Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.
Updates from 3rd April 2020
Treasury considers JobKeeper eligibility to include more businesses
In announcing the $130 billion JobKeeper program on Monday, the Treasurer set out clear eligibility requirements including a 30 percent fall in revenue for businesses with turnover below $1 billion and 50 percent for those with turnover greater than $1 billion.
However, following our concerns that many employers could miss out, given that some may not have been operational a year earlier or that their turnover may not have been representative of their usual turnover, the tax commissioner has now been given the discretion to make the final call. We have lobbied our respective professional bodies and local members to consider some of the unintended consequences.
According to our information, the tax commissioner will be allowed to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the coronavirus, such as;
- Set out alternative tests that would establish eligibility in specific circumstances. Treasury explained that eligibility may be established as soon as a business ceases or significantly curtails its operations.
- Allow tolerance where employers, in good faith, estimate a greater than 30 percent (or 50 percent) fall in turnover but actually experience a slightly smaller fall.
- Assist businesses that have not operated for a full year, businesses that have employees but do not generate revenue, and businesses that engage employees via a related service entity.
It is not clear yet how and when businesses will be able to seek the commissioner’s discretion and we will keep you informed on this, given the cash-flow pressure on businesses to retain or re-engage employees.
We recognise that businesses are desperate for a lifeline, and given that the JobKeeper payments will not be paid until after 1 May 2020, it is our belief business owners need to engage with us immediately to consider cash-flow requirements and to identify any stimulus or ATO administrative concessions that may assist in keeping their business operating.
Original Updates from 31st March 2020
Is My Business Eligible?
- My business has a turnover of less than $1 billion and turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month).
- My business must have been in an employment relationship with eligible employees as at 1 March 2020 and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
- Not-for-profit entities (including charities) that meet the turnover tests are eligible to apply for JobKeeper Payments.
- Self-employed individuals (businesses without employees) that meet the turnover tests are eligible to apply for JobKeeper Payments. Sole traders, partnerships and trusts will also be eligible.
Are My Employees Eligible?
- Employees are currently employed (including those stood down or re-hired).
- Employees were employed at 1 March 2020.
- Employees are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020).
- Employees are at least 16 years of age.
- Employees are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
- Employees are not in receipt of a JobKeeper Payment from another employer.
Note: Employees cannot receive both the JobSeeker and JobKeeper payments. If your employees receive the JobKeeper Payment, this may affect their eligibility for other Centrelink payments as they must report their JobKeeper Payment as income.
What do I need to do?
- Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline. The Australian Tax Office has already created a website for companies to register interest in the JobKeeper program.
- Provide information to the ATO on eligible employees. This includes information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax).
- If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s).
- If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
- Notify all eligible employees that they are receiving the JobKeeper Payment.
- Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.
** It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
When will I Receive Payment?
The first payment will be received by employers from the ATO in the first week of May. The payments will be received monthly and in arrears.
** We note for a lot of clients, this delayed payment will mean cashflow problems may arise over the next month, please contact our office to arrange a cashflow planning exercise to assist you through this period.
I am Self Employed and Don’t Have Employees?
– Businesses without employees, such as the self-employed, can register their interest in applying for the JobKeeper Payment.
– You will need to provide an ABN, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity.
– People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments.
– Payment will be made monthly to the individual’s bank account.
I have already stood down Employees without pay:
Sarah runs a beauty salon. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to
shut the business. As such she has been forced to stand down her staff without pay. Sarah’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three staff for up to six months. Sarah will maintain the connection to her employees and be able to quickly resume her operations. Sarah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Sarah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment. If Sarah’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.
I have Employees with Different Wages:
Adam owns a real estate business with two employees. The business is still operating at this stage, but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The employees are:
- Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
- Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
- The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income.
- The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.
Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
If you know of anyone that may benefit from this information, please feel free to forward our Covid-19 correspondence on to family and friends.