More JobKeeper and Commercial lease updates from COVID-19
Some good news for commercial tenants amid the Coronavirus downturn. Commercial leases are such a huge cost, and whilst we get that landlords also need to make an income, unless a compromise is made between landlord and tenant, there could be plenty of empty shops soon.
Prime Minister Scott Morrison announced some new measures for landlords and tenants yesterday (Tuesday 7th April). The new mandatory code will apply to tenancies where the tenant or landlord is eligible for the JobKeeper program, which means those that are in financial distress. This code was described to include “good-faith principles” where landlords must not terminate the lease or draw on a tenant’s security and likewise, tenants must honour their lease.
The PM reinforced the point that landlords and tenants should “sit down and work it out.”
“Which is sometimes easier said than done. I mean what if you have the conversation and the landlord flat out refuses to cooperate? Who actually wins in that situation?”
Current details provided:
- Landlords will have to reduce leases for businesses affected by Coronavirus.
- The reduction will have to be in proportion to the reduction in the tenant’s business.
- Waivers of rent must account for at least 50% of the reduction businesses
- Deferrals refers to rental payments that need to be paid, but can be put off.
- Deferrals can be spread over the remaining time on a lease for no less than 24 months.
- That means if a tenant had 3 months left on a lease, they would still have at least a year to make any deferred rent payments.
- The PM said landlords that don’t engage with their tenant to work a rent arrangement out would be “forfeiting their rights”.
It’s clear the PM wants landlords and tenants to work together.
There have also been some updates to the JobKeeper payments previously released, and again, we expect more changes and finer details to come.
Last week the government announced the JobKeeper payment. This is a wage subsidy aimed at helping employers keep paying their employees. Millions of workers across Australia will receive a fortnightly payment of $1500 through their employer. The goal is to help businesses start up quickly once this crisis is over.
We expect the JobKeeper legislation to be introduced in Parliament today (Wednesday 8th April). Once legislation is passed it will take a few days to receive Royal Assent – the last step in enacting the law – so please give us some time over the Easter break to review it. We encourage you to try to take some time for yourself this Easter as well.
There are more details and eligibility requirements of course. Please get in touch with us if you have any questions.
- Employers must apply online, provide information to the ATO on all eligible employees and ensure that those employees receive at least $1500 per fortnight (before tax).
- There is a maximum period of 6 months, from 30 March 2020.
- Businesses (including not for profits) must prove their business turnover is estimated to fall by 30% or more.
- Self-employed individuals will be eligible to receive the JobKeeper payment if they meet the same criteria.
More information can be found here:
- JobKeeper Payment Fact Sheet for Employers.
- JobKeeper Payment Fact Sheet for Employees.
There is also updated tax relief for those now working from home in terms of what you can claim.
The ATO has created a new Working From Home Shortcut to make it easier for anyone who has to work from home to claim a Tax Deduction based on hours worked from home from 1 March.
The new arrangement will allow people to claim a rate of 80 cents per hour for their running expenses, rather than needing to calculate costs for specific running expenses. The requirement to have a dedicated working from home area has been removed. As always, you should refer all tax questions to your tax agent, and keep a diary or notes to validate your claims.