Further information and clarity surrounding the JobKeeper payment has now been made available. We understand there’s a lot of information to wrap your head around, so remember we are here to help you – From completing your enrolment forms through to implementing all eligible stimulus items & tax minimization strategies (more info on this coming shortly).
Eligible businesses that elect to participate will receive a wage subsidy in the way of a payment of $1,500 per fortnight per eligible employee to support the people they employed as at 1 March 2020 who are retained in employment and/or one eligible business participant (i.e., an eligible sole trader, partners, company director or shareholder or trust beneficiary).
The JobKeeper scheme will ensure that eligible employees receive a payment of at least $1,500 (before tax) per fortnight for the duration of the scheme.
The minimum $1,500 (before tax) payment requirement will operate as follows:-
- If an employee has been receiving at least $1,500 in gross salary per fortnight since 30 March 2020, they will continue to receive their regular income according to their prevailing workplace agreements. In this case, the JobKeeper payment will effectively subsidise the first $1,500 of the employees gross fortnightly income
- If an employee has been receiving less than $1,500 in gross salary income per fortnight since 30 March 2020, the employer must pay the employee a ‘top-up’ payment to ensure the employee has been paid at least $1,500 per fortnight to be eligible to receive the JobKeeper payment. This means some employees will receive more than their ordinary wage from their employer.
- If an employee has been stood down without pay after 1 March 2020 their employer must pay the employee a minimum payment of $1,500 (before tax) from 30 March 2020, to be eligible to receive the JobKeeper payment in respect of the employee.
Note: the minimum payment must be made by the last day of the fortnight. However, the ATO has already exercised its discretion to allow employers to make the minimum payment for the first two fortnights by the end of April 2020. Going forward the minimum payment will need to be strictly made by the end of the relevant fortnight.
More flexibility for employers receiving the JobKeeper Payment under the Fair Work Act 2009.
Amendments have been made to the Fair Work Act 2009 to support the practical operation of the JobKeeper scheme and to facilitate a range of flexible working arrangements designed to support the continued operation of businesses and the ongoing employment of employees.
JobKeeper enabling directions
Under these amendments, an employer who qualifies for JobKeeper payments in respect of an eligible employee will be able to provide (subject to certain safeguards) the following directions (i.e., JobKeeper enabling directions) to the employee (provided the employee is initially consulted and the directions are not unreasonable in the circumstances):
- A ‘stand-down’ direction which can be a direction for the employees to not work on particular days, to work for a lesser period or to work a reduced number of hours.
Such a direction can only be given if, amongst other things, the employee cannot be usefully employed for the employee’s normal days or hours during the period the employer is eligible to receive JobKeeper payments for the employee, because of:
- Changes to the business (e.g., less patronage and/or the closure of stores) attributable to the Coronavirus pandemic; or
- Government initiatives to slow down the transmission of the Coronavirus
During the period to which such a direction applies, the employer is still required to pay the employee the full $1,500 (before tax) per fortnight. Furthermore, such a direction cannot reduce the employees hourly base rate of pay, meaning an employer must ensure that the total amount payable to a particular employee in respect of a fortnight is either:
- The amount of the JobKeeper payment for the employee; or
- If a greater amount if payable to the employee for the performance of work during the fortnight, that amount (i.e., in full)
- A direction about the duties to be performed by the employee that are within the employee’s skill and competency.
Again, such a direction cannot reduce the employee’s hourly base rate of pay.
- A direction for the employee to work at a location that is different from the employee’s normal place of work (including the employee’s home).
This direction can only be given if, amongst other things, the new work location does not require the employee to travel a distance that is unreasonable in the circumstances (where the location is not the employee’s home).
Furthermore, in addition to the JobKeeper enabling directions (discussed above) the amendments to the Fair Work Act 2009 will also generally allow an employer and its employees to enter into agreements relating to their ongoing employment.
