How to Prepare for the End of the JobKeeper Scheme
Throughout the COVID-19 pandemic, the Australian Government’s JobKeeper Payment scheme has offered significant support for many businesses. For some business owners, it was literally the life jacket that allowed their business to remain afloat. For some individuals, it may have been the difference between employment or losing their job amidst career uncertainty.
However, after almost 12 months in effect, and after an extension from 4 January 2021, the scheme is set to come to an end on 28 March 2021. The crutches are being removed and many economists are forecasting a few wobbly months (or years!).
So how can you prepare your business and your staff for life after JobKeeper in an unstable economy? Here’s what the experts have to say.
The Impacts of JobKeeper
The financial implications of COVID-19 affected not only Australian business owners but also their employees, landlords, lenders, suppliers and accountants. In fact, the list goes on and on.
During the pandemic, all the unexpected surprises and uncertainties that arose meant that managing cash flow forecasting was more important to business owners than ever before. While everyone was scrambling for answers and trying to make sense of the impacts the pandemic would have on their business and lifestyle, grants, subsidies and schemes were thankfully pulled together and rolled out faster than we’ve ever seen.
To cushion the blow of COVID-19 and the financial struggles that came along with it, the Federal Government passed more than 40 pieces of legislation that enabled funds to start flowing back into the pockets of business owners in the form of JobKeeper, the ATO Cash Flow Boost and other government grants.
JobKeeper saw eligible businesses and not-for-profit organisations receive $1500 per fortnight, per eligible employee. The JobKeeper scheme enabled employers to stay connected to their employees, which ensured they didn’t have to re-hire and re-train new staff when the pandemic was over. This act helped to keep Australians in jobs, and businesses in business.
If you were tapped into the available support, it made a huge difference.
What We’re Saying Goodbye to When JobKeeper Ends
As the end of March quickly rolls around, we won’t only be farewelling JobKeeper but also several other legislations that definitely helped soften the blow of the COVID-19 pandemic.
Before 30 June 2021, we’ll see the following pieces of legislation draw to a close:
- JobKeeper Scheme - 28 March 2021
- Coronavirus Supplement - 31 March 2021
- Apprentice/Trainee Wage Subsidy - 31 March 2021
- Homebuilder - 31 March 2021
- Backing Business Investment (fast tracked depreciation) - 30 June 2021
The Next Phase of Government Support
The end of JobKeeper doesn’t mean the end of government support. New legislations have already come into effect in the next phase of support offered to us by the government and include:
- Full Expensing of Depreciation Assets (FEDA) - until 30 June 2022
- Loss Carry-Back (only for 2020-2021 and 2021-2022 income years) - until 30 June 2022
- JobMaker Hiring Credit - until 6 October 2021
- Travel Agents - until funds depleted
JobMaker and Beyond
The JobMaker Hiring Credit scheme is a credit available to eligible businesses and non-profit entities that create new jobs. Businesses looking to fill the role of an employee who left the business are ineligible for the JobMaker Hiring Credit scheme.
JobMaker is available for jobs created from 7 October 2020 until 6 October 2021, and supplies the employer with credit to support wage costs as follows:
- $200 per week for new employees between the ages of 16-29
- $100 per week for new employees between the ages of 30-39
JobMaker is administered by the ATO and is paid quarterly in arrears from the start date of the employee for 12 months – assuming that the business and the employee remains eligible.
To confirm eligibility of your business and employee, you can check the JobMaker Eligibility tool.
Unlike JobKeeper, JobMaker is applicable to new businesses, and businesses don’t need to satisfy a ‘decline in turnover test’ in order to receive payments.
Managing Cash Flow
As a business owner, it’s important that you consider the ways you can effectively manage your cash flow over the coming months as we enter this time of change. A few ways you can successfully manage your cash flow include:
- Knowing and understanding your cash flow position
- Considering how your product mix and sales strategy may need to change in order to reduce the impact of (or take advantage of) the current climate
- Revisit your marketing plan and strategy to investigate how to bet promote your business in a low-cost way
- Eliminate all non-essential or discretionary expenditure (including reducing labour costs where necessary)
- Reconsider your operating hours to reduce the running costs of your business
- Discuss reducing or deferring rent with your landlord
- Consider converting your debt to interest-only with your bank
- Review cash flow relief and support options provided by the ATO and SRO
- Identify any other options for short-term sources of finance
- Reduce stock levels and sell surplus assets that do not have debt attached to them
- Consider payment plans or deferral for personal expenses (such as school fees)
You might also wish to read about tax planning and the ways you can forecast your revenue and costs.
Our Melbourne-based accounting advisors are happy to talk you through the benefits that JobMaker may have provided your business, and what you need to consider in order to be eligible.