September 2020 Update from ASBFEO and Small Biz Matters With special guest Kate Carnell ASBFEO

By Alexi Boyd | Sunday October 4

Small Biz Matters – #178 Providing the small business community with educational content and advocacy since 2014
with Alexi Boyd, broadcaster, advocate and small business owner.
Date: 29 September 2020

Intro:

Small Biz Matters is proud to announce our ongoing collaboration with the Australian Small Business and Family Enterpris­­e Ombudsman through regular updates from Kate Carnell about all ASBFEO is doing to advocate and support small businesses.

In the second of the series Kate Carnell will update us about ASBFEO’s response to the crisis facing small business. This week we’re updating you on:

  • Jobkeeper, FairWork and the eligibility tests
  • The latest on negotiations between ASBFEO, Govt and Banks’ response to the crisis
  • Commercial tenancies - who’s helping who here?
  • Insolvency laws and what it means to be trading insolvent right now

Kate Carnell, as an independent advocate for small business owners, has the legislative power to influence our nation’s lawmakers, ensuring legislation and regulations are put in place to help small businesses grow and in these times, survive.

Welcome back to the show Kate Carnell.

Topics we’ll be covering:

JobKeeper 2.0

  • From 28 September, the JobKeeper payment will be tapered over two stages.
  • 28 September – 3 January 2021:
  • Payments to be delivered in 2 tier system to employers that meet the JobKeeper criteria –
    • -              Tier 1 applies to employees that have worked more than 80 hours in the 28-day reference period. This payment is $1,200 per fortnight.
    • -              Tier 2 applies to employees that have worked less than 80 hours in the given 28 day reference period. This payment is $750 per fortnight.
  •  
  • The following extension period from January 4 – 28 March 2021
  • -Tier 1 payments reduce to $1000 per fortnight
  • -Tier 2 payments reduce to $600 per fortnight 

Turnover test

  • Businesses can pass the actual decline in turnover test either through using the basic test or the alternative test.
  • Most businesses will likely use the basic test, which is based on GST turnover.
  • In applying the actual decline in turnover test, businesses should note that:
  • It must be done for specific quarters only.
  • They must use actual sales made in the relevant quarter, not projected sales, when working out their GST turnover.
  • They allocate sales to the relevant quarter in the same way they would report those sales to a particular business activity statement if they were registered for GST.
  • For the first extension period, a business meets the test when current GST turnover for the quarter ending 30 September 2020 (the months of July, August and September) has declined by the specified shortfall percentage in comparison to their current GST turnover for the quarter ending 30 September 2019.
  • Likewise for the second extension period, a business meets the test when their current GST turnover for the quarter ending 31 December 2020 (the months of October, November and December) has declined by the specified shortfall percentage in comparison to their current GST turnover for the quarter ending 31 December 2019.

Alternative test

  • The alternative test applies to businesses where the normal comparison period is not appropriate. A common example would be if the business has been operating for less than a year.
  • Businesses that are looking to apply for the JobKeeper extension using one of the alternative tests will now need to indicate to the ATO that they are doing so.
  • This means filling out an extra box on the form.

 

Banks

  • The banks are taking a more flexible approach to small business loan repayments. They are working through assessing the position of customers now. From the ABA website, depending on how the business is fairing, the next step for customers will be one of:
    • Those who can resume repayments at the end of their deferral, will be required to do so;
    • Those still in difficulty, will work with their bank to restructure or vary their loan, including converting to interest only payments for a period of time, or extending the term of the loan;
    • Following the assessment once the bank understands the customers circumstances, in some cases, a further 4-month deferral may be granted, but this will not be automatic; or
    • Customers who will be unable to pay their loan over the longer term will be offered tailored assistance that addresses their needs.

Commercial tenancies

  • WA – no change, WA announced on 10 September, they were extending the emergency period under its Commercial Tenancies (COVID-19 Response) Act 2020 until 28 March 2021.
  • SA – potentially no change, there is legislation before its Parliament (to be debated this week) to extend SA’s COVID-19 Emergency Response Act 2020 until 3 January 2021. We will monitor the passage of this bill.
  • TAS – no change, TAS announced on 4 September they are extending the financial hardship period under the COVID-19 Disease Emergency (Commercial Leases) Act 2020 until 1 December 2020.
  • VIC – no change, VIC announced, on 20 August extended its Commercial Tenancy Relief Scheme until 31 December 2020.
  • ACT – no change, the ACT announced on 10 September that it was extending its current arrangements for SME commercial rents until 31 January 2021.
  • QLD – no changes, regulation under the ­COVID-19 Emergency Response Act 2020 does not end until 31 December 2020.
  • NSW – no change, Retail and Other Commercial Lease (COVID-19) Regulation 2020 is not to be repealed until 25 October 2020. Will continue to monitor.

Insolvency

  • The Federal Government has just announced plans to overhaul insolvency rules to make it easier for small businesses to restructure or wind up. These are in line with our Insolvency Practices Inquiry final report.
  • The reforms will allow small businesses to restructure their debts while remaining in control of their business and for those businesses that do need to wind up, the liquidation process will be changed to make it quicker and easier.
  • The government has extended the temporary insolvency and bankruptcy protections until 31 December 2020. Temporary changes to statutory demand and bankruptcy notices requiring a debt of $20,000 and allowing six months to pay the amount demanded will also be extended until 31 December 2020.
  • My office continues to recommend the establishment of a small business viability voucher program, where small business owners facing financial stress can get a voucher valued up to $5000 to access tailored advice on the state of their business.

To find out more go to their website: https://www.asbfeo.gov.au/

About our Guest:

The Ombudsman - Kate Carnell

"In this role I will seek to bring together the many voices within the small business community in a way that promotes growth in this vital sector."

Kate Carnell is the inaugural Australian Small Business and Family Enterprise Ombudsman (ASBFEO).

As the ASBFEO, she is an independent advocate for small business owners.  Her office has the legislative powers needed to effectively influence our nation’s lawmakers, ensuring legislation and regulations are put in place to help small businesses grow.

The ASBFEO office also provides small businesses and family enterprises with assistance should they find themselves involved in a business dispute.

Small businesses are the engine room of the economy; it’s a big reputation to live up to, so we need to do all we can to ensure they have the freedom to innovate, employ and thrive well into the future.

About ASBFEO

Australia is a nation of small businesses and family enterprises.  It’s a dynamic and exciting sector that allows people with an entrepreneurial spirit to pursue their dreams.

One of the fastest growing in the economy, the sector presents many opportunities – and challenges – for those who dedicate themselves to pursing a small business venture.

The ASBFEO's role is to support small businesses and family enterprises to enable them to grow and thrive.

The ASBFEO was launched on 11 March 2016 and has two key functions: to assist and to advocate for small businesses and family enterprises.

ASSIST:

We understand the challenges facing small business owners. We provide access to dispute resolution services for those who may be involved in a disagreement, so they can try and find a solution to their problem without having to go to court.

ADVOCATE:

There are a number of different activities the Ombudsman may conduct in fulfilling the role of small business advocate. Broadly these include:

Conduct inquiries and research

Work with other arms of government

Contribute to other inquiries

Promote good business practice.