JobKeeper: A Brief Re-Cap
- Eligible businesses that elect to participate will receive 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.
- Employers (including not-for-profits) will be eligible for the subsidy if their business has a turnover of less than $1 billion (and if part of a group for income tax purposes, the group has a combined turnover of less than $1 billion) and estimate their turnover has fallen or will likely fall by 30 per cent or more.
- For charities registered with the Australian Charities and Not-for-profits Commission (ACNC), they will be eligible for the subsidy if they estimate their turnover has fallen or will likely fall by 15 per cent or more relative to a comparable period.
- Employers must elect to participate in the scheme. They will need to make an application to the ATO and provide supporting information demonstrating a downturn in their business.
- 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 JobKeeper Payment will be available from 30 March 2020 and will run until 27 September 2020.
- The first payments by the ATO will be received by employers in the first week of May. They will continue to be made, monthly in arrears.
- Whilst the scheme refers to fortnightly (or 14 day) periods, there is no need for employers to change their payroll frequency. The payment requirement is that they pay their eligible employees a minimum of $1,500 per fortnight in the scheme payment periods. Where an employer pays their staff monthly, the ATO will be able to reallocate payments between periods. However, overall an employee must have received the equivalent of $1,500 per fortnight.
- The first fortnightly period starts 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.
- All business types are generally eligible.
- A company that is in liquidation, or a partnership, trust or sole trader in bankruptcy, will not be eligible.
- JobKeeper enrolment applications will be available from 20 April 2020.
Turnover Rules & Eligibility Criteria
- Turnover 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 (There are some modifications for businesses that are part of a GST group).
- 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.
- 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, (e.g. because there was a large interim acquisition, they were newly established, were scaling up, or their turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.
- The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business ceases or significantly curtails its operations).
- There will be some tolerance where employers, in good faith, estimate a 30 per cent fall in turnover but actually experience a slightly smaller fall.
- You can apply for the payment if you reasonably expect that your turnover will fall by 30% or more (or 50% or more for businesses with a turnover of $1 billion or more) relative to your turnover in a corresponding period a year earlier. The ATO will provide guidance about self-assessment of actual and anticipated falls in turnover.
- Businesses looking to apply for JobKeeper will need to satisfy the decline in turnover test through either a basic test or the alternative test.
- The basic test compares the GST Turnover for either (a) any monthly period from March 2020 to the end of September 2020 or (b) any quarterly period from April to June or July to September…compared to the same monthly or quarterly period in 2019.
- The alternative test will apply where there is not an appropriate relevant comparison period in 2019. This alternative decline in turnover test will be determined by the Commissioner of Taxation.
- Once this self-assessed test is met, there is no requirement to re-test in later months or quarters. For example, if a business assesses that its turnover will fall by 30% in April 2020 compared to April 2019, then it retains its eligibility until the JobKeeper payments stop for all businesses at the end of September 2020. This is irrespective of its turnover in the months subsequent to April 2020. It is not required to estimate or determine turnover for subsequent periods.
- However, entities will need to notify the ATO of its current GST turnover for the reporting month and its projected GST turnover for the following month on a monthly basis. According to the rules, this information will not affect an entity’s eligibility, nor will it be used to verify whether the projection given as part of the decline in turnover test was accurate.
- If a business does not meet the turnover test at the start of the JobKeeper scheme on 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.
Rules Around Paying Employees
- If your business is eligible for JobKeeper, you will receive a $1,500 per fortnight subsidy to support the continued employment of eligible employees.
- If an eligible employee currently earns less than $1,500 before tax per fortnight, you will need to pay them $1,500 per fortnight before tax to receive the JobKeeper payment.
- If you want to claim the subsidy for an eligible employee and they have not been paid $1,500 per fortnight since 30 March 2020, employers must pay a ‘top-up’ payment to employees so that they are eligible. The ATO will provide further guidance on how this will work.
- The employer cannot claim the reimbursement for the JobKeeper payment for employees who were not paid the full amount during each JobKeeper payment period.
- The employer will be reimbursed $1,500 per fortnight for each eligible employee.
- Employers cannot pay their employees less than $1,500 per fortnight and be entitled to a JobKeeper payment for that employee.
- If the eligible employee is paid more than $1,500 a fortnight before tax, the employer will only be reimbursed $1,500 per fortnight. However, no additional payment to the employee is required.
- If you have stood down employees without pay after 1 March 2020, you can ‘back pay’ them for this period and claim the JobKeeper payment.
- If you let eligible employees go, after 1 March 2020, they can be re-hired in order to receive the JobKeeper payment. They can even be immediately stood down, just as long as they remain employed.
- If paying employees presents a cashflow challenge, businesses are being encouraged to discuss short term funding options with their banks or other lenders. This is due to the fact that the JobKeeper scheme is paid monthly, in arrears.
