Author: Adam_Admin

What to consider when dismissing employees due to COVID-19

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Despite unprecedented circumstances, employers still need to consider the requirements of dismissal under the Fair Work Act when ending employment to avoid legal action against them.

When dismissing or standing down employees due to COVID-19 limitations, employers must continue to comply with the applicable award, enterprise agreement, workplace policy or employment contract, as well as providing employees with their legal entitlements, such as notice, accrued leave and redundancy payments.

The Fair Work Act prohibits employers from dismissing employees due to illness or injury, meaning that if they have contracted COVID-19, or have symptoms that prevent them coming into work, they cannot be dismissed.

Employers who are affected by COVID-19, such as those who are facing business slow down or are shutting down may dismiss employees under redundancy. Employees may be entitled to redundancy pay if their continuous service to the employer is less than 12 months. Regular redundancy eligibility requirements still apply and not all employees will be eligible, such as casual workers, apprentices and trainees.

The Australian Government has enabled employers to make temporary and partial stand downs during COVID-19. Stand downs can be enforced without pay if the business has been closed due to enforceable government direction (non-essential services), if a significant portion of employees are under self-quarantine, or if work is forced to stop due to lack of supply.

Assistance available for SMSFs and their members

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The Government’s economic response to coronavirus will provide SMSFs and their members with additional support, including reducing minimum drawdown rates and early release of superannuation.

The minimum annual payment required for account-based pensions and annuities has been reduced in an initiative to assist retirees. For the 2019-20 and 2020-21 financial years, the minimum annual payment required for members has been reduced by 50%.

If the minimum drawdown amount has been paid, no further payments will be required for the rest of the year. Those who have already paid more than the minimum drawdown amount are able to have their member recontribute this amount if the member is eligible to make contributions. Re-contributions will continue to be subjected to rules or limits, such as contributions caps.

Members of SMSFs who have been adversely affected by COVID-19 may be able to access up to $10,000 of their super before 1 July 2020, as well as a further $10,000 between 1 July 2020 and 24 September 2020, on compassionate grounds. To be eligible, members must satisfy at least one of the following criteria:

  • They are unemployed.
  • They are eligible for certain government support payments, including a job seeker payment, youth allowance for jobseekers or parenting payment.
  • They were made redundant on or after 1 January 2020.
  • They had their work hours reduced by at least 20% on or after 1 January 2020.
  • They are a sole trader and either had a turnover reduction of at least 20% or had their businesses suspended, both on or after 1 January 2020.

Applications for early access can be made through myGov.

In addition to these initiatives, the Government will also be automatically deferring the lodgement of 2019 SMSF annual returns until 30 Junes 2020.

Mandatory code of conduct for commercial tenants and landlords

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The Government has introduced a mandatory code of conduct to help commercial tenants with rent relief during the COVID-19 pandemic.

Under the code of conduct for commercial tenancies:

  • Landlords must not terminate leases for non-payment of rent during the COVID-19 pandemic and recovery period.
  • Tenants must stay committed to their lease terms.
  • Landlords must offer reductions in rent as waivers and deferrals proportionate to the tenant’s reduction in trade during COVID-19. Waivers must constitute no less than 50% of the total rent reduction during that period.
  • Benefits that owners get for their properties as outgoing reliefs (e.g. deferred loan payments, land tax, reduced charges) should be passed onto the tenant in the appropriate proportion.

The code will be implemented nationwide and aims to encourage parties to reach agreeable outcomes on a case by case basis. For commercial tenants, this means negotiating rent reductions corresponding to their annual turnover reductions and being provided extended lease terms for the rent waiver and deferral period.

From 3 April 2020, the code will apply to SMEs with an annual turnover of less than $50 million and are participating in the JobKeeper program. Take note of how these measures may affect your business and how they may help you plan ahead for the upcoming financial year.

FBT exemptions to keep in mind during the COVID-19 pandemic

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In emergency situations like the COVID-19 pandemic, there are certain benefits you can provide your employees or their associates which may be exempt from fringe benefits tax (FBT).

