How will the changes to JobKeeper affect SMEs?

How will the changes to JobKeeper affect SMEs?

With COVID-19 continuing to be troublesome in Australia, the government announced an extension to the JobKeeper program on 21^st July, labelled JobKeeper 2.0. This will come into force on 29^th September and last until 28^th March 2021. These changes have been welcomed by many SMEs who fear that without financial support they will no longer be able to operate under COVID-19 restrictions.

Entitlement for the JobKeeper program, however, will change from the current one-time test to ongoing eligibility, along with reduced payments to eligible employees. It’s possible that these changes may have a negative impact on some SMEs if they can’t fulfil the new criteria for the JobKeeper 2.0 program. Conversely, others will reap the benefits of ongoing government support during the pandemic.

New eligibility criteria for JobKeeper

Currently, to be eligible for JobKeeper, businesses must prove eligibility by satisfying the “decline in turnover” test with the “test period” being either a relevant month or quarter. This test must only be satisfied once, even if your circumstances change. Businesses must also send monthly turnover data to the ATO (both current and projected turnovers), however if your turnover returns to pre-COVID19 numbers, you were still eligible for the JobKeeper program. As of 29^th September, these requirements will change: https://treasury.gov.au/coronavirus/jobkeeper/extension

The new requirements of JobKeeper 2.0 are based on a comparison of quarterly turnover. So to be eligible for the JobKeeper 2.0 program during the October to December 2020 quarter you must satisfy the “decline in turnover” test in the two previous quarters: April to June 2020 and July to September 2020. For the January to March quarter, you must satisfy this test during the three previous quarters: April to June 2020, July to September 2020 and October to December 2020.

The rates of payments will also be changed from the current $1500 per fortnight for eligible employees to $1200 from 29^th September and to $1000 from 4^th January 2021 for employees working more than 20 hours per week. For employees working less than 20 hours per week, these fortnightly payments will be reduced to $750 from 29^th September and $650 from 4^th January 2021. These fundamental changes have been designed to ensure that businesses suffering the most from COVID-19 receive the financial support they need to remain open, while encouraging future sustainability and planning for these affected businesses. If your SME is eligible for continuing JobKeeper payments, it is anticipated this boost and support will assist in continuing operations and retaining your employees into 2021. Let’s hope that by this time, the COVID-19 restrictions will be lifted and Australia can return to the new ‘normal’.

Whilst the exact details of the decline in the turnover test are yet to be released for the October to December 2020 quarter, it’s believed that some of Australia’s most heavily impacted SMEs will benefit from these changes. These include hospitality and tourism, entertainment and the airline industries. It’s also important to remember that many businesses in both Victoria and NSW are suffering through a second round of restrictions. Hopefully, these new changes to the JobKeeper 2.0 program will be sufficient to help these businesses remain in operation until the restrictions lift.

At Insurance Advisernet, we encourage any of our customers who are struggling through the COVID-19 pandemic in Australia to reach out. If you need advice about reducing your insurance risks or want to discuss whether your current policies are still relevant in these challenging times, please talk to an insurance specialist today and find your local adviser.

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

SME Business Insurance

Business Insurance is used by many businesses, but it’s best suited to SME-type operators.

SME Business Insurance

What is SME Business Insurance?

Any business in Australia, including small to medium-sized businesses, will benefit from an added layer of financial security in the form of an SME Business Insurance cover. This provides owners and businesses with protection against financial risks and the loss of key assets. It also protects customers, employees, suppliers, and contractors.

Some types of insurance are mandatory, like Workers' Compensation, Professional Indemnity, or CTP Insurance for motor vehicles – these are called statutory insurance covers. Other types of insurance are optional, but they are important ways of reducing business risk and protecting your finances and assets.

What does SME Business Insurance cover?

Property Damage – cover ranges from fire, storm, lightning and other perils to any type of accidental loss or damage. The property insured includes damage to buildings, contents, stock, plant and equipment, raw materials, and consumer goods.
Business Interruption – covers weekly amounts or net profit loss and ongoing fixed costs following property loss or damage. Also referred to as Loss of Profits or Consequential Loss Insurance.
Burglary/Theft - covers break-in at the business premises and the damage is done, as well as theft of goods or stock;
Money - covers theft of money in various locations (during transit, in a locked safe, or in a private residence) at any time (within and outside business hours).
Liability - covers a variety of statutory and civil legal liability, including personal injury and property damage, environmental liability, management liability, statutory liability, professional liability, aviation, marine and motor vehicle-related liability;
General Property - covers specified portable property against accidental loss or damage once it is taken off the premises, within Australia or overseas;
Equipment - covers sudden internal derangement and accidental loss or damage to plant, equipment and machinery, as well as computer and other electronic equipment. Loss of stock and business interruption cover can also be part of this insurance.
Motor vehicle & mobile plant – covers registered and unregistered motor vehicles, mobile plant & equipment, farm equipment, construction plant, as well as attachments and trailers. This insurance can also cover loss of income, downtime and hire costs of replacement equipment.

Speak to an insurance expert

It is our business to understand your objectives, needs, financial situation and risk profile and provide you and your business with tailored risk and insurance advice.
This is how we work with your business:

1.   We analyse your objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions.
2.   With your input, we undertake risk assessments and conduct market research to determine the most suitable insurance product(s) for your key risk exposure.
3.   Your insurance adviser will present appropriate strategies and solutions and also negotiate and place insurance covers agreed.

Frequently Asked Questions

How can insurance help small businesses in Australia?
- In Australia, small businesses are encouraged to invest in business insurance to help protect their business from costly eventualities like damage to property and liability claims. Investing in a comprehensive yet affordable insurance policy promotes the continuity of the business in times of losses or great financial trouble.
What does SME stand for?
Small-to-medium enterprises (SMEs) are businesses whose revenue, number of employees and assets do not exceed a certain threshold. Each country or industry defines a set of criteria to determine whether an organisation falls under the SME category.
How can insurance help small entrepreneurs or SMEs, or how it relates to risk management?
Risk transfer is one of the treatment approaches in managing risks in business, and insurance is an example of risk transfer. It’s a strategy that SMEs employ to shift a risk or a liability from one party to another when that party specialises in managing a specific kind of risk/liability.
Why is insurance important for business owners?
Getting an insurance policy for your business is important, as it cushions or completely shields you from the hefty costs of certain unforeseen issues (accidents, damages to properties, effects of force), legal claims, and other liabilities. Without insurance, business owners might be forced to foot the bill out of their own pocket.