Coronavirus support payments for sole traders a step in the right direction, but fundamentally flawed, says small business ombudsman

Since this article was published, more support has become available for sole traders through the government’s JobKeeper wage subsidy scheme. You can learn more about that here. 

As COVID-19 continues to take its toll on the Australian economy, small businesses in all kinds of sectors have been struggling, with many forced to close their doors.

But, confusion reigns for one group in particular — sole traders, freelancers and self-employed people. The smallest of small businesses.

The first COVID-19 stimulus package, announced on March 12, included financial support for employers, plus an extension of the instant asset write-off scheme, but nothing that really applied to sole traders, freelancers and self-employed people.

At the time, Australian Small Business and Family Enterprise Ombudsman Kate Carnell, along with other advocates, called on the government to provide more support for those business owners who slipped through the cracks.

The second, beefed up stimulus package addressed this oversight, at least in part, by making it easier for these businesses to access income support payments.

Income support has been extended for six months, to include sole traders, who will become eligible for jobseeker payments, and will receive the coronavirus supplement of $550 per fortnight.

Speaking to SmartCompany, Carnell says the new package is “a significant step forward” for many sole traders and freelancers.

Now, if they’re earning less than $1,000 per fortnight through their business, they can receive the coronavirus supplement and still continue to trade, where possible.

Although it’s income-tested, “there’s no assets test, which is good,” Carnell adds.

“It doesn’t replace income, but hopefully it helps keep things going.”

But, it’s an imperfect solution; it’s somewhat of a blunt instrument solution for a group of people that is not only huge, but incredibly diverse, says Carnell.

“They range between really quite small operators to quite sixable and successful businesses,” she says.

Many are using contractors themselves, she adds.

“The challenge for the government was to come up with a package that would help a sole trader who doesn’t employ … and cover such a broad range of different approaches.”

Equally, although sole traders and self-employed people are now eligible for jobseekers’ allowance, they’re not jobseekers, Carnell says.

“They’re not seeking jobs. They’ve got a business, and they’re trying to keep their business going.”

Something that’s unclear at the moment is whether the income tests that apply to the jobseekers’ payments will take partners’ earnings into account — something they usually do as standard.

“One of the issues we’re trying to get to the bottom of is what happens if your partner is employed,” Carnell says.

“I think you’re still able to get the coronavirus supplement, but it could impact on the jobseekers’ allowance.”

“That would be really unacceptable,” she says.

It’s something the government will likely have to take another look at, and refine further, Carnell explains. But, she doesn’t believe this was the intention.

The support is for people who run businesses, she stresses.

“This is to try to keep people’s businesses afloat during this difficult time.”

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