Updated: JobKeeper payment application details
The JobKeeper Payment is a wage subsidy that will be paid through the tax system to eligible businesses impacted by the Coronavirus.
Under the scheme, eligible businesses will receive a payment of $1,500 per fortnight per eligible employee and/or for one eligible business participant (i.e., an eligible sole trader, partner, company director or shareholder or trust beneficiary).
The subsidy will be paid for a maximum period of six months (from 30 March 2020 up until 27 September 2020). It will be paid to eligible businesses monthly in arrears, with the first payments to employers commencing from the first week of May 2020 (from 4 May 2020 onwards).
Applications for the JobKeeper payment will be open from Monday, 20 April 2020 when eligible employers can enrol and apply on the ATO website.
On 14 April 2020, the ATO released additional information on the formal enrolment process. In particular, tax agents will be able to enrol for the JobKeeper Payment Scheme on behalf of their clients from 20 April 2020 using the ATO’s Online services for agents.
Employers must enrol with the ATO using the Business Portal and authenticate with myGovID by the end of April to claim JobKeeper payments for April. The first two Jobkeeper fortnights are:
- 30 March – 12 April
- 13 April – 26 April
Employers will be eligible for the JobKeeper payment if all of the following apply:
• On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation.
• You employed at least one eligible employee on 1 March 2020.
• Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).
• *At the time you enrol in the JobKeeper scheme, you need to confirm that your business in a relevant period has had, or is likely to have, a:
- 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), or
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
• Your business is not in one of the ineligible categories.
*The decline in turnover test only needs to be satisfied once – there is no requirement to retest turnover each month. As a result, if a business can demonstrate that its turnover has been adversely impacted by at least 30% (or 50%, as the case may be), then it will continue to meet this requirement even if its turnover subsequently recovers in later JobKeeper fortnights.
Ultimately, it is up to each business to self-assess whether it satisfies this test. In most cases, businesses will be required to make a reasonable estimate of their turnover for a month or a quarter. To assist with this process, the ATO (according to Treasury) will be providing guidance in this regard shortly.
In the meantime, it would be prudent for businesses to start collating relevant information (e.g., interim accounts, monthly sales reports and prior year BASs) to get ready for comparison calculations.
On the basis that the sole trader’s business has satisfied all the other requirements to qualify for the JobKeeper Payment, a sole trader can qualify for the JobKeeper Payment in relation to their eligible employees and also qualify for the JobKeeper Payment themselves (i.e., in their own capacity) as an eligible business participant.
In order words, a sole trader’s entitlement to the JobKeeper Payment as an eligible business participant arises independently of their entitlement to the JobKeeper Payment in respect of their employees. Therefore, whether a sole trader has any employees or not will not impact on their ability to personally qualify for the JobKeeper Payment.
Business owners actively engaged in their business
Other businesses in the form of a company, trust or partnership can also qualify for JobKeeper payments where a business owner (a shareholder, adult beneficiary or partner) is actively engaged in the business, or a director is actively engaged in the business. This is limited to one entitlement for each entity even if there are multiple business owners or participants.
Employers must register for the scheme
An employer can only be entitled to a JobKeeper Payment where they are registered under the JobKeeper Scheme before the end of any relevant JobKeeper Payment fortnight.
Notably, 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).
For example, in order to be eligible for a JobKeeper Payment in respect of the JobKeeper fortnight commencing 30 March 2020, the employer has until 26 April 2020 to register. Whereas for the JobKeeper fortnight commencing 11 May 2020, the employer must (if they are not already registered) register by 24 May 2020.
As the scheme is operated on an ‘one in, all in’ basis, employers cannot ‘pick and choose’ which eligible employees will be able to participate in the scheme.
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. This applies to all eligible employees (i.e., irrespective of whether they are still working for the employer or they have been stood down).
How to calculate a fall in turnover
How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier. The turnover calculation is based on GST turnover. To work out 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 turnover for April 2019
- projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.
In determining whether the turnover of a business has fallen (or is likely to fall) by at least 30% (or 50% as the case may be), the business would generally need to show a decline in its projected GST turnover in the current period (i.e., either a month or quarter) relative to its current GST turnover in the corresponding period in the 2019 income year.
The concept of ‘projected GST turnover’ and ‘current GST turnover’ for these purposes have been modified to apply to the period (i.e., either a month or a quarter) rather than the month, with the GST grouping provisions to be disregarded as well.
Specifically, the modified ‘current GST turnover’ is determined at the end of the period and takes into account the total value of all supplies made by the entity during that period, excluding input taxed supplies, supplies that are not for consideration and supplies that are not made in connection with the enterprise that the entity carries on.