- Withholding tax on JobKeeper payments should be calculated & deducted as appropriate i.e. it is a before tax amount.
- Superannuation is generally not payable on any JobKeeper top-up amounts, although the business may elect to pay additional superannuation at its own discretion. Where an employee is paid more than $1,500 per fortnight, the employer’s superannuation obligations will not change.
- 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.
- JobKeeper cannot be claimed for employees hired after 1 March 2020.
- The JobKeeper 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.
- Employees will not be eligible for the JobKeeper scheme if they are fully incapacitated, unable to work and being supported by a workers compensation scheme.
Who is an Eligible Employee?
An eligible employee is an employee who:
- is currently employed by the eligible employer (including those stood down or re-hired);
- is a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020;
- is a permanent employee of the employer, or if a casual employee, not a permanent employee of any other employer;
- was aged 16 years or older at 1 March 2020;
- was an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
- was a resident for Australian tax purposes on 1 March 2020; and
- is not in receipt of a JobKeeper Payment from another employer.
To receive the JobKeeper Payment, employers must:
- Apply to the ATO and assess that they have or will likely experience the required turnover decline.
- Provide information to the ATO on all eligible employees. This includes information on the eligible employees engaged as at 1 March 2020 and those currently employed by the business or not-for-profit (including those stood down or re-hired). For most businesses or not-for-profits, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business or not-for-profit.
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). Employees who receive $1,500 per fortnight or more from their employer will continue to receive their regular income according to their prevailing workplace arrangements. For employees that have been receiving less than this amount, the employer will now need to pay them, 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.
Employees will receive a notification from their employer that they are receiving the JobKeeper Payment. The majority of employees will need to do nothing further.
Employees in the following circumstances will have additional obligations:
- Employees that have multiple employers must notify the employer that is their primary employer.
- Employees that are not Australian citizens must notify their employer of their visa status, to allow their employer to determine if they are an eligible employee.
- Employees that are currently in receipt of, or have applied for, an income support payment should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.
JobKeeper for Self-Employed & Other Eligible Businesses
People who are self-employed will be eligible for the payment provided, at the time of applying, they:
- estimate their GST turnover has or will fall by 30 per cent or more;
- had an ABN on or before 12 March 2020, and
- either had an amount included in its assessable income for the 2018-19 year and it was included in their income tax return lodged on or before 12 March 2020 (or such later time as allowed by the Commissioner), or
- made a supply during the period 1 July 2018 to 12 March 2020 and provided this information to the Commissioner on or before 12 March 2020 (or such later time as allowed by the Commissioner);
- were actively engaged in the business;
- are not entitled to another JobKeeper Payment (either a nominated business participant of another business or as an eligible employee);
- are not a permanent employee of any other employer;
- were aged at least 16 years of age as at 1 March 2020; and
- were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020.
- Self-Employed applicants will be asked to provide their ABN and a single Tax File Number for the eligible recipient of the JobKeeper Payment, and a declaration of business activity.
Rules Relating to Other Eligible Businesses
- Only businesses with employees or self-employed people are eligible for the JobKeeper Payment.
- In a partnership, only one partner can be nominated to receive a JobKeeper Payment along with any eligible employees, noting a partner cannot be an employee.
- Where beneficiaries of a trust only receive distributions, rather than being paid salary and wages for work done, one individual beneficiary (that is, not a corporate beneficiary) can be nominated to receive the JobKeeper Payment.
- An eligible business can nominate only one director to receive the payment, as well as any eligible employees. That individual may not also receive the payment as an employee.
- An eligible business that pays shareholders that provide labour in the form of dividends will only be able to nominate one shareholder to receive the JobKeeper Payment.
Steps to Take to Enrol for JobKeeper
The ATO has announced the 8 steps you, or your BAS/Tax Agent, should take to enrol your business for JobKeeper
- Register your interest and subscribe for JobKeeper payment updates.
- Check you and your employees, or those of your clients, meet the eligibility requirements.
- 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).
- Notify 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.
- 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 JobKeeper payment for April. Keep it on file and provide a copy to your registered tax agent if you are using one.
- From 20 April 2020, you can enrol with the ATO for the JobKeeper payment using OFSA or the Business Portal respectively and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April.
- 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.
- 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).
The ATO will provide guidance to help businesses self-assess their eligibility. This will include for circumstances that do not fit neatly into more general circumstances that the majority of businesses are in.
The Government will include appropriate integrity rules to prevent employers from entering into artificial schemes in order to get inappropriate access to payments.
The ATO will also cross-check payments with Services Australia data, and data from other government agencies, and undertake activities designed to identify multiple or ineligible payments to individuals.
There are serious consequences, including large penalties and possible imprisonment, for those trying to illegally get benefits under the scheme.