A month and a lifetime have passed since my first article examining the various Covid-19 support packages on offer for architects. It feels like the world is a much calmer place now than the chaos, empty supermarkets and general panic of March. So it’s time for an update on the support packages, and a summary of new initiatives that have emerged.
The federal government’s cashflow boost package was passed into law on the 23rd of March, and triggered by submissions of March business activity statements, has started trickling into bank accounts.
Other than submitting your BAS, there’s nothing you need to do to access this support. The ATO automatically calculates your entitlement and credits your account with the amount owed. It’s worth noting that this credit does not involve men in dark suits and dark shades depositing suitcases with unmarked bills on your doorstep. Rather, it’s a credit to your ATO account against your next tax bill in April (if you pay PAYG monthly) or June (if you pay it quarterly).
More information on the cashflow boost can be accessed here.
The federal government’s jobkeeper package was passed into law on the 8th of April, with a subsequent flurry of activity from the ATO, within accounting software and on the desks of business owners.
Unlike the cashflow boost, there’s a lot you need to do to access this support:
- Check if your business is eligible for jobkeeper payments. There has been a deep and pungent river of anxiety over this process, with uncertainty over which months you need to compare to prove a loss in revenue, whether the months should be quarters, whether calculations should be on a cash or accruals basis, and what to do if your revenue is down but not compared to last year. Fortunately, the ATO has provided a useful summary of the two ways to test eligibility. And if you use Xero as your accounting software, it has an excellent turnover calculator that you can access from the payroll page.
- Enrol for jobkeeper payments, which you can do here. There has been plenty of confusion over this step too, mostly about whether you should count yourself as an employee or an eligible business participant (whatever the hell that means). My understanding is that if you pay yourself a salary, you’re an employee, and if you don’t pay yourself a salary (for example, because you just draw down cash from your business account whenever you need it), you’re an eligible business participant. You can’t be both. To be entitled to jobkeeper payments for April, the enrolment deadline was initially set for today, but an extension has now been granted until the end of May,
- Notify your employees that you’re enrolling for jobkeeper payments, and have them complete the jobkeeper employee nomination notice.
- Set up single touch payroll in your accounting software. This isn’t essential, as you can do the next step directly through the ATO business portal, but it does make that step easier.
- Enrol your employees for jobkeeper payments and select a start date for their eligibility. In Xero this is mind-boggling easy, I imagine somewhat less so if you’re stuck with the business portal.
- Ensure you have a jobkeeper pay item set up in your accounting software. This happens automatically in Xero. It will only be relevant for employees who would otherwise earn less than $1,500 per fortnight and are receiving jobkeeper as a topup.
- Pay your employees.
- Complete a monthly declaration with the ATO, reconfirming your number of eligible employees. This can be done through the business portal or via your accountant.
The good news is that once you qualify for jobkeeper payments, you won’t ever need to re-qualify. So even if your revenue starts looking much rosier in coming months, you’ll still be entitled to $1,500 per employee per fortnight.
Business support fund
The Victorian government’s business support fund opened for applications on the 30th of March, and is available to businesses “that have been subject to closure or are highly impacted by restricted activity directions issued by the Deputy Chief Health Officer”.
My understanding is that a number of architects applied for this support and have been uniformly and unceremoniously rejected. Here’s the relevant portion of the email I received earlier this week:
“Thank you for your recent application to the Business Support Fund. Unfortunately, and after careful consideration, your application has been found to be ineligible as your Australian Business Number (ABN) Registration indicates that your industry classification does not meet the Business Support Fund’s eligibility requirements.”
Which in other words means that an actual living person is probably not responsible for assessing your application. Instead, an automated bot checks the Australian Business Register for your ABN, compares the industry code of your business (which is likely professional, scientific and technical services) to a list of pre-approved codes, and rejects you without further fuss.
More information on the business support fund can be accessed here.
Please let me know in the comments if you think it’s worth contesting this, and I’ll see what I can do about ArchiTeam or the Australian Institute of Architects lobbying the state government for a review.
