Supporting Businesses To Retain Jobs (JobKeeper Payment)
OnVenture welcomes the Australian Government’s JobKeeper initiative to subsidise the wages costs of businesses who’s revenue has been significantly affected by the Coronavirus crisis but continue to operate and as to keep otherwise stood down employees connected with their employers in the case of shutdowns.
The Australian Government has announced a $130 billion JobKeeper payment to help keep more Australians in jobs and support businesses affected by the significant economic impact caused by the Coronavirus. Around 6 million workers will receive a fortnightly payment of $1,500 (before tax) through their employer. The payment ensures eligible employers remain connected to their workforce and will help businesses restart quickly when the crisis is over.
The following has been derived from Australian Government Treasury and Australian Taxation Office support notes and documents.
What support is being offered
Under the JobKeeper payment, eligible businesses impacted by the Coronavirus will be able to access a $1,500 per fortnight subsidy from the Government for eligible employee’s as to continue paying their employees from 30 March 2020. These subsidies are available for a maximum period of 6 months.
Key steps for entities who intend to participate
To receive the JobKeeper Payment, entities must do the following:
Assess eligibility and register your interest:
- Assess whether your entity has or will experience the required turnover decline to be eligible for the program.
- Register your interest and subscribe for JobKeeper payment updates. Register here: https://www.ato.gov.au/Job-keeper-payment/
- Identify which employees are eligible to claim the JobKeeper payment.
- Notify your 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.
- Continue to pay at least $1,500 before tax to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April) or within current pay cycles however ensuring consistent with at least $1,500 fortnight amounts e.g. $750 if weekly.
- 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 practitioner if you are using one. Download the form here: https://www.ato.gov.au/Forms/JobKeeper-payment—employee-nomination-notice/
Enrol for the JobKeeper payment from 20 April 2020:
- You or your registered tax practitioner must then enrol for the JobKeeper payment via online services from the 20th of April 2020 onwards. 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).
Apply for the JobKeeper payment from 4 May 2020 onwards:
- Ensure you have paid each eligible employee a minimum of $1,500 per JobKeeper fortnight before tax. If you intend to claim for April 2020 you must have paid each eligible employee the minimum on or before 30 April 2020.
- You or your registered tax practitioner must then apply for the JobKeeper payment via online services from the 4th of May 2020 onwards.
- Identify your eligible employees in the application form by:
- selecting employee details that are prefilled from your STP pay reports if you report payroll information through an STP enabled payroll solution, or
- manually entering employee details in ATO online services or the Business Portal if you do not use an STP enabled payroll solution, or
- using a registered tax agent who will submit a report on your behalf through ATO online services for agents.
- Submit the confirmation of your eligible employees online and wait for your confirmation email or SMS showing it has been received.
- Notify your eligible employees you have nominated them.
- The ATO will pay the JobKeeper payment for all eligible employees after receiving your application
File your monthly JobKeeper Declaration Report with the ATO:
- Each month, complete your JobKeeper Declaration Report through ATO online services or via your registered tax practitioner to continue to receive the JobKeeper payments from the ATO which includes:
- Reconfirming that your reported eligible employees have not changed or otherwise notify the ATO if your eligible employees change or leave your employment.
- Provide some information as to your current and projected turnover although this information is not to retest your reported fall in turnover, this only needs to be done once.
Eligibility for employers
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 that pursued your objectives principally in Australia.
- 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).
- Your business has faced 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.
You should note that the turnover calculation is based on GST turnover, but there are some modifications, including disregarding GST grouping where two or more associated business entities operate as a single GST group.
How to calculate a fall in turnover for the first fortnight starting 30 March 2020
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
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, but there are some modifications, including disregarding GST grouping (where two or more associated business entities operate as a single GST group). See “Entities that are members of a larger group”.
If you work out that you qualify for the JobKeeper payments for the first fortnight because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover in following months. However, you will have ongoing monthly reporting requirements.
The Commissioner of Taxation also has the discretion to set out alternative tests that can establish your eligibility when turnover periods are not appropriately comparable (for example, if your business has been in operation less than a year). The ATO will provide more information soon about alternative tests.
