One of the Federal Government’s key initiatives to the COVID-19 crisis is
the JobKeeper Program. Eligible businesses can receive a wage subsidy
payment of $1500 per fortnight per employee for up to 6 months.
The JobKeeper payments have been of critical importance to many businesses
across the economy. However, strict eligibility conditions apply. The
basic criteria, relevant for our industry, are:
- A business that was carrying out business in Australia on 1 March with at
least one eligible employee that continues to be employed; and
- Faced a decline in revenue of at least:
o 30%, for an aggregate turnover of $1 billion or less; or
o 50%, for an aggregate turnover of $1 billion or more.
With the private capital industry operating in every sector of the economy,
there are many nuances impacting individual investee businesses’ ability to
access the JobKeeper Program. However, we identified three main obstacles
facing our industry. These are:
1) The need to aggregate turnover – although private capital-backed
Australia businesses within a fund operate independently, their turnover
must be aggregated when assessing JobKeeper payment eligibility. For some
funds, this results in needing to apply the 50% reduction in aggregate
turnover test, despite individual businesses being well below the $1
2) Ineligibility of employee special purpose vehicles (SPVs) –
Employee SPVs may find it difficult or impossible to demonstrate a
reduction in turnover due to their corporate structure. As a result, these
employees would be not be eligible; and
3) The impact on high growth businesses – For some high growth
businesses, particularly start-up businesses, a flattening of sales can be
crippling. These businesses would fail well before seeing a 30% reduction
in turnover but would not be eligible for JobKeeper payments.
In response, the Australian Investment Council conducted a survey of
members to identify the impact of the rules on our industry. As a result,
we raised our concerns with government and engaged
directly with the Coronavirus Business Liaison Unit and the JobKeeper
division within Treasury, and the ATO. Through this engagement, which
included multiple meetings, we have increased the awareness of how the
private capital industry operates and highlight the impact of the rules on
private capital-backed Australian businesses. We were also successful in
working with other industry stakeholders to highlight issues common across
As a result of pressures and insights from various stakeholders, the
government implemented a number of changes to the eligibility criteria.
Most importantly for our industry, these include:
- ‘Alternative tests’ for fall in turnover. These alternative tests accommodate situations such
as: when an acquisition, disposal or restructure distorts a comparison
period’s turnover; where a business had substantial growth in revenue in
the period before 1 March; and, businesses has cyclical turnover; and
- Changes to allow eligibility for employees employed through special purpose labour service entities.
These changes are a great outcome for our industry and will save many
Australian businesses and Australian jobs.
We would like to thank those members that participated in our survey. Your
input assists us to effectively represent the industry and in bringing
about important changes.
As further details of the JobKeeper Program emerge and businesses assess
their eligibility, there may be other obstacles that surface. If you are
facing difficulties and feel that the Australian Investment Council can be
of assistance, please contact us.