The federal government’s commercial leasing code of conduct came into effect on the 3rd of April. The code seeks to “impose a set of good faith leasing principles for application to commercial tenancies… where the tenant is an eligible business for the purpose of the Commonwealth Government’s JobKeeper programme.”
- You are eligible if your architecture practice is eligible for jobkeeper.
- You landlord cannot terminate your lease due to non-payment of rent.
- Your landlord must offer you a proportionate reduction in your rent based on the reduction you experience in your revenue during Covid-19.
- The rent reduction is to be a combination of deferral and outright waiver, with the latter constituting no less than 50% of the total reduction.
- A rent deferral is to be repaid to your landlord over the balance of the lease term or a period of 24 months, whichever is the greater.
- There’s a whole bunch more in the code than this, but these are the main points.
- The commercial leasing code is now active, so it’s up to you to renegotiate your rental arrangement with your landlord.
- Your regular monthly rent is $2,000, but your revenue has fallen by 50% due to Covid-19. Your landlord is required to provide you with rent relief of $1,000 per month, of which a minimum of $500 is to be a full waiver. The remaining $500 is to be a deferral, to be repaid to your landlord over the next two years.
More information on the leasing code of conduct can be accessed here.
On the 6th of April, the federal government started paying childcare centres 50% of their usual revenue, on the proviso that they remain open and do not charge families for care. This package added a further $453m of economic stimulus to the hundreds of billions already committed.
For the parents reading this article, there’s nothing you need to do to access the free childcare support, and you are supposed to receive it whether you keep sending your children to childcare or decide to keep them home.
This has been enormously helpful for my family and every other family I know, it is without doubt a great burden lifted. But I have to confess I don’t understand how childcare centres are able to operate on 50% of their usual revenue. Even with lower occupancy, surely their overheads won’t have gone down that much? Are they entitled to top this up with the cashflow boost and jobkeeper packages?
If you have any idea how this is actually working, please let me know in the comments.
Tax deductions for your home office
If you’re an employee working from home, or a business owner for that matter, I imagine you’re now dedicating a portion of your household expenses to the purpose of work. To claim a tax deduction for these expenses under normal circumstances, you would need to individually track and log each expense. These include:
- Electricity used to run equipment and heat, cool and light your work area.
- Cleaning your work area.
- Phone and internet.
- Computer consumables and stationary.
- Purchasing home office equipment.
They don’t include:
- Rent or mortgage repayments.
- Coffee, tea or milk.
- Booze, so much booze.
Keeping a track of all this stuff would be excruciatingly boring, so fortunately the ATO has announced that as of the 1st of March and until at least the 30th of June, you can use a shortcut method instead:
- You are entitled to claim 80c per work hour for all expenses.
- At 37.5 hours per week, this translates to a tax deduction of $132 for the month of April.
More information on tax deductions while working from home can be accessed here.
There are far too many support packages on offer from far too many councils to examine here, though suffice it to say that they’re probably all offering something. To use where I work as an example, the City of Moreland is providing:
- Rates relief.
- Community grants.
- No enforcement of timed parking restrictions.
The Victorian state government has produced a useful financial assistance finder that summarises the vast majority of support packages available, and filters them depending on whether you run a business, are a sole practitioner or a employee:
I’ve not come across similar tools provided by other states and territories, but please let me know in the comments if you have and I’ll add them to the list.
Once again, I wish you all the best in your efforts to survive what are sure to be difficult months ahead, and hope we see each other on the other side of Covid-19 with all of our practices alive and well. A collection of Panfilo articles related to Covid-19 can be accessed here.
- Example #1: if you usually pay an employee $2,000 per fortnight, you will continue paying her this under the ordinary hours pay item, and are obliged to pay superannuation on this entire sum. Example #2: if you usually pay an employee $500 per fortnight, you will continue paying her this under the ordinary hours pay item and a further $1,000 under the jobkeeper pay item. You are only obliged to pay superannuation on the $500.
- Business Support Fund; Business Victoria; accessed April 2020.
- Email received by author from the Victorian state government; April 2020.
- National cabinet mandatory code of conduct: SME commercial leasing principles during Covid-19; Prime Minister of Australia; accessed April 2020.
- Ultrastructure of the Covid-19 virus; sourced from New Scientist.