Last updated: 30 April 2020
Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a payment of $1,500 a fortnight per eligible employee from 30 March 2020, for a maximum period of 6 months.
There is so much information out there, so we’ve compiled all your Frequently Asked Questions in our blog, so you can wrap your head around the JobKeeper Payment and how it affects your business.
ATO Update: The deadline to enrol for the first JobKeeper period (30 March - 26 April) has been extended from 30 April to 31 May.
Which Employers Are Eligible?
Employers are eligible for the subsidy if:
- their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
- their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
- the business is not subject to the Major Bank Levy.
The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
Not-for-profit entities (including charities) and self-employed individuals (ie. sole traders, businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.
Which Employees Are Eligible?
Eligible Employees are those 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;
- are an Australian citizen, the holder of a permanent visa, 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.
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.
What happens if I have stood an employee down already?
Eligible employers who have stood down their employees before the commencement of this scheme will be able to participate. Employees that are re-engaged by a business that was their employer on 1 March 2020 will also be eligible.
What if my employees are already accessing support from Services Australia?
In circumstances where an employee is accessing support though Services Australia (i.e. the jobseeker payment) because they have been stood down or had their hours reduced and the employer will be eligible for the JobKeeper Payment, the employee should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.
How Does The Decline In Revenue Work?
How do I establish a decline of 30% (or 50% for businesses > $1b) fall in turnover?
Businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier.
What if the business was not in operation a year earlier and/or newly established?
Where a business was not in operation a year earlier, the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.
What if the turnover a year earlier was not representative of the business’ usual/average turnover?
Examples of this are when there was a large interim acquisition or if the turnover is typically highly variable.
As mentioned above the Tax Commissioner will have discretion to set out other criteria.
The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business ceases or significantly curtails its operations).
What if I misestimate the downturn in revenue?
There will be some tolerance where employers, in good faith, estimate a greater than 30% (or 50%) fall in turnover but actually experience a slightly smaller fall.
How Do I Enroll For The JobKeeper Payment?
- Register your interest and subscribe for JobKeeper payment updates on the Australian Taxation Office (ATO) website
- Check you and your employees meet the eligibility requirements.
- Continue to pay at least $1,500 to each eligible employee per fortnight from 30 March.
- Notify your employees that you will be claiming JobKeeper on their behalf and check that they haven’t claimed through another business.
- 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. Remember to keep all records on file.
- From 20 April 2020, you can enrol for the JobKeeper payment with the ATO using the Business Portal and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April.
More details about the application process can be found on the ATO official website.
How much do I need to pay my employees?
You should pay the minimum $1,500 before tax to each eligible employee each fortnight (starting with the fortnight 30 March – 12 April) to claim the JobKeeper payment for that fortnight.
You will need to continue to pay employees if you are claiming for either: every subsequent fortnight until 27 September 2020 or when the employee stops being eligible or you decide to opt out your business.
Do I need to pay my employees $1,500 a fortnight before the first JobKeeper Payment on May 1st?
For the first two fortnights (30 March – 12 April and 13 April – 26 April), ATO will accept the minimum $1,500 payment before tax has been paid for each fortnight even if it has been paid late, provided it is paid by 8 May 2020.
This means you can make two fortnightly payments of at least $1,500 per fortnight, or a combined payment of at least $3,000 before 8 May 2020.
ATO update: The payment deadline was extended from 30 April to 8 May
What if the employee normally earns less than $1500 a fortnight?
You must pay them $1,500 for each fortnight to claim the JobKeeper payment. This ‘top up’ of their salary or wages will ensure they remain eligible.
Employers cannot pay their employees less than $1,500 before tax per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay the nominated employee less than $1,500 before tax per fortnight.
What if the employee normally earns more than $1500 a fortnight?
If the eligible employees earn more than $1,500 per fortnight, your business will only receive $1,500 for each eligible employee and you are required to top up the remaining balance.
However, if the employee is not performing any work for the business, you are not required to top up their pay.
What if the employee has been stood down?
If an employee has been stood down after 1 March, and you re-engage them, you must pay their eligible employee at least $1,500 per fortnight before tax. You will only be eligible to claim for the fortnights after they have re-engaged the employee within the pay period.
If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and has since been re-engaged by them, the employee must receive, at a minimum, $1,500 per fortnight, before tax.
What If I can’t pay my employees the minimum amount per fortnight?
You cannot claim the reimbursement for the JobKeeper payment for employees who were not paid the full amount during each JobKeeper payment period.
The JobKeeper payment is a reimbursement from the ATO and cannot be paid in advance.
We recommend seeking financial advice from your accountant/bookkeeper if this is the case. If you don’t have one, we are happy to help, send us an email here.
I pay my employees monthly, is my business still eligible?
If the ordinary arrangement is to pay its employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner.
For example, if an employer’s ordinary arrangement is to pay an employee every four weeks, it will be reasonable if the employee is paid at least $3,000 for every four-week period.
Do I need to pay superannuation on the JobKeeper