JobKeeper Payment

 
The $1,500 JobKeeper Payment

The Australian Government announced the JobKeeper Payment last night to help employers keep their employees. As with all announcements at the moment, there is some information available but there are too many gaps to properly advise all of our clients. We have attempted to provide a relevant summary of the information that we do know so far.
 

What is the JobKeeper Payment?

 
A subsidy of $1,500 per fortnight per employee, administered by the ATO, will be paid to businesses that have experienced a downturn of more than 30% (50% for businesses over $1bn).

If an employer receives the subsidy, they will be required to ensure that the full amount is passed on to the employee. See the example below.
 

Eligibility

 
There are two levels of eligibility; for employers and employees.

Eligible employers are those with:

  • Turnover below $1bn that have experienced a reduction in turnover of more than 30% relative to a comparable period 12 months ago (of at least a month); or
  • Turnover of $1bn or more that have experienced a reduction in turnover of more than 50% relative to a comparable period 12 months ago (of at least a month); and
  • Are not subject to the Major Bank Levy.
 
Sole traders and the self-employed with an ABN, and not-for-profits (including charities) that meet the turnover tests are eligible for the JobKeeper payment.

Refer to the notes at the end if you are self-employed.

Eligible employees are those who:

  • Were employed by the relevant employer at 1 March 2020; and
  • Are currently employed by the employer (including those who have been stood down or re-hired); and
  • Are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March); and
  • Are at least 16 years of age; and
  • Are an Australian citizen, hold a permanent visa, are a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
  • Are not in receipt of a JobKeeper Payment from another employer.
 

How the support is calculated

 
The ATO will administer this program and will make the $1,500 payments based on payroll information. The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria.

We anticipate this will mean that employers that have not yet registered for Single Touch Payroll (STP) because of the exemptions that have been in place (such as being a closely held employer or a micro employer) will need to get registered and start reporting their employee salary and wages using STP as soon as possible. This is likely to be the ATO’s preferred (and possibly only) method of keeping track of employees included on the payroll of an employer but we are not sure about this yet.

The business will continue to receive the payments for eligible employees while they are eligible for the payments. While the program is expected to run for 6 months, payments will stop if the employee is no longer employed by the relevant employer.

Please note that the JobSeeker Payment will be paid in arrears to employers. This means that you will need to fund the salary and wage payments to your employees and then be reimbursed later by the ATO. This will no doubt have an impact on cashflow for affected businesses.
 

How the support is provided

 
If you want to manage the process yourself, you must:

  • Register
    • Applications are not yet open. However, you should register your intent to apply for the JobKeeper subsidy with the ATO (here). The ATO will provide you with regular updates and advise you when you can lodge your application.
  • Assess turnover
    • Ensure you have an accurate record of your revenue for the 2018-19 income year and for the 2019-20 year to date;
    • Ensure you keep an accurate record of revenue from March 2020 onwards;
    • Compare your revenue for the whole of March 2019 with the whole of March 2020;
    • Measure the % decline in your revenue and ensure it has declined by more than 30%;
    • If you are not eligible in March, you may become eligible in another month.
  • Identify eligible employees
    • Nominate the employees eligible for the JobKeeper payments – you will need to provide this information to the ATO and keep that information up to date each month. The ATO will use Single Touch Payroll (STP) to prepopulate the information in most cases. If you are not using STP, we are not sure how this information will be kept up to date with the ATO;
    • Notify all eligible employees that they are receiving a JobKeeper payment. Employees can only be registered with one employer;
    • Pay eligible employees at least $1,500 per fortnight (before tax). If an employee normally receives $1,500 or more per fortnight before tax the employee should continue to receive their regular income;
    • Pay superannuation guarantee on normal salary and wages amounts paid to employees. If the employee normally receives less than $1,500 per fortnight before tax, the employer can decide whether to pay superannuation on the additional amount that is paid as a result of the JobKeeper program.
 
If you would like our assistance with the above process, please contact us. We can help you with the process but we will need to work together to compile the information required to manage the process.
 
Notes for those that are self-employed

While it appears that businesses without employees can potentially qualify for JobKeeper Payments, it is not clear at this stage what conditions will need to be satisfied. The information available at the moment indicates that sole traders and the self-employed can register their interest in applying for the JobKeeper payment with the ATO. These businesses will need to provide an ABN for the business, nominate an individual to receive the payment, provide the individual’s TFN and declare their continued eligibility for the payments. Payments will be monthly to the individual’s bank account.

The information at the moment continues to refer to “self-employed” but it does not clarify if you are self-employed if you operate your business as a partnership or through a company or trust.

If you are of the opinion that you meet all of the other criteria (i.e. the reduction in turnover), then we recommend that you register your intent to claim the payment regardless of your business structure. We are hopeful that some clarity will be provided over the coming weeks for those businesses.

Similarly, we are not sure what this means for the proprietors of businesses that do have some employees but are self employed (e.g. if you operate as a partnership and have an employee). Will you receive the JobSeeker Payment for your employee and also yourself? Again, we are hoping to receive some clarity around this issue soon.
 

Example

 
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% in in the coming months. The employees are:
 
Employee Employment type Salary per fortnight (before tax)
Anne Full-time $3,000
Nick Part-time $1,000
 
Both Anne and Nick are still working in the business.
 
Adam registers his interest in the JobKeeper scheme (from 30 March 2020), then applies to the ATO providing details of his eligible employees. Adam also advises Anne and Nick that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

Adam’s business is eligible to receive the JobKeeper Payment for each employee.

For Anne, the business will:

Continue to pay Anne her full-time salary of $3,000 per fortnight before tax,

Receive $1,500 per fortnight from the JobKeeper Payment

Pay superannuation guarantee on Anne’s salary

For Nick, the business will:

Continue to pay Nick $1,000 per fortnight before tax salary

Pay Nick an additional $500 per fortnight before tax (totalling $1,500)

Receive $1,500 per fortnight from the JobKeeper Payment

Pay superannuation guarantee on Nick’s wage of $1,000 per fortnight (but can choose to pay SG on the full $1,500)

Adapted from Treasury fact sheet: JobKeeper payment — information for employers
 
Further Information

Link to ATO to register your interest – JobKeeper Payment

https://www.ato.gov.au/Job-keeper-payment/

Link to information for employers – JobKeeper Payment

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet_Info_for_Employers_0.pdf

Link to information for employees – JobKeeper Payment

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet_Info_for_Employees_0.pdf
 

Second $750 payment to households