Summary of COVID-19 Assistance for Queensland Pubs and Clubs
In the last fortnight we have seen a stream of regulatory changes and new assistance packages addressing the economic impacts of the COVID-19 coronavirus, with further announcements expected in the coming days, weeks and months.
Our summary of the support available to pubs and clubs is as follows. Much of the assistance listed below is relevant to other businesses as well.
JobKeeper payment - $1,500 per fortnight per eligible worker
Who is eligible?
Pubs and clubs who have lost 30% or more of their revenue compared to 12 months ago (or those who have lost 50% of revenue if their turnover is over $1 billion).
What is it?
If eligible, your business or not-for-profit (NFP) will receive $1,500 per fortnight for each worker who:
is at least 16 years of age;
was employed by you as at 1 March 2020 whether full-time, part-time, or as a long-term casual employed on a regular basis for more than 12 months as at 1 March 2020;
is either an Australian citizen, or holds an eligible visa; and
you will pay the employee at least $1,500 per fortnight before tax. For employees that have historically earned less than this amount, the employer will need to top up the payment to the employee to $1,500, before tax, and the full wage will be covered by the JobKeeper payment.
Eligible employers should pay employees and withhold PAYG as usual and must notify the employees that they are receiving the JobKeeper payment. The JobKeeper payments will then be payable to the employer monthly in arrears by the Australian Tax Office (ATO), from 30 March 2020 for a maximum six months.
See here for more information or sign up here to receive further updates from the ATO.
Boosting cash flow for employers - refund on PAYG withholding
Who is eligible?
Pubs and clubs who employ at least one person and have an annual turnover under $50 million.
What is it?
Eligible employers will receive a minimum of $20,000 (up to a maximum $100,000) delivered as a credit by the ATO through the activity statement system, calculated based upon the PAYG withholding reported in your Business Activity Statements (BAS).
Effectively, you should be entitled to the full $100,000 credit if you will withhold at least $50,000 in PAYG for the period 1 January to 30 June 2020. The refund is deliverable in instalments between April and October, after your BAS is lodged.
Supporting apprentices and trainees - trainee wage subsidy
Who is eligible?
’Small businesses’ employing less than 20 full-time employees. At the time of writing (2 April 2020), we expect the definition of small businesses will include clubs and NFPs. It is unclear at this stage whether the definition of small businesses will include NFPs such as clubs.
Any employer who engages a trainee, if that trainee had been an apprenticeship or traineeship with a small business as at 1 March 2020. So for example, if the trainee is let go by their small business employer after 1 March 2020, then any business or entity who subsequently employs the trainee will be eligible.
What is it?
The government is providing a wage subsidy of 50% of trainees’ wages paid from 1 January 2020 to 30 September 2020, up to a maximum $7,000 per quarter per eligible trainee. Eligible trainees must have been in training as at 1 March 2020 and must be assessed by an Australian Apprenticeship Support Network (AASN) provider.
See here for more information on how to apply and to arrange an AASN assessment.
Temporary relief for financially distressed businesses
Who does it affect?
Sole traders and the directors of companies formed under the Corporations Act 2001. The directors of clubs incorporated under State legislation such as the Queensland Associations Incorporation Act 1981 are not covered by these changes.
What is it?
The package consists mainly of four temporary changes which will apply up until 23 September 2020 (albeit this deadline may be further extended):
The threshold at which creditors can issue a statutory demand on a company has been increased from $2,000 to $20,000, and the timeframe for a company to respond to a statutory demand has been extended from 21 days to six months.
The threshold at which creditors can initiate bankruptcy proceedings has been increased from $5,000 to $20,000, and the time that a debtor has to respond to a bankruptcy notice has been increased from 21 days to six months. It is important to note that despite these changes relating to bankruptcies and statutory demands, creditors will otherwise still be able to enforce debts through the courts as normal.
