they meet some additional criteria. Full details of sole trader eligibility can be found here. So the big message for sole traders is that, if you think your revenue will be down 30 per cent or more then register.

You can see more answers from Mr Gandolfo in the comments below.

Originally published as David Gandolfo answers your JobKeeper and business finance questions