The fringe benefits tax is a tax which employers must pay on certain benefits they provide for their employees, their employees’ families and associates. However, with emergency circumstances such as the pandemic-level coronavirus, the ATO is providing FBT emergency assistance exemptions which apply to many common scenarios that your business may be experiencing.

In the case of COVID-19, the FBT emergency assistance exemption applies to:

  • Help businesses which have had to relocate their employees who needed to self-isolate and are from a high-risk area.
  • Paying for emergency meals and accommodation for employees who are stranded overseas due to travel restrictions.
  • Paying for flights for overseas employees returning to Australia.
  • Exempting transport fees for an employee to seek medical assistance from their workplace.
  • Exempting equipment purchased to provide to work-from-home employees such as laptops, portable printers or other portable electronic devices.
  • The minor benefits exemptions may apply for minor, infrequent and irregular benefits of under $300.

With all these exemptions to keep in mind, remember that your FBT return is due 21 May 2020 unless the ATO accepts your request for an extension on lodgement time, you have been granted a deferral or you lodged electronically through a registered tax agent.

Your FBT returns can only be lodged through the practitioner lodgement service (PLS) which requires a Standard Business Reporting (SBR) enabled software from a digital provider. Your digital service provider should be partnered with the ATO in integrating tax and superannuation services into your practice management software.

How to keep in contact with your clients

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Amidst the COVID-19 pandemic, it is important for businesses to use the web to communicate effectively with their clients and potential customers in order to retain them during such difficult financial times. While the modern internet provides businesses with many avenues to contact their clients, a few key methods you can consider implementing in your business strategy are explained below.

Send regular emails with updates:
Retention emails are a good way to start when trying to stay in touch with your clients over the digital space. Your emails should express a deep understanding of your customers and the circumstances they are most likely in (e.g. currently in self-isolation), outline your business services which may provide support during trying times and above all, show that you care about their well-being and encourage their feedback.

Your emails should also include updates and news about your business so that your customers are aware of your circumstances as well. Make sure that your emails are distributed on a regular basis (e.g. once a week) without being too frequent and running the risk of spamming and putting off your customers.

Provide updates on your website and blog:
Another way you can stay in touch with your clients is to provide regular updates on your business services through your website and/or blog. Clients are more likely to visit your website if they are still interested in your services during such times, so it is important to be transparent and provide updates on your business activities through your website. Also, consider posting frequently on your blog and providing your clients with more interactive and current content to keep them engaged with your business.

Use interactive tools on social media:
If you are looking to keep up to date with your clients’ interests while simultaneously updating your clients on your business ventures, social media is the best way to do it. With more people on social media than ever, now is the time to take advantage of your various relevant social media platforms to not only post updates about your business but also keep up to date with your clients on a more personal level.

With features such as stories, polls, surveys and comment sections, you are sure to gain a more interactive and personal experience by communicating with your clients through social media. Take the time to reply to comments, start interactive promotions such as giveaways and let your audience know that you care about and want to be engaged with them.

How to save money during the COVID-19 pandemic

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The COVID-19 pandemic is proving to be not only a major health concern for the global population, but also a huge financial concern for businesses and individuals alike. In a time of economic uncertainty and risks of unemployment, here are a few ways you can save money during the coronavirus crisis.

Consider changing your savings account:
While Australian interest rates are at an all-time low, savings accounts which offer an interest rate of over the 1.8% inflation rate still exist. If your savings account is offering interest rates below the annual inflation rate, consider switching over to a bonus savings account, where bonus interest rates are offered to customers who satisfy the various requirements each month (e.g. making a deposit each month). Introductory savings accounts are another temporary and popular option, as they typically have much higher interest rates for the first few months before reverting to a lower rate after.

Having a comparatively high interest rate isn’t the only reason to consider changing your savings accounts, as there are others which come with more helpful financial tools and features. For example, spending insight tools and bill payment reminders may help you plan out your savings during these trying times.

Look into a long-term term deposit:
Similar to a savings account, a term deposit is a relatively risk-free place to store any cash you may have. However, a term deposit is an option to consider if you are looking to cash away your savings for a long time, as customers may receive penalties if they take out money during a specified length of term. Term deposits are also low-maintenance and if you’re able to find one offering a high interest rate, it’d certainly be a safe place for you to store your savings during these uncertain times.

