On April 8, 2020 the federal government passed its $130 billion Job Keeper stimulus package through parliament. Please note, the information is constantly changing and what we are providing in this update is accurate as at 16th April, 2020.
The Job Keeper Payment is designed to support hundreds of thousands of Australians who have been stood down or whose businesses have been significantly impacted as a result of COVID-19.
Our team understands that this new legislation is quite confusing and that there is still a lot to be explained in further detail by the ATO. In some ways, the legislation has provided more questions than answers. We are doing our best to keep our clients updated as much as we can when the information becomes available.
Please keep in mind that we may not be able to answer your questions at this stage as the legislation may not yet be available for your circumstance.
- Eligible employers will be paid a fixed amount of $1,500 per fortnight which is to be passed onto each eligible employee.
- Tax is to be withheld by the employer on this wage however superannuation on this amount is optional.
- Payments are to be made in the first week of May however these will be back dated to March 30th, 2020.
- All fortnights within the 6 month period from 30 March – 27thSeptember are considered “Job Keeper Fortnights.”
- If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer; the employee will also receive, at a minimum, $1,500 per fortnight, before tax.
- The payment is not spouse means tested (like the Job Seeker Payment is). Therefore, provided you (or your business) meet the eligibility criteria, you could receive this payment even if your spouse is a high income earner.
- You can register your interest in applying for the Job Keeper Payment from 30 March, 2020. If you have registered with the ATO for an update on the Job Keeper Payment, you will receive a notification from the ATO of when online enrolment is available.
- Employees and business owners can receive the Job Keeper payment ONLY if their associated business passes the “decline in turnover test”.
Decline in turnover Test Key Points:
- To be eligible for this payment as a business owner, you must be able to prove that your turnover has dropped by 30% or greater since March 1st, 2020 ( if your annual turnover is less than 1 billion).
- Alternatively, if you are a business owner and your turnover is greater than 1 billion, you must have a 50% reduction in revenue or more.
- If a business adopts JobKeeper, it must be offered to all eligible employees.
Who can receive the Job Keeper Payment?
- Employees (including those formally employed by their own business- and on the payroll).
- Sole Traders
- 1 Partner ( only ) of a partnership
- 1 adult beneficiary of a trust
- 1 director or shareholder of a company
- To be classed as an “eligible employee.” you must be formally employed by your employer and in receipt of a minimum of $1500 (including tax and salary sacrifice super and other benefits) per fortnight within each“Job Keeper Fortnight”.
- Your employer needs to notify the commissioner of your fortnightly earnings ( this will likely be done through Single Touch Payroll).
- To be eligible for this payment as an employee on a wage, you must have been employed on 1stMarch, 2020 in either a full time, part time, or long term casual capacity for 1 year or longer.
- If you are in receipt of paid parental leave, dad and partner pay or workers compensation; you will not be eligible.
- You must be an Australian citizen, a holder of a permanent visa, a protected special category visa, a non-protected special category visa who has been residing continuously in Australia for 10 years or more, or a New Zealander on a special category (subclass 444) visa.
- You must be at least 16 years of age.
- You can only receive this payment from 1 employer.
You are an eligible employer if you satisfy the following conditions:
- On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
- You employed at least one eligible employee on 1 March 2020.
- As mentioned above, that employee must be in receipt of $1500 minimum per job Keeper Fortnight.
- What this means is that you as the employer must have the cash flow to be able to pay the minimum $1,500 from the 30thof March. (Remembering that payments will be back paid from the first week of May).
- There are currently talks of banks offering bridging finance to businesses to fund these payments to their staff on the guarantee that the employer will receive the money from the ATO ( and pay it back ).
- Basically, unless you can secure a loan you do need to have the cash flow to be able to make these payments for staff until the first week of May at least.
- Your business must pass the decline in turnover test*.
- You will be able to enrol in the Job Keeper scheme from April 20, 2020 using an form on the ATO website. Once you enrol, you will later be required to identify your eligible employees via a further form.