Specifically, an employer (during the period that they are entitled to the JobKeeper payment for an employee) can make a request to the employee (and the employee cannot unreasonably refuse) for the employee to agree to:
- Perform their duties on different days or at different times (without a reduction in the employee’s working hours) and/or
- Take annual leave (including at half pay) that will not result in the employee having a balance of paid annual leave of fewer than two weeks.
When will the JobKeeper payment commence?
The JobKeeper payment will be available from 30 March 2020 but employers will not receive the first payment from the ATO until the first week of May. We understand this may pose a problem for a lot of employers in that they will be required to cover the ongoing wage costs in the meantime. The payments will be made to employers monthly in arrears.
TIP: An employer can be entitled to a JobKeeper payment where they are registered in the scheme before the end of the relevant JobKeeper Payment fortnight. Of note, an exception applies for the first JobKeeper fortnight (which ended on 12 April 2020) whereby an employer is required to be registered by 26 April 2020 (rather than 12 April 2020).
What is an ‘eligible employee’?
An ‘eligible employee’ is one that satisfied the following requirements: –
- The employee is currently employed by the employer (which includes an employee who has been stood down or re-hired after they had already lost their job).
- The employee was employed by the employer as at 1 March 2020.
- The employee is a full-time or part-time employee, or a long-term casual employee (i.e., one who has been employed by the employer on a regular and systematic basis for longer than 12 months as at 1 March 2020).
- The employee was at least 16 years of age on 1 March 2020.
- The employee was, on 1 March 2020, either: • a resident of Australia for social security purposes (e.g., an Australia citizen, a holder of a permanent visa or a holder of a protected special category visa); or • a resident of Australia for tax purposes and was a holder of a Subclass 444 (Special Category) visa.
- The employee has not given any other employer a nomination notice.
- If the employee is a long-term casual employee – they are not a permanent employee of any other employer.
- The employee is not in receipt of a government-funded parental leave pay or dad and partner pay and nor are they fully supported by a workers’ compensation scheme.
Can I select which of my eligible employees are covered by the JobKeeper scheme?
No. Once an employer decides to participate in the JobKeeper Scheme, they must ensure that all of their eligible employees (who have agreed to be nominated for the scheme) participate in the scheme. As the scheme is operated on a ‘one in, all in’ basis, employers cannot ‘pick and choose’ which eligible employees will be able to participate in the scheme.
If I have stood down my employees after 1 March 2020, and are no longer paying them, do I need to pay them, for what period and by when?
Yes. If you want to participate in the scheme and you stood down employees after 1 March to qualify you will need to pay them a minimum of $1,500 per fortnight (before tax) between 30 March 2020 – 12 April 2020.
For all following payment periods, you will need to continue to pay your employees a minimum of $1,500 per fortnight (before tax).
Does the JobKeeper payment apply to me as a business owner that does not employ staff?
Yes, as long as your business satisfies all other requirements to qualify for the JobKeeper payment. The JobKeeper scheme also recognises that certain participants in a business (such as sole traders) have also been affected by the economic downturn caused by the Coronavirus. Therefore, to provide a benefit to such businesses, payments can also be made to an entity in respect of what is referred to as an eligible business participant (generally the controlling individual who is not an employee of their business).
A ‘business participant’ is an individual who is actively engaged in the business carried on by entity and is either: –
- a sole trader;
- an individual partner of a partnership;
- a director or individual shareholder of a company; or
- an adult beneficiary of a trust
Of importance, however, is that while a business may have more than one business participant, it can only nominate one of these individuals and this person becomes the ‘eligible business participant’ in respect of whom can receive a JobKeeper payment.
I am a sole trader who also employs staff am I eligible for the JobKeeper payment for myself?
Yes. As long as your business has satisfied all the other requirements to qualify for the JobKeeper payment, a sole trader can qualify for the JobKeeper payment concerning their eligible employees and also qualify for the payment themselves as an ‘eligible business participant’.
If I have stood down my employees without pay after 1 March 2020 can I “back pay” them to 30 March 2020?