Review your credit cards:
Take advantage of your extra time and review your credit card debts and fees. Cancel any credit cards that you won’t be using in the current conditions (especially travel credit cards) and save those that you will need for a sustainable daily lifestyle, which also preferably have low interest rates. While cancelling credit cards, also consider using a balance transfer to transfer your debt from one credit card to another to simplify the process and keep things uniform. If you’re able to, taking care of any debt on your credit cards now would be more practical than accumulating interest and paying back at a later date.

Apply for assistance:
The Australian Federal Government has implemented many financial measures to help individuals with their financial struggles amid the COVID-19 pandemic. For example, welfare recipients can apply to receive an extra $550 per fortnight as well as a one-off $750 cash payment. The JobKeeper program which pays employees a minimum of $1,500 per fortnight is also available to working or individuals who have been stood down. To apply and find out more about the assistance schemes that you are eligible for, visit the Centrelink website and start your claim.

In addition to the Government, Australian banks are also being more understanding of individual circumstances and have relaxed their criteria in terms of mortgage payments (with six-month repayment deferrals), personal loan repayments and easier access to term deposits. Contact your bank if you are experiencing financial struggle as a result of COVID-19 and they may be able to help you.

Eligible for the JobKeeper scheme? Here’s what to do now

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Businesses wishing to use the JobKeeper payment scheme may find themselves running into many logistical uncertainties, as claiming the JobKeeper payment scheme can be a complicated and risky process. Here are the steps you need to take now to benefit.

Businesses who have satisfied the eligibility requirements of a minimum 30% reduction in their turnover for at least a month, with a turnover of less than $1 billion a year, will be able to apply for the scheme. This includes sole traders who are actively engaged in the business and are not a permanent employee of any other employer.

To claim JobKeeper payments, eligible employers must:

  1. Register your interest and subscribe for JobKeeper payment updates through the ATO website. before 26 April 2020 through the ATO.
  2. Continue to pay eligible employees at least $1,500 each per fortnight (the first JobKeeper fortnight is from 30 March to 12 April), or make a single combined payment of $3,000 by the end of the month.
  3. Notify eligible employees of your intention to claim JobKeeper payments and confirm that they are not also claiming the payment through another employer.
  4. Provide your nominated employees with the JobKeeper employee nomination notice to complete before the end of April if you intend to claim JobKeeper payment for April.
  5. Enrol for the JobKeeper payment on or after 20 April 2020 through the ATO’s Business Portal. For April JobKeeper payments, this must be done before the end of the month.
  6. Fill out the online form, providing your bank details and whether you will be claiming an entitlement based on business participation, e.g. sole traders.
  7. State number of employees who will be eligible for the first two JobKeeper fortnights (30 March -12 April and 13 April – 26 April).

Receiving JobKeeper payments can put small businesses at risk of cash flow problems due to the requirements of JobKeeper payments. To be eligible, businesses must back pay the minimum $1,500 per fortnight to nominated employees from 30 March 2020, despite JobKeeper reimbursements not being provided until the first week of May. Employers who normally pay employees less than $1,500 each per fortnight (often these are part-time and long-term casual employees) may find themselves in further financial strain for at least a month as the employee wages will likely exceed the amount they would ordinarily pay in wages despite already losing 30% of their turnover.

Employers who apply for the scheme but fail to pay their eligible employees may face penalties up to $126,000 for individual employers, or $630,000 for corporations as a breach of the Fair Work Act. The ATO can also claw back funds (with interest) which it deems to be improperly paid. The scheme also requires monthly reports of current and projected GST turnovers, where eligibility consequences can be imposed for not meeting record keeping requirements.

Applying for your superannuation guarantee amnesty

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If you are an employer looking to correct past unpaid superannuation guarantee (SG) amounts, you now have a six-month window until 7 September 2020 to apply for SG amnesty. Up until early September, employers will be able to disclose, lodge and pay unpaid SG amounts for their employees.

Employers are encouraged to apply for SG amnesty to get their obligations up to date. You can also claim deductions and not incur administration charges or penalties during this amnesty.

