New owners of Hobart’s Jam Packed Cafe caught off guard by apparent JobKeeper loophole

The new owner of a Hobart café has been left barely making ends meet after a JobKeeper fail, saying he has been stung for investing in a business during the COVID-19 pandemic.

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THE new owner of a Hobart cafe has been caught off guard by an apparent JobKeeper loophole, saying the anomaly was penalising him for investing in a business during the COVID-19 pandemic.

Richard Scarr in April purchased Jam Packed Cafe in Hunter St — previously owned by Federal Group — and took on the cafe’s five full-time employees believing they would remain eligible for the income support payments.

Those staff were on JobKeeper after the cafe closed due to coronavirus restrictions, but because of the new ownership, the employees are now not believed to be eligible for the payments.

It means the business is now solely supporting those employees despite turning over less than half of the business’s pre-COVID trade.

The sale settled on August 10 and the cafe reopened a week later and while Mr Scarr is “thrilled” with the public’s support, he said that without JobKeeper the business was “literally just getting by … just covering bills”.

Jam Packed Cafe owner Richard Scarr speaks to the Mercury about JobKeeper. Picture: LUKE BOWDEN

Mr Scarr is now trying to get confirmation about whether the business qualifies for the next stage of the program, but says he has been told it was unlikely by officials of the Australian Taxation Office, which is administering the payment.

He said the cafe was trading at about 30-40 per cent of the business’s pre-COVID levels, and was only just making enough to cover expenses.

From Monday, the eligibility for JobKeeper payments was modified, but Tasmanian businesses whose turnover is still down 30 per cent or more can reapply for another three to six months of the program to help pay their staff’s wages.

But the key issue for Mr Scarr is that because he recently acquired the cafe, he may not be able to satisfy eligibility criteria.

Mr Scarr, also the owner of the Brew coffee shop in Sandy Bay, said he went through with the sale believing the staff would still be eligible for JobKeeper.

“I’ve spoken to the ATO so many times … it’s safe to say I’m now supporting 15 people and there would be other businesses in the same boat,’’ he said.

“I guess people said I’ve bought a cafe and started it up at a really bad time, but what do you do?

“Fear paralyses people so you’ve just got to get on the front foot. I looked at the JobKeeper support and how long it was supposed to stay.”

Jam Packed Cafe owner Richard Scarr speaks to the Mercury about JobKeeper. Picture: LUKE BOWDEN

Mr Scarr said businesses were being encouraged to take risks and employ people but the loophole was holding his enterprise back.

“I’m trying to invest in people and the place, and I take looking after 15 people really seriously,’’ he said.

A federal treasury spokesperson said the JobKeeper program required the employer and employee to meet eligibility criteria.

“Employees are generally still eligible for the JobKeeper Payment even if the business has changed ownership since 1 March 2020, assuming all other eligibility conditions are also satisfied, however, eligibility can be impacted depending on how a business changes hands,’’ the spokesperson said.

“This occurs because an important integrity feature of the JobKeeper payment is that the entity must have been carrying on a business on 1 March 2020 to be an eligible employer.”

The spokesperson said those with questions about eligibility should contact the ATO.

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