JobKeeper package could now offer relief to pre-revenue startups

The government’s $130 billion wage subsidy package may offer some support to pre-revenue startups, with the government indicating there will be alternative eligibility tests.

The JobKeeper scheme was designed to help businesses of all kinds and sizes keep their employees on the books. But decoding what it means for startups has been something of a rollercoaster ride.

The scheme was originally made available for businesses that have seen a 30% drop in revenue, year-on-year. But that wasn’t all too helpful for high-growth startups that may have grown significantly over the past 12 months, but which have seen a massive drop in trade since the COVID-19 pandemic set in.

It also didn’t cater to any business less than 12 months old.

The government then clarified the criteria in an updated fact sheet, saying that where a business’ turnover a year earlier is not representative of the average, or if it’s turnover is “typically variable”, then the tax commissioner will “have discretion to consider additional information”.

It’s still not exactly clear how companies will be expected to prove they have seen a negative impact because of COVID-19, or how long it will take the ATO to go through each individual case. But, this suggested a willingness to take startups into account.

However, for some time, there was no mention of what would become of pre-revenue startups.

Another update has now suggested that there may be alternative tests available, aside from measuring turnover.

Eligibility for the scheme may be established if a business has “ceased or significantly curtails its operations”.

While, again, details are unclear at this stage, this could extend a lifeline to startups that are dependent on investor funding and trying to extend their runways for as long as possible in order to get through the COVID-19 crisis, and for which skilled staff are an important asset.

In a tweet, StartupAus chief Alex McCauley encouraged pre-revenue startup to apply for the JobKeeper scheme.

“Then develop a strong case showing how you’ve been impacted”, he advised.

I’d strongly encourage pre-revenue startups who have ‘significantly curtailed operations’ due to COVID (as I know many of you have) to register your intent to apply for JobKeeper and then develop a strong case showing how you’ve been impacted.

— Alex McCauley (@alexmccauley) April 8, 2020

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