- As a business owner wanting to claim this for your employees, you must complete the Job Keeper Employee nomination notice in order to notify your eligible employees that you intend to participate in the scheme. Both you and your nominated employee are required to complete this form. You do not need to send this form to the ATO however you should keep a record to document that your employee has agreed that you can claim the Job Keeper payment for them.
- It is important that you engage with your employees in order to establish work requirements. You may need to think outside the box in order to have staff who may not be able to work in their traditional role engage in activities such as online marketing, cleaning etc. As an example perhaps you recently had to close your beauty salon. You elect to enter the Job Keeper scheme and you keep your eligible employees on the books under this scheme. These staff members might assist by working from home and doing online tutorials on how to remove acrylic nails / apply face masks. Perhaps another staff member might pop into the salon weekly to clean.
- To be classed as an “eligible business participant” you must be actively engaged with your business even if you are not receiving a formal wage.
- You will be either a sole trader, 1 partner within a partnership, 1 adult beneficiary of a trust, 1 director or shareholder of a company.
- On March 1, 2020 you must have been 16 or over and an Australian resident/ resident for tax purposes.
- You need to have notified the commissioner by 26th April, 2020 that you will be participating in the scheme. Once you have elected to go into the scheme, you are in it until you elect to go out.
- The individual must not be in receipt of parental leave pay, dad & partner pay or workers’ compensation.
- If you are a business without employees, you will be required to provide your ABN and nominate one individual to receive the Job Keeper Payment. That individual’s TFN along with a declaration as to recent business activity will need to be provided.
- If you are self-employed, you will need to provide a monthly update to the ATO for integrity and data gathering purposes.
- To be eligible you must pass the decline in turnover test.
- If you determine that you qualify for the Job Keeper payments for the first Job Keeper fortnight because your turnover has declined by the relevant amount; you will remain eligible and you do not need to keep testing turnover in following months.
*The decline in Turnover Test: Further Detail
- You only need to satisfy this requirement once – you don’t need to retest turnover each month.
- At the time you enrol in the JobKeeper payment scheme, you need to confirm that your business in a relevant period has had, or is likely to have:
- 30% fall in turnover (for an aggregated turnover of $1 billion or less)
- 50% fall in turnover (for an aggregated turnover of more than $1 billion)
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
- To determine your fall in turnover, you can compare either:
- GST turnover for March 2020 with GST turnover for March 2019
- projected GST turnover for April 2020 with GST or turnover for April 2019
- OR projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019
- For those businesses that are not registered for GST, the ATO will go off the income reported in the 2019 FY Income Tax Return to check eligibility.
- If the 2019 FY Income Tax Return has not been lodged, it is implied that you will miss out on the payment however it is said that you can apply to the commissioner for discretion. Regardless, it can’t hurt to ensure your tax and BAS affairs are caught up ASAP as this way you will be in a much better position to make a request to be eligible for the payment.
- Where there is no prior period to compare from, or the prior period data is not really an accurate reflection, the ATO will use its discretion to use additional data and other tests to determine your eligibility. This will also apply if you are a new start up.
- If an entity does not qualify for the month of April 2020 because its turnover has not been sufficiently affected, it can test in later months to determine if the test is met. This allows entities that only become affected partway through the six month period of operation of the Job Keeper scheme to continue to monitor for any decline in turnover until they qualify for the scheme in a later period.
- The ATO will provide more detailed information on the decline in turnover test in due course.
If anyone is found to have entered into a scheme for the purpose only to obtain the Job Keeper Payment, heavy penalties will apply.
BUT WAIT, THERE’S MORE…
We are waiting to hear more from the ATO on:
- The eligibility of sole traders
- Other businesses in the form of a company, trust or partnership can have one member receive the payment as long as that member is “actively engaged.” Unfortunately, this applies even if there are multiple business owners or participants. More information will soon follow on this.
- As mentioned above, the ATO is yet to release more detailed information on the decline in turnover test and projecting GST turnover.