JobKeeper Payment

On Wednesday, 8th April 2020 the Federal Government passed its $130 billion JobKeeper Package.  As a result businesses and not-for-profits impacted by the Coronavirus can access a subsidy to support them in retaining employees.   JobKeeper Payments are paid in respect of each eligible employee who was employed at 1 March 2020 and is currently employed by the business (including those who are stood down or re-hired).  The payments of $1,500 (before tax) per fortnight per eligible employee will be available from 30 March 2020 to 27 September 2020.

The Application Process:

Online applications for the JobKeeper payment will be processed by the Australian Taxation Office (ATO), which is expected to be available from mid-April.  However initially employers can register their interest in applying for the JobKeeper payment via ato.gov.au.

As part of the application process, eligible employers must:

  • identify and include all eligible employees
  • provide monthly updates to the ATO
  • ensure all eligible employees receive, at a minimum, $1,500 per fortnight before tax
Who can apply?:

Businesses with employees:

Eligible employers (including not-for-profits) are those business who have:

  • an aggregated turnover of less than $1 billion and an expectation that their GST turnover has fallen, or is likely to fall, by 30% or more; or
  • an aggregated turnover of $1 billion or more and an expectation that their GST turnover has fallen, or is likely to fall, by 50% or more; and
  • their business is not subject to the Major Bank Levy.

The self-employed:

Self-employed individuals (businesses without employees) are eligible for the JobKeeper Payment if the turnover tests are met.  Businesses without employees will need to provide the following information:

  • an ABN for their business
  • nominate an owner to receive the payment
  • provide the Tax File Number of the owner
  • provide a declaration as to recent business activity

JobKeeper Payments for the self-employed are processed monthly to the nominated owners bank account.

Charities

Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) are eligible for the subsidy if they estimate their GST turnover has fallen, or is likely to fall, by 15% or more relative to a comparable period in the prior year.  Universities and non-government schools that are registered charities are specifically excluded from this lower turnover threshold and are required to meet the 30% test.

The Turnover Test:

Turnover is calculated as it is for GST purposes, and as reported in the Business Activity Statements.  It includes all taxable supplies and all GST free supplies but not input taxed supplies.  Registered charities will also include any donation income received or likely to receive.

In establishing whether turnover has, or is likely to, fall by the 30% businesses will compare their turnover from a relevant period in the prior year to current results.  Generally speaking, the comparative period will be based on the reporting period of the business’ business activity statement i.e. monthly or quarterly.

The Tax Commissioner has discretionary powers where:

  • a business for not-for-profit was not in operation year earlier
  • turnover a year earlier was not representative of the usual or average turnover (i.e. due to acquisition activities,  highly variable turnover for commencing businesses, turnover affected by natural disasters etc)
  • any other factors to be considered to establish that the business has been significantly affected by the impacts of the Coronavirus.
Eligible Employees:

Eligible employees are employees who:

  • are currently employed by the eligible employer (including those stood down or re-hired);
  • were employed by the employer at 1 March 2020;
  • are full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020);
  • are a permanent employee of the employer, or if a long-term casual employee, not a permanent employee of any other employer;
  • are at least 16 years of age at 1 March 2020;
  • are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
  • were a resident for Australian tax purposes on 1 March 2020; and
  • are not in receipt of a JobKeeper Payment from another employer.

Employees receiving Parental Leave Pay from Services Australia are not eligible for the JobKeeper Payment.

Employees on parental leave from their employee are eligible for the JobKeeper Payment.

Employees receiving workers compensation and are working, for example on reduced hours, are eligible for the JobKeeper Payment.  Employees receiving workers compensation and not working are not eligible for the JobKeeper Payment.

The eligible employer will be required to advise their employees that they have been nominated as an eligible employee for the purposes of the payment.

Ongoing Employer Obligations:

In order to receive, and continue receiving, the JobKeeper Payment, employers must:

  • Meet the required decline in turnover.
  • Provide information to the ATO on all eligible employees (as described above).  For most businesses or not-for-profits, the ATO will use Single Touch Payroll data to pre-populate the employee details.
  • Ensure each eligible employee receives at lease $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.
Frequently Asked Questions:

When are payments processed and how often are they paid?

The first payment will be received by employers from the ATO in the first week of May.  Payments will then continue to be made by the ATO monthly in arrears.

What are the eligible payment periods for reimbursement?

Employers will need to satisfy payment requirements for their eligible employees in respect of each 14 day period covered by the scheme.  The first period commences on Monday 30 March 2020 and ends on Sunday 12 April 2020.  The final period will start on Monday 14 September 2020 and end on Sunday 27 September 2020.

My employees currently don’t earn $1,500 per week.  What happens to their wages now?

Employees who receive $1,500 or more from their employer will continue to receive their regular income according to their prevailing workplace arrangements.

For employees who have been receiving less than this amount, the employer will now need to pay them, at a minimum, $1,500 per fortnight before tax.

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?

You can claim the JobKeeper Payment for employees that were stood down after 1 March 2020.  To be eligible in relation to these employees, you will need to pay them a minimum of $1,500 per fortnight (before tax) for the payment periods of the JobKeeper Payment.

Am I required to pay PAYG Withholding and Superannuation on the JobKeeper Payment?

You must pay a minimum of $1,500 per fortnight to your eligible employees, withholding income tax on this amount as appropriate.

Where an employee is paid more than $1,500 per fortnight, the employer’s superannuation obligations will not change.

Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper Payment, it will be up to the employer if they want to pay superannuation on any additional wages paid due to the JobKeeper Payment.

What happens if my employee resigns?

If an employee for whom you are receiving the JobKeeper Payment resigns, you must notify the ATO.  You may need to refund some money to the ATO.

I hired an employee after 1 March 2020.  Can I receive the JobKeeper Payment for them?

The employee must have been engaged as of 1 March 2020.

My turnover has not decreased by 30 per cent this month, but I believe it will in the coming month.  Am I eligible?

You can apply for the payment if you reasonably expect that your GST turnover will fall by 30 per cent or more relative to your GST turnover in a corresponding period a year earlier.  The ATO will provide further guidance about self-assessment of actual and anticipated falls in turnover.

It is unlikely that my turnover will decrease by 30 per cent in the coming month, but can I apply later if my turnover decreases in one of the subsequent months?

If a business does not meet the turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment at a later time once the turnover test has been met.  In this case, the JobKeeper Payment is not backdated to the commencement of the scheme.  Businesses can receive the JobKeeper Payments up to 27 September 2020.

Will the ATO use the JobKeeper Payments to offset a 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 facilitates employers to pay their employees.

Further Information:

For further information relating to the JobKeeper Payment as part of the Economic Response to COVID-19 (Coronavirus) Federal Government Stimulus Package, visit the links below:

Disclaimer:  Paragon Business Services does not provide financial or tax advice.  All information provided is of a general nature only and might no longer be up to date or correct.  You should seek professional accredited tax and financial advice when considering whether the information is suitable to your circumstances.