Yes. If you want to claim the JobKeeper payment for your employees you will need to confirm your eligible employees want to be a part of the scheme and arrange for them to be paid the minimum of $1,500 per fortnight (before tax) from 30 March 2020.
What happens if I don’t have the money to continue paying my eligible employees until the payments are made?
The JobKeeper payment is a reimbursement scheme that is paid monthly in arrears. If this presents cash flow difficulties, businesses are encouraged to speak with their bank to identify their options. Banks have said that businesses may be able to use the upcoming JobKeeper payment as a basis to seek credit to pay their employees until the scheme makes its first payment.
We do however hope that the Government may reconsider this and further updates may be made.
What is the definition of turnover?
Turnover (for the purpose of determining how much turnover has declined by) will be defined according to the current calculation for GST purposes and is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies. This is a self-assessment and you may need to assess your qualification here on the basis of whether you report on a cash or accrual basis however we recommend talking with us to ensure the correct assessment is made for you and your business activity.
Is this turnover test related to only turnover in Australia, or does it include overseas operations as well?
Under the GST law, only Australian based sales are included and therefore, only Australian based turnover is relevant. A decline in overseas operations will not be counted in the turnover test.
My Business has only just started or my business has ‘lumpy’ income. How can I self-assess that my turnover has fallen?
To establish that a business has faced or is likely to face a 30 percent or more fall in turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or quarter (depending on the Business Activity Statement reporting period of that business) relative to their turnover in a corresponding period a year earlier.
Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, the Tax Commissioner will have the discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.
Again, we recommend getting in touch with us to assist in this instance.
It is unlikely that my turnover will decrease by 30 percent in March, can I apply later if my turnover decreases in one of the subsequent months?
If a business does not meet the turnover test for March 2020, the business can start receiving the JobKeeper payment at a later time once the turnover test has been met. In this instance, though the JobKeeper payment will not be backdated to the commencement of the Scheme.
Will I have to continue to meet the decline in turnover test on an ongoing basis?
No. The decline in turnover test only needs to be satisfied once. Whilst a business must satisfy the decline in turnover test to be entitled to the JobKeeper payment, once it is satisfied, there is no requirement to retest in later JobKeeper payment fortnights. Therefore if a business can demonstrate their turnover has been adversely impacted and passes the test then it will continue to meet this requirement even if its turnover subsequently recovers in later JobKeeper fortnights.
Will the ATO use the JobKeeper payments to offset BAS debt?
The payment will generally be paid directly to the employer and not used to offset tax liabilities, as the intent is that it is a payment that enables employers to pay and retain their employees.
How and when can I enrol for the JobKeeper payment
You can enrol for the JobKeeper payment from 20 April 2020 following these steps:-
- Step 1 – Register your interest and subscribe for JobKeeper payment updates.
- Step 2 – Check you and your employees meet the eligibility requirements.
- Step 3 – Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April).
- Step 4 – Notify your eligible employees that you are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming JobKeeper payment through another employer or have nominated through another business and not in receipt of the JobSeeker payment from Centrelink.
- Step 5 – Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April if you plan to claim the JobKeeper payment for April. Keep it on file and provide a copy to your registered tax agent if you are using one.
- Step 6 – From 20 April 2020, you can enrol with the ATO for the JobKeeper payment using the Business Portal and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April. If you are not registered for a myGovID, as your tax agent we can do the enrolment for you. We would be happy to assist you through his process. When you receive your enrolment information and instructions from the ATO, please just forward the email to us and we will be in contact with the next steps.
- Step 7 – In the online form, provide your bank details and indicate if you are claiming an entitlement based on business participation, for example, if you are a sole trader.
- Step 8 – Specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).
There’s a lot to consider & implement to make sure you are receiving the full benefits from these government stimulus options. We’re here to work alongside you throughout this, ensuring we are doing all we can for your business to survive.
You’ll hear from us soon about your annual tax planning, an essential right now, as well as keeping you in the loop of all the latest updates.