The modified ‘projected GST turnover’ is determined at a time during a particular period and takes into account the total value of all supplies made, or are likely to be made, by the entity during that period, excluding input taxed supplies, supplies that are not for consideration and supplies that are not made in connection with the enterprise that the entity carries on.
The ATO’s discretion for JobKeeper eligibility
The Commissioner also has the discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g., eligibility may be established as soon as a business has ceased or significantly curtails its operations). There will also be some tolerance where employers have, in good faith, estimated at least a 30% (or 50%, as the case may be) fall in turnover, but actually experience a slightly smaller fall.
What if a business’s turnover has not decreased (e.g., by 30%) but it is predicted to do so in the coming month?
An employer can apply for the JobKeeper Scheme where it is reasonably expected that its GST turnover will fall by 30% or more (or 50% where applicable) relative to its GST turnover in a corresponding period a year earlier. Treasury has advised that the ATO will provide guidance about self-assessment of actual and anticipated falls in turnover.
Additionally, if a business does not meet the decline in turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment at a later time, once the decline in turnover test has been met. However, in this case, the JobKeeper Payment will not be backdated to the commencement of the scheme, although businesses can receive JobKeeper Payments up to 27 September 2020.
Employee is eligible under the JobKeeper Payment scheme if they:
- are employed by you (including those stood down or re-hired)
- were either a
- permanent full-time or part-time employee at 1 March 2020
- long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer
- were at least 16 years of age on 1 March 2020
- were 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 or tax purposes and was a holder of a Subclass 444 (Special Category) visa.
- were not in receipt of any of these payments during the JobKeeper fortnight:
- government parental leave or Dad and partner pay
- a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work
- agree to be nominated by you (see Nominating employees).
You cannot claim for any employees who:
- were first employed by you after 1 March 2020, or
- left your employment before 1 March 2020, or
- have been, or have agreed to be, nominated by another employer.
Employers need to re-start or continue to pay your eligible employees at least $1,500 a fortnight in line with your existing pay cycle through your existing payroll solution.
When to pay
You should pay your employees for each JobKeeper fortnight you plan to claim for; and the minimum payment must be made by the last day of the fortnight.
However, for the first two fortnights, the ATO will still accept the minimum $1,500 payment for each fortnight even if it has been paid late, provided it is paid by the end of April 2020. Going forward, the minimum payment will need to be strictly made by the end of the relevant fortnight.
How much to pay
If your eligible employees earn less than $1,500 in gross salary income per fortnight since, the employer must ‘top up’ their salary to $1,500 for each fortnight to ensure they remain eligible.
You cannot pay your employees less than $1,500 per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 before tax per fortnight.
If your eligible employees earn more than $1,500 per fortnight, you will only receive $1,500 for each eligible employee. Any amount you pay above $1,500 per fortnight is not subsidised by the JobKeeper payment.
If an employee has been stood down without pay after 1 March 2020, their employer must pay the employee a minimum gross fortnightly salary income of $1,500 from 30 March 2020 to qualify for the JobKeeper payment for that employee.
If an employee ceased working for you after 1 March 2020, you can re-engage them and pay them at least $1,500 per fortnight. You will only be eligible to claim for the fortnights after you re-engaged your employee.
Employers are required to satisfy the ‘wage condition’ and continue to pay emloyees to qualify the JobKeeper. a payment under the scheme is meant to be a reimbursement to the employer of an amount already paid to an eligible employee (who is participating in the JobKeeper Scheme).
If employers have insufficient cashflow to make such payments, Treasury has encouraged such businesses to speak to their banks about using the upcoming JobKeeper Payment as ‘collateral’ to seek short-term finance to pay their employees.
The JobKeeper Payments from the ATO are assessable income to the business and employers are required to deduct PAYG withholding from the amounts paid to employees.
However, employers are not subject to Superannuation Guarantee (‘SG’) in relation to any extra JobKeeper Payments. For example, if an employee ordinarily earns $1,000 a fortnight and is ‘topped-up’ by $500 to $1,500 a fortnight, the employer will be required to pay SG in relation to the ‘usual’ $1,000 but it is up to the employer if they want to pay SG on the additional $500 payment.
This information is a guide to the emerging details on the administration of the Jobkeeper Scheme. It is of a general nature comprising extracts from the ATO website materials. Your specific circumstances require individual examination for evaluation of the subsidy for your business.
What to do NOW
1. Identify if your turnover meets criteria
2. Start gathering information on decline in turnover
3. Determine eligible employees and communicate with them
4. Send the JobKeeper employee nomination notice to each nominated employee to complete this week.
5. Be prepared for the Employer Jobkeeper online registration process next Monday April 20th
Talk to us as we can assist you – we will provide you with an engagement letter indicating the scope of work required to be undertaken and the commercial aspects of our advice and assistance.
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