Month: April 2020

We are sure that most of you have now heard that the Prime Minister announced a new Code for commercial landlords and tenants which must be followed if the tenant and their business is adversely affected by COVID-19.

At Gibson Howlin Lawyers, we have looked at what has been announced and provided the following summary of what this new code means for commercial landlords and tenants.

As the Code was released by the Federal Government, it does not become law until it has been legislated and regulated in each individual State and Territory.

The key to a tenant being able to utilise the new Code and any resulting state-based legislation or regulation is that they must:

• be eligible to receive support under the Commonwealth’s JobKeeper programme; and
• have a turnover of less than $50 million; and
• have a 30% or greater decrease in turnover.

The Code sets out a number of principles which are intended to assist Tenants and Landlords to reach an agreement. These principles are:

• a prohibition on Landlords terminating leases for non-payment of Rent;
• an obligation on Tenants to continue to comply with their obligations under their respective Lease(s);
• an obligation on Landlords to offer rent reductions in the form of deferrals (postponement of Rent) or waivers that are proportional to the Tenant’s decrease in turnover. Rent waivers must comprise at least half of the total rent reduction;
• a prohibition on Landlords charging fees or interest on rent or other payments being deferred;
• a prohibition on Landlords calling on security deposits, bank guarantees and personal guarantees;
• a requirement for Landlords to provide their Tenants with an opportunity to extend their Leases for an equivalent period of the rent waiver and/or deferral;
• an automatic freeze on rent increases for the period of the COVID-19 pandemic and for a subsequent recovery period; and
• an obligation on Landlords to pass on any reduction in statutory rates or charges it receives to its Tenants.
• If Landlords and Tenants cannot agree on how to amend or vary the lease in the face of the COVID-19 pandemic, the Code allows either party to refer the matter to their respective State or Territories’ mediation service.

For those leases that do not meet the criteria set out earlier, Landlords and Tenants will be free to make their own commercial arrangements in relation to amending or varying the lease (if an agreement can be reached at all).

At Gibson Howlin Lawyers we are continuing to keep track of the NSW Government’s ratifying of the Code and are ready to assist you to negotiate an agreement with your Landlord or Tenant (as the case maybe) in accordance with the Code or to document any rent relief agreement reached.

We currently have a number of Landlords and Tenants at the moment who are already utilising our services to assist in such matters, so please do not hesitate to contact us on 9523 6111 if you require such assistance.

The NSW State Government has also announced relief with respect to payroll tax. If your grouped businesses have wages of $10m or less and you pay monthly, then no payment is required for the months  of March, April and May 2020.

When annual reconciliations are lodged, there will be a tax liability reduction of 25%. Wage figures for all months must still be reported in the annual reconciliation.

The idea behind this being that non-payment of three months of payroll tax will roughly equate to the 35% reduction in the annual liability.

Further details that have been released by Revenue NSW can be found here.

For more detailed advice, our experienced solicitors are available to discuss your specific circumstances. Do not hesitate to contact us on 9523 6111.  

As part of the Federal Government’s recently announced $130bn stimulus package, the JobKeeper payment has been hailed as a relief for employers and employees alike. The Federal Government will effectively pay an employees salary of $1,500 per fortnight before tax by reimbursement through the BAS system.

Whilst the legislation and finer details for the payment have not yet been released (although expected shortly), on 5 April 2020, Treasury has set out some guidance for Employers to assess their potential to access the payment.

The important points of note are:

• Register your interest on the ATO’s website (an online application will be available at a later point in time);
• Employee information will need to be provided to the ATO;
• Each employee (even if paid less than the amount) must be paid a minimum of $1,500 per fortnight before tax;
• Employees must be notified that they are receiving the JobKeeper Payment;
• The ATO will expect monthly information about eligible employees to be provided; and
• Business turnover must be expected to fall by at least 30% (for business with turnover <$1m).

The payments will be for a maximum period of 6 months from 30 March 2020. These reimbursement payments from the ATO will commence in the first week of May through the BAS system.

One of the most uncertain aspects of the payment is the estimation of turnover. Treasury has indicated that the estimation is to be based upon historically lodged BAS one year prior. As an example, to determine whether you expect turnover to fall by 30% in the June quarter BAS and you are a quarterly BAS lodger, you should look at your turnover figures lodged in your June 2019 quarter BAS.

Whilst there is a degree of uncertainty in accurately predicting a fall in turnover, as well as the potential for 12 months prior not being a true indication of estimated turnover, it appears the Commissioner of Taxation will be provided with a discretion to set out alternative tests to establish eligibility and to take additional information into account to determine whether a business has been significantly affected by the impacts of Covid-19.

It is expected that there will also be latitude provided to businesses that estimate a 30% reduction in turnover, in good faith, but actually experience less of a fall than expected.

The Federal Government have no doubted decided to use the ATO systems through BAS lodgement to claim these payments as a method of ensuring that only businesses who are complying with their lodgement obligations are able to claim the payment.

If you have concerns about your lodgement history with the ATO and seek advice on your compliance and eligibility, please contact us to make an appointment via telephone or video conferencing to obtain more specific and detailed advice.

Further details that have been released by Treasury can be found here as well as an FAQ on commonly asked questions.

Whilst this article attempts to explain the JobKeeper Payment as succinctly as possible, we suggest that every business should contact their Accountant to determine whether this payment is suitable for their business.

For more detailed advice, our experienced solicitors are available to discuss your specific circumstances. Do not hesitate to contact us on 9523 6111.