On April 8, 2020 the federal government passed its $130 billion Job Keeper stimulus package through parliament.
This information was posted onto the ATO website yesterday (14th April, 2020).
Please note that this is only the first version of ATO guidance and that their full version is NOT yet available.
- Eligible employers will be paid a fixed amount of $1500 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 any amount in excess of wages for hours worked 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: To be eligible for this payment as a business owner, you must be able to prove that your has dropped by 30% or greater since March 1st, 2020 ( if your annual turnover is less than 1 billion).
- Decline in turnover Test: 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 Job Keeper, 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
Eligibility – Employees
- 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.
- Your employer must continually pass the decline in turnover* test for each fortnight within the Job Keeper period. This means that their turnover compared to the same time last year has dropped by the required amount to prove their business has been directly impacted by the effects of COVID-19.
- 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 if that you as the employer must have the cash flow to be able to pay the minimum $1500 from the 30thof March. (Remembering that payments will be back paid from the first week of May).
- There is 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 noticein 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.
Eligibility – Business Owners
- 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 26thApril, 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 / 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 to 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
- The revenue reported in the March 2020 quarter BAS lodged will be compared against the revenue in the same quarter in 2019 in order to ensure the required drop in revenue ( as above ) has occurred. Further information on this idea can be found here.
- View this link for more information on determining eligibility.
- 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 part way 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.
An example would be if you were to backdate or artificially change your business structure or employment arrangements.
Payroll Software Set-up
- The amount that will bring the employee’s payment up to $1500 is to be classed within the payroll system as an “allowance.”
- This will be reported to the ATO as a special classification and reported through Single Touch Payroll.
- Further information on preparing your payroll for the Job Keeper Payment can be found here.
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 are yet to release more detailed information on the decline in turnover test and projecting GST turnover.
- You can register for further information updates on the Job Keeper Payment directly by text message from the ATO using this link.
- Xero are in the process of setting up a new Job Keeper feature in payroll. If you are ready to pay employees now, this linkprovides the work around in the meantime.
- We expect that the requirement will be that if the employee is working, leave will still accrue.
- We expect that if the employee is not actually working, then no leave will accrue.