To be eligible for the SG amnesty, employers must declare and pay their SG shortfalls and interest charges. Payments made during the amnesty can later be claimed as tax deductions and payment plans can also be arranged to better accommodate for employers, including those which can:

  • Have flexible payment terms and amounts which the ATO will adjust as an employer’s circumstances changes.
  • Extend the payment plan to beyond 7 September 2020. However, keep in mind that only payments made before or on 7 September 2020 will be tax-deductible.

Due to the COVID-19 pandemic, the ATO will also be amending refund returns as quickly as possible for employers who lodged an SG charge statement between 24 May 2018 and 6 March 2020.

To apply for the SG amnesty:

  • Lodge an approved SG amnesty form with the ATO for each quarter by 11:59pm on 7 September 2020.
  • Check your amounts are correct and that there are no errors on the form.
  • Complete the declaration to confirm that you are applying for the SG amnesty
  • Save the form as a .xls file.

After correctly submitting your form, the ATO will contact you with which of your quarters are eligible for the SG amnesty.

ATO’s additional tax support for businesses

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While the Australian Government has provided businesses with many relief measures during the COVID-19 pandemic, such as the JobKeeper subsidy payment scheme, major changes to instant asset write-off and also rental relief for commercial tenants, the ATO has also provided additional tax support measures that may help your business further.

The ATO is providing businesses with financial relief in terms of interest payment and penalties. Such measures include:

  • The ATO will consider remitting interest and penalties incurred after 23 January 2020.
  • Low interest payment plans can be discussed with the ATO if you need help to pay your existing and ongoing tax liabilities.
  • Income tax, FBT and excise payment due dates can be deferred until 12 September 2020.

The ATO is also encouraging businesses to consider temporarily changing their GST reporting cycle in order to get quicker access to their GST refunds. For example, for businesses which usually report their GST quarterly, moving to monthly reporting if you are due for a GST refund means you can get quicker access to the GST refunds you are entitled to. However, before you make the change, consider that:

  • You can only change your reporting cycle from the start of a quarter.
  • Changing your GST reporting cycle does not mean changing your PAYG reporting cycle.
  • Choosing to report and pay GST monthly means committing to reporting monthly for at least 12 months before electing back to quarterly reporting.
  • Your fuel tax credits will need to be reported with your GST.

The new additional tax support measures also means that you can vary your PAYG instalments on your activity statement. You may also be able to claim a refund for any instalments made during the 2019-20 financial year. Penalties or interest will not be applied to where you choose to vary your PAYG instalments for the 2019-20 financial year as well.

Ways to retain your employees

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Retaining your employees is often a harder task than you think, especially during fluctuating economic conditions and with a growingly skilled and talented workforce. Here are some tips you can implement into your workplace culture to help you retain employees and make sure they are happy working with you!

Provide quality leadership, management and supervision:

Employees more often than not leave jobs because of their managers, bosses and supervisors rather than the job itself. To make sure your employees have a good experience working for you, provide them with educational and warm leadership. Here are a few things to keep in mind when leading and teaching your employees:

  • Be clear about your expectations
  • Be clear about each employee’s earning potential and update them whenever possible
  • Provide concise and constructive feedback on their performance

Allow employees to grow their talents and skills:

Learn about your employees and allow them to utilise their skill sets and talents within the work delegated to them in your business. As an employee, what’s even worse than a bad manager is the inability to grow their skills and be challenged at work. Never box your employees into rigid work procedures and allow a degree of freedom and room for growth for your employees.

Reward your employees:

Keep employees happy to work for you and give you their all by constantly incentivising them with rewards. Whether your rewards are monetary or speak to their emotional needs, employees need to be motivated to keep working for you while also remaining productive and doing their best for you. Consider making your rewards personalised to each employee to make them more effective.

Respect and appreciate your employees:

Tied in with the previous point of employees leaving their positions as a result of their bosses, showing your appreciation and respecting your employees goes a long way in influencing your best employees to stay with your business. A positive and amicable work culture often makes or breaks a business and not only should you respect your employees, all of your employees should be respectful and appreciative of each other. Building a respectful community in your workplace is certainly a plus when considering how to retain employees.