Entities that are members of a larger group
Where an entity is part of a larger group this may affect how they apply the decline in turnover test to determine whether they are eligible. If the larger group has, or estimates they will have, an aggregated turnover of more than $1 billion for the income year in which the test period occurs or had an aggregated turnover of more than $1 billion for the previous year, the entity will be required to show a 50% decline in turnover to be eligible to receive JobKeeper payments.
Testing the decline in turnover is done on an individual employer entity basis. It only takes into account the turnover of the entity which is the employer, and not other members of a group.
Not-for-profit organisations
Not-for-profit entities (including charities) that meet the turnover tests are eligible to apply for the JobKeeper payment. An ACNC-registered charity, other than universities and schools, only needs to show a decline in turnover of 15% or more.
Eligibility for self employed
The JobKeeper Payment is available to eligible employees, businesses including companies, partnerships, trusts and sole traders, not-for-profits and charities.
The intent of the JobKeeper Payment is to enable any eligible self-employed person get a wage subsidy regardless of what business structure they use, where:
- The partners in a partnership only receive a share of profits – one partner can be nominated to receive it
- Directors of a company only receive dividends – one director can be nominated to receive it
- Beneficiaries of a trust only receive distributions – one individual beneficiary (i.e. not a corporate beneficiary) can be nominated to receive it
Eligibility for employees
Eligible JobKepper 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 basis for longer than 12 months as at 1 March 2020);
- Are at least 16 years of age on 1 March 2020;
- Are an Australian resident as at 1 March 2020 within the meaning of the Social Security Act 1991, which requires that they reside in Australia, and are one of an Australian citizen, the holder of a permanent visa, or a Protected Special Category Visa Holder. More information about these requirements can be found from the Services Australia website under residence descriptions here: https://www.servicesaustralia.gov.au/individuals/topics/residence-descriptions/30391. Your employee can also be an Australian tax resident who is a Special Category (Subclass 444) Visa Holder. Employees who are not permanent residents of Australia must notify you of their visa status to allow you to determine if they are eligible.
- 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
If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper Payment as income.
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.
If your employees have multiple employers, they can usually choose which employer they want to nominate through. However, if your employees are long-term casuals and have other permanent employment, they must choose the permanent employer and cannot nominate you. They cannot receive the JobKeeper payment from more than one employer.
Employees who were stood down or on long term leave
Employees who have been stood down from work under the Fair Work Act 2009 without pay may still be eligible employees as long as they were in your employment and met the eligibility criteria on 1 March 2020.
You will need to have paid them at least the minimum amount of $1,500 for each fortnight you claim for, to receive the JobKeeper payment.
Employees who have been terminated
If you terminated an employee after 1 March 2020, you can re-engage them and they will be eligible if they met the eligibility criteria on 1 March 2020.
If you want to claim the JobKeeper payment for employees you have re-engaged, you will need to:
- Confirm they want to be re-hired and participate in the JobKeeper scheme with you
- Re-engage the employees you want to claim for
- Ask them to complete the JobKeeper employee nomination notice and return it to you. You are required to keep this form as part of your records keeping obligations under the law
- Start paying them a minimum of $1,500 (before tax) for each fortnight they are employed and you claim for.
You will only be paid a JobKeeper payment for employees from the fortnight they were re-engaged. You cannot claim retrospectively for employees you re-engage.
Examples
Employer with employees on 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. The business 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 can register his initial interest in the scheme from 30 March 2020, followed subsequently by the enrolment and application steps described above. Adam will provide information to the ATO on a monthly basis through the Declaration Reporting and receive the payment monthly in arrears.
Employer with employees who have been stood down without pay
Zahrah runs a beauty salon in Melbourne. 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 three beauticians without pay.
Zahrah’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 beauticians for up to six months. Zahrah will maintain the connection to her employees, and be in a position to quickly resume her operations.
Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.
If Zahrah’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.
Further Information from the Australian Government
For more information from the Australian Taxation Office for employers visit: https://www.ato.gov.au/General/JobKeeper-Payment/Employers/
For more information on the Australian Government’s Economic Response to Coronavirus visit: https://treasury.gov.au/coronavirus/jobkeeper
For information on the eligibility for those self employed visit: https://www.business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/support-available-for-sole-traders
To register for the JobKeeper Payment visit: https://www.ato.gov.au/Job-keeper-payment/
Further information or support from OnVenture
Need our help to understand the stimulus packages and how they’ll effect your business, book in a chat here: https://calendly.com/onventure/discovery30min