Important questions remain unresolved despite positive momentum in ECEC support package implementation
With the majority of services across Australia now having received their third ECEC Relief Package payment, and with JobKeeper enrolment having been open for more than a week, there is no doubt that real progress has been made since the depth of the COVID-19 crisis experienced in March.
That being said there are still some important areas that have yet to be resolved for the broader early childhood education and care (ECEC) community and / or specific areas of the community.
Below is a list of what The Sector team see as being the core issues outstanding at time of press.
Outstanding guidance from the ATO regarding the GST treatment of ECEC Relief Package receipts and JobKeeper eligibility
This is particularly important for those services that have been unable to meet the “decline in revenue” test required to participate in the JobKeeper package.
Last week the ATO confirmed that all business continuity payments a.k.a. ECEC relief package payments received from the Government will receive special treatment when it comes to GST.
The new rule will see all payments received by services under the scheme classified as “non supplies for GST purposes” which in turn means that services receiving ECEC payments do not need to classify them as revenue in the decline in revenue test when calculating their eligibility for JobKeepers.
If the service therefore has no revenue to report then eligibility becomes automatic. Although the details of the rules governing the ruling have yet to be released, the ATO have committed to providing guidance as soon as possible. This guidance will be available on the ATO website.
Outstanding guidance from the ATO on whether community preschools are able to use the 15 per cent or 30 per cent decline in turnover thresholds
This issue is important for community run preschools who are seeking access to JobKeeper but who are concerned that their decline in revenue test will be 30 per cent not 15 per cent.
The ATO initially confirmed that a preschool is defined as an ACNC-registered charity that is itself a school within the meaning of the GST Act and therefore must use the 30 per cent test.
However, due to the volume of questions on the matter the ATO have signalled they are looking into the issue and will provide further guidance in due course.
Exceptional Circumstances Supplementary Relief Payment application approval timetables and payment dates
Services that have been disadvantaged by the ECEC Relief Package due to revenue reductions and /or have seen occupancies rise in recent weeks to levels that require increased rosters to accommodate are particularly interested in relief payment application approval timetables and payment dates, given that for some, revenues from the package are not sufficiently large to cover them so a “top up” is required.
Although the Exceptional Circumstances Supplementary Relief Payment application process is now live, details around approval timeline are unclear.
To mitigate this the Department of Education, Skills and Employment have provided services with a double payment of the ECEC Relief Package on Thursday 16 April but as yet no communication around Exceptional Circumstances Supplementary Relief approvals have been forthcoming.
Community Child Care Special Circumstances Fund Approvals and Payment timelines
Those services who have applied for grants under the Community Child Care Special Circumstances grant program announced by Dan Tehan in March but have yet to receive payments are keen to know when this will occur.
This support plan was made available to ECEC services in March by Dan Tehan, Federal Minister for Education as a means by which struggling services were able to apply for grants to support their viability due to COVID-19 related losses in revenue.
Applications for less than $10,000 were alleged to have been processed in less than four days and for those larger than $10,000 no timetable was provided.
Although there is evidence that approvals for the smaller grants have been circulated to relevant applicants, no timeline for payment has been provided and applicants for amounts larger than $10,000 have yet to receive any notification of approval.
JobKeeper exclusion for Council owned and operated services
This issue is relevant for all council run services that have yet not received a state or territory Government support package.
The JobKeeper package eligibility requirements expressly exclude entities that are wholly owned by an Australian government agency or local governing body with the rule therefore extending to council run ECEC services.
The Government has not yet provided any additional support to this area of the sector and left it to state and territory governments to address. Thus far New South Wales have indicated a pledge to commit $82 million to support 260 council services but outside of NSW it is unclear whether any support has been provided.
JobKeeper exclusion for large mixed use charity providers
This issue is relevant for all services run by major not for profits with activities in more than just the ECEC space, such as those owned and operated by Uniting who, due to the organisational structure they are part of, are not eligible for JobKeeper.
Although the Government did introduce a new 15 per cent “decline in revenue” test for not for profit organisations, providers such as Uniting will not qualify because they are part of a larger organisation whose revenue declines were smaller than 15 per cent despite the ECEC division experiencing falls in occupancy of in excess of 50 per cent.
Thus far no further advice on this issue has been provided by the Government and Uniting continues to operate without JobKeeper support.