Company directors will be relieved of their duty to prevent insolvent trading. This includes that company directors will not be held personally liable for debts incurred by the company in the ordinary course of the company’s business up until 23 September 2020, even if the company is insolvent. However it is important to note that any debts incurred by the company during this period will still be payable by the company, and directors may still face criminal prosecution in certain serious cases where they are found to have acted dishonestly or fraudulently. These changes are similar to the recent ‘Safe Harbour’ amendments introduced in September 2017. However, unlike the Safe Harbour protections, directors will be eligible for the insolvent trading relief even if their company does not lodge tax documents on time and even if employee entitlements are not paid up to date.
The Treasurer now has temporary powers to amend the Corporations Act to provide relief from specific obligations, or to modify obligations to enable compliance with legal requirements. For example, the Treasurer may use this power to grant relief for companies who would otherwise be required to hold their Annual General Meeting where that may not be practical due to the coronavirus. Any such amendments enacted under this special power will only be valid for six months from the date it is made.
Increasing the instant asset write-off
Who is eligible?
Businesses with annual turnover of less than $500 million (up from $50 million).
What is it?
Until 30 June 2020, you can claim a tax deduction for the purchase of eligible assets costing less than $150,000 each (up from the current threshold of $30,000).
Backing business investment - tax deductions for new asset purchases
Who is eligible?
Businesses with a turnover of less than $500 million.
What is it?
Until 30 June 2021, you can deduct 50% of the cost of certain new, depreciable assets including plant and equipment. The balance 50% of the cost of such assets is then subject to existing depreciation rules.
SME guarantee scheme - borrow up to $250,000 without any security
Who is eligible?
All businesses and NFPs such as clubs with a turnover of up to $50 million.
What is it?
The Federal Government has invited lenders to participate in a scheme whereby the government will guarantee 50% of new loans valued at up to $250,000 plus interest per borrower. Borrowers will not be required to provide any security for loans under the scheme, in light of the government guarantee. Loans will be for up to three years, with an initial six month repayment holiday. The guarantee will apply to eligible loans made until 30 September 2020.
See here for more information, including a list of the participating lenders.
UPDATED 14 APRIL 2020: Commercial Tenancy Mandatory Code of Conduct
As previously reported in our publication by our Leasing Partner, Fiona Sears, titled Commercial Tenancy Mandatory Code of Conduct, the Commonwealth Government on 7 April 2020 announced the details of the much anticipated COVID-19 Code of Conduct for commercial tenancies (the Code). While the finer details are still to be legislated by the various States and Territories, we finally have some clarity around the obligations of both landlords and tenants in dealing with the impact of COVID-19 on leasing.
Unfortunately, even with the release of the Code, there are still a number of unanswered questions, such as how the Code will deal with pre-COVID-19 breaches, relief arrangements already agreed between parties and how tenants who have voluntarily closed their doors are to be treated – just to name a few.
We hope that these matters and others will be addressed when the Code is legislated in the various jurisdictions and that State and Territory governments work quickly to provide this certainty in these uncertain times.
In the meantime, below is a summary of information released about the Code.
The Code makes mandatory a set of good faith leasing principles which are to apply to commercial, retail and industrial tenancies that are suffering financial stress or hardship[i] as a result of the COVID-19 pandemic.
The Code comes into effect in all States and Territories from a date following 3 April 2020 (to be defined by each jurisdiction) and is to apply for the duration of the COVID-19 pandemic period[ii].
It is intended that the Code will assist parties to agree tailored, bespoke and appropriate temporary arrangements, taking into account individual circumstances.
The Overarching Principles of the Code that are to govern the arrangements entered into by landlords and tenants are that:
parties are to work together in good faith to ensure business continuity and to facilitate the resumption of normal trading at the end of the COVID-19 pandemic period allowing a reasonable recovery period;
parties are to act in an open, honest and transparent manner and will each provide sufficient and accurate information[iii]to enable outcomes consistent with the Code;
any outcomes must take into account the impact of the COVID-19 pandemic on the tenant, with specific regard to its revenue, expenses and profitability; and
the parties are to assist each other in their dealings with other stakeholders including government, utility companies and banks/other financial institutions.
