ATO warns 8000 businesses over JobKeeper eligibility
- The Tax Office could move to recoup JobKeeper payments from as many as 8000 small businesses around the country, after warning some employers may not be eligible for the payments.
- Businesses and sole traders receiving the $1500 fortnightly wage subsidies have been told they face compliance checks by the ATO if they started operating after January 1, or where they had no assessable business income during the 2018-19 financial year.
- The ATO is completing manual checks within identified groups, but warned businesses which don't meet the requirements could not receive taxpayer cash.
- Labor has used the Eden-Monaro byelection campaign to heap pressure on the government to release its review into JobKeeper, completed last week by Treasury Secretary Steven Kennedy.
- Dr Kennedy handed the report to Treasurer Josh Frydenberg last week and its release is expected before the government's economic update later this month.
Qantas facing legal action over JobKeeper
- The union for Qantas airport staff has pledged to take immediate legal action against the airline because it says it is refusing to change how it uses JobKeeper to pocket parts of the wage subsidy.
- But the airline is opposing union calls to apply a similar standard to the thousands of employees who are paid fortnightly and have seen JobKeeper used to pay down their penalty rates in a fortnight where they don’t work.
- The Fair Work Commission in May found Qantas had been unreasonably allocating earnings for a monthly-paid employee to different fortnights that saw it use JobKeeper to pocket parts of staff pay.
- In a note to members on Thursday, the ASU said it only found out Qantas had changed its position on monthly-paid staff this week after the union pointed out the updated guidance.
Boost the economy before attempting budget repair
- The fiscal props such as the $70 billion JobKeeper program holding up the economy should not be pulled away too quickly and the government should be patient when it comes to repairing the COVID-19 hole in its budget.
- Economists expect an annual contraction of 4 per cent in 2020, according to The Australian Financial Review's economists survey for the June quarter.
- As the virus continues to hold sway over the country's reopening schedule, the unemployment rate is already moving higher, rising to 7.1 per cent in May. The rate is only expected to continue to climb this year, according to the June economist survey.
- Tim Toohey, chief strategist at Yarra Capital Management, pointed out that the government's very low borrowing costs give it ample time to focus on an economic recovery during 2021 before it needs to consider budget repair.
JobTweaker lever needed to pull back from cliff
- So a second wave of government supports must extend the emergency lifeline for the economy beyond September.
- The list is long: JobKeeper ends, the doubling of unemployment benefits through JobSeeker stops, the pause in payments on half a million mortgages runs out, the rental eviction ban is lifted, government loan guarantees for small businesses pull back, and the clock runs out on extra wage subsidies for apprentices.
- Or, to put that another way, if you want to know what will happen with JobKeeper, keep watching the virus numbers in Melbourne.
- But the recession is changing shape fast, so the nature, timing and dollars of government support needs to change fast too.
- So whatever happens, we shouldn’t be scared of spending more money if that’s needed to get unemployment back down.
- The mistake the world made after the GFC was pulling back government support too soon.