The JobKeeper payment is coming to a close. Everyone (including the ATO) is talking about what it will mean when the scheme officially stops.
After the federal government tried selling its half-price flight program to the Australian public yesterday, reality seems to have sunk in that the scheme is officially coming to an end. JobKeeper payments will conclude on 28 March 2021.
What does the ATO say about JobKeeper payments ending?
According to ABC News, the Australian Tax Office (ATO) believes it is owed hundreds of millions of dollars from companies who hustled the JobKeeper subsidy.
While some companies such as Domino's Pizza Enterprises Ltd (ASX: DMP), Nick Scali Limited (ASX: NCK) and Santos Ltd (ASX: STO) have paid back JobKeeper funds that were not required, many others have not.
20 Australian companies promised to repay approximately $144 million to the ATO, however, only $20 million has been paid back so far.
According to ATO second commissioner Jeremy Hirschhorn, the misused JobKeeper payments were issued to companies based on revenue, opposed to whether the company is profitable or not.
Some recipients used JobKeeper payments to pay executive bonuses and raise dividends, with experts stating they believe this is the product of a poorly designed policy. While the ATO isn't likely to admit an oversight, it's clear that the program has run its course and it's time for the next act.
Will the tourism and aviation support package save us?
While some businesses like Qantas Airways Limited (ASX: QAN) and Flight Centre Travel Group Ltd (ASX: FLT) will benefit from the federal government's follow up to JobKeeper, the new scheme isn't pleasing everyone.
The Australian Financial Review reports that duty free retailers are not happy about being left out of the new funding package. Considering the current crux on international travel, being denied a dime of the $1.2 billion support package doesn't sit well with some people in the industry.
Richard Goodman, who is the Managing Director of Heinemann Australia, said that sales are down 98%. He continued that without ongoing government support, such as the JobKeeper payment, cost decisions that may result in job cuts will have to be made.
The CEO of The Australian Retailers Association, Paul Zahra, commented:
"It's good to see focused support for the tourism and aviation industry locally and the flow-on effects that will have for some retailers, but this [package] overlooks support for businesses severely impacted by international border closures."
Foolish Takeaway
As a replacement to previous JobKeeper payments, the government is turning to the ravaged tourism and travel industries for its next approach.
Rating agencies are also paying attention to how the country is addressing its financial commitments as the coronavirus continues to leave its mark.
The JobKeeper payment is going to end, the next support package will take effect. Depending on how that goes, we'll see where we land next.