Landlords and tenants must have regard to the following Leasing Principles when negotiating temporary relief arrangements:
landlords are prohibited from terminating leases due to non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period);
tenants must remain committed to the terms of their lease. Material failure to comply with the substantive terms of their lease will forfeit any protections provided to the tenant under the Code;
landlords must offer tenants proportionate[iv]reductions in rent payable in the form of waivers and deferrals[v] of up to 100% of the amount ordinarily payable, based on the reduction in the tenant’s trade during the COVID-19 pandemic period (and a subsequent reasonable recovery period);
rental waivers must constitute no less than 50% of the total reduction in rent payable (as provided for in paragraph 3 above) during the COVID-19 pandemic period[vi]and should constitute a greater proportion of the total reduction in rent payable in cases where failure to do so would compromise the tenant’s capacity to fulfil their ongoing obligations under their lease. Regard must also be had to the landlord’s financial ability to provide such additional waivers. Tenants may waive the requirement for a 50% minimum waiver by agreement;
payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater – unless otherwise agreed between the parties;
landlords should seek to pass onto the tenant any reduction in statutory charges or insurance that the landlord is able to secure together with any benefit it receives due to any deferral it obtains in relation to loan repayments;
where appropriate landlords should also seek to waive recovery of any other expense (or outgoing payable) by a tenant during the period the tenant is unable to trade. It is important to note that landlords have the right to reduce services as required in such circumstances;
if negotiated outcomes require repayment, this should occur over an extended period in order to avoid placing an undue financial burden on the tenant. No repayment should commence until the earlier of the COVID-19 pandemic ending (as determined by the Commonwealth Government) or the existing lease expiry – once again taking into account a reasonable subsequent recovery period;
no fees, interest or other charges are to be applied with respect to any rental waiver or rent deferral;
landlords are prohibited from calling on a tenant’s security for the non-payment of rent during the period of the COVID-19 pandemic and/or the subsequent recovery period. This extends to cash bonds, bank guarantees or personal guarantees;
tenants should be provided with an opportunity to extend their lease for an equivalent period of the rent waiver/deferral period;
landlords agree to a freeze on rent increases (excluding retail leases based on turnover rent) for the duration of the COVID-19 pandemic and a reasonable subsequent recovery period; and
landlords may not apply any prohibition or levy any penalty if tenants reduce opening hours or cease to trade due to the COVID-19 pandemic.
What happens when landlords and tenants cannot agree on concessions to apply?
The matter is to be referred to applicable state or territory retail/commercial leasing dispute resolution processing. It is important to note that landlords must not use the mediation process to prolong or frustrate the facilitation of amicable resolution outcomes.
Where to from here?
We can help. Whether you are a landlord, a tenant or an asset manager, you can contact us to discuss your position and concerns and options available to you.
There will be more to come on the implementation of this Code as each jurisdiction legislates the Code and we remain committed to continuing to bring this information to your attention as it comes to hand.
[i] Defined to mean an individual, business or company’s inability to generate sufficient revenue as a direct result of the COVID-19 pandemic (including government-mandated trading restrictions) that causes the tenant to be unable to meet is financial and/or contractual commitments. Small to medium enterprises who are eligible for the Commonwealth Government’s JobKeeper payment are automatically considered to be in financial distress under the Code.
[ii] Defined as the period during which the Commonwealth Government’s JobKeeper programme is operational.
[iii] This includes information generated from an accounting system, and information provided to and/or received from a financial institution, that impacts the timeliness of the parties making decisions with regard to the financial stress caused as a direct result of COVID-19.
[iv] Means the amount of rent relief proportionate to the reduction in trade as a result of the COVID-19 pandemic plus a subsequent reasonable recovery period, consistent with assessments undertaken for eligibility for the Commonwealth Government’s JobKeeper programme.
[v] Any reference to waiver or deferral may also be interpreted to include other forms of agreed variations to existing leases, or any other such commercial outcome of agreements reached between the parties. Any amount of reduction provided by a waiver may not be recouped by the landlord over the term of the lease.
[vi] Example: Where a tenant’s revenue has fallen by 30%, then at least 15% of the total cash flow relief is rent free/waiver and the remainder is to be a rent deferral.
Queensland State Government
UPDATED 14 APRIL 2020: Land Tax Relief
Who is eligible?
Queensland landowners can apply for land tax relief if they meet all of the following criteria:
the landowner rents all or part of a property to a tenant/s OR all or part of a property is currently available for lease;
at least one tenant’s ability to pay their normal rent OR the landowner’s ability to secure a tenant is affected by the COVID-19 pandemic;
the landowner provides rent relief to an affected tenant/s commensurate with the amount of the land tax rebate OR if the property is unable to be leased, the landowner requires land tax relief to meet their financial obligations (such as debt repayments); and
the landowner complies with new leasing requirements, even if the relevant lease is not regulated.
In addition to the above, commercial landowners must abide by principles which are broadly in line with those Commercial Tenancy Mandatory Code of Conduct set out above. This includes that the landlord must:
Negotiate in good faith with tenants whose ability to pay rent is impacted by COVID-19;
Not evict tenants in financial distress due to COVID-19;
Not increase rent, except where rent is linked to increased turnover;
Not penalise a tenant wo stops trading or reduces opening hours;
Not charge any interest on unpaid or deferred rent; and
Not make a claim on a bank guarantee or security deposit for non-payment of rent.
What is it?
The Queensland government is offering eligible landowners
a three-month (ie. 25%) rebate of land tax for those who have already paid land tax for the 2019-20 year; and
a three-month deferral of land tax for the 2020-21 year.
As above, any relief granted to landowners must be passed on to tenants.
In addition to the above, the foreign land tax surcharge will be abandoned for the 2019/20 year.
Landlords will be able to apply for land tax relief from 14 April 2020 by visiting this website.
Deferral of Gaming Machine Taxes
All gaming machine taxes for the three months from April to June 2020 have been deferred (but not waived). Licensees who have already paid their gaming machine taxes for March 2020 will also have those taxes returned to them.
Waiver of 2020-21 Liquor Licence fees
The State Government has announced that all annual liquor licence fees for 2020-21 will be waived.
Power bill relief - $500 rebate off energy bills
Who is eligible?
Businesses who consume less than 100,000 kilowatt hours of electricity.
What is it?
You will automatically receive a $500 rebate on your business electricity bills.
Jobs support loans - low interest loans up to $250,000
Who is eligible?
Queensland businesses and NFPs who have one or more full time employee in Queensland and have operated their business or NFP since 1 July 2017. Borrowers must also show that they have suffered a loss of income as a result of COVID-19 and must demonstrate that they intend to continue operations after receiving the loan and that they will be able to service the loan under normal business conditions.
What is it?
Low interest loans (2.5% fixed interest rate) of up to 50% of your entity’s annual wage expense, to a maximum $250,000. Loans up to $100,000 require no security and loans over $100,000 will be secured by a General Security Agreement. Loans must be used to meet your entity’s working capital expenses such as wages, rent, paying creditors and equipment finance payments, etc.
Loans are repayable over 10 years, with no repayments or interest charged for the first year, followed by two years of interest only payment, and then principal and interest payable for the remainder of the term.
All pubs and clubs who pay payroll tax in Queensland.
What is it?
The relief available depends on the size of your business:
Small and medium businesses and NFPs (ie. those with payrolls of $6.5 million or less per annum) will be eligible for:
A two-month refund of payroll tax on your November and December 2019 payroll tax returns. The government is aiming to pay such refunds to your nominated bank account within 48 hours of you completing all required steps.
A three-month payroll tax holiday (ie. you do not pay any payroll tax) for January, February and March 2020;
A deferral of all payroll tax payments for the rest of 2020;
Large businesses and NFPs (ie. with payrolls of more than $6.5 million per annum) will be eligible for a refund on your January and February 2020 payroll tax returns. You will need to demonstrate to the Office of State Revenue that your business has been directly or indirectly affected by COVID-19, however pubs and clubs should not have any difficulty satisfying this condition (note, the requirement to demonstrate some impacted from COVID-19 does not apply to small and medium businesses and NFPs).
You can apply for payroll tax relief via the online portal at www.business.qld.gov.au. Applications for the refund and/ or holiday need to be made by 31 May 2020.
At time of writing, the Queensland Government has not announced any plans to provide land tax relief in addition to the measures above, however other states including South Australia and Victoria have already announced plans to defer land tax deadlines.
Local governments have announced various measures to assist businesses to deal with the impacts of COVID-19, such as:
Brisbane City Council has announced a moratorium on fees and charges for footpath and outdoor dining, food safety permits and advertising applications and licence fees (among other measures) until at least 30 June 2020. Businesses that have already paid such fees since 1 March will receive a refund. Likewise businesses seeking to cancel events due to the coronavirus can claim a refund for any event booking fees paid to Council. Furthermore, Council is offering payment plans or deferred payment arrangements for up to 9 months, for businesses experiencing hardship because of coronavirus. Interest will not be applied to outstanding amounts and all rating recovery processing will cease until further notice.
Redland City Council will double the amount of time allowed for ratepayers to pay their next rates bill and have announced $288,000 in grants for business and community groups experiencing hardship due to COVID-19. Council will also provide a one-off contribution towards electricity costs for clubs and associations registered under Council’s community electricity scheme. You should contact Redland City Council for more details.
Sunshine Coast Council has pledged that they “… will not be charging interest on outstanding rate payments and will not be pursuing outstanding rates at this time”. They will also reimburse or waive food licensing fees for the period 1 March to 31 August 2020, reimburse or waive footpath/ outdoor dining permit fees for the period 1 March to 31 July 2020, and reimburse major event permit fees for events scheduled from 1 March to 30 June 2020.
Gold Coast City Council is waiving roadside dining fees for the period 1 February to 30 June 2020. They are also suspending debt recovery action and waiving interest payments for businesses who enter an approved payment arrangement for overdue water, waste and rates charges.
Logan City Council is offering an interest free period for rates and charges during the quarter April-June 2020, and existing hardship arrangements for residential property owners will be extended to all ratepayers. 50% of operational licence fees paid since July 2019 will be refunded, and fees will be waived for any new applications received up until 31 August 2020. Lease fees will be waived for sport, recreation and community oranisations.
Ipswich City Council will waive or refund all footpath dining fees, food licence fees, temporary food stall/ premises fees, and temporary event fees for the period 1 March to 30 June 2020.
Toowoomba Regional Council will pause debt recovery for all outstanding rates and charges through to 30 June 2020.
Mackay Regional Council will waive footpath dining and trading fees, food and itinerant and static vendor charges and licence fees for accommodation and other businesses impacted for the 2020-2021 financial year. The due date for rates that are due in September 2020 has been deferred by three months until December 2020 for all ratepayers.
Townsville City Council has waived al fresco dining fees, food licence fees, temporary food stalls/ premises fees, and trade waste fees until 30 June 2020. Rates payments will be deferred, with Council to announce further details in this regard. Applications will also be fast-tracked and all fees waived for restaurants and food and drink outlets to allow them to trade outside their premises.
Cairns Regional Council will waive outdoor dining fees for the period April to June 2020 and provide a three-month extension on a range of business-related fees and charges such as Council water charges and water and trade waste usage fees.
You should contact your local council to find out more about measures that they are introducing.
We expect further announcements to be made by local governments in the coming weeks now that the results of the recent local government elections are being confirmed.
Here is a link to the Australian Banker’s Association’s press release.
The threshold for loan payment deferrals for up to 6 months has been increased from $3 million to $10 million. Interest will capitalise on the loans.
“During this period banks have also agreed to not enforce business loans for non-financial breaches of the loan contract (such as changes in valuations)”.
The new measures will apply on an opt-in basis, meaning to access the package:
commercial landlords will need to “provide an undertaking to the bank that for the period of interest capitalisation they will not terminate leases or evict current tenants for rent arrears as a result of COVID-19”; and
customers will be required to advise their business is affected by COVID-19.
The relevant Loan must be “current in terms of existing facilities 90 days” before applying. In this context we take this as meaning the loan must not have expired during those 90 days.
We’ll seek to provide updates as more information comes to hand and encourage you to contact us or your business banker to discuss your position and the options available to you.
Article written by Matthew Bradford (Partner) and Glen Rolley (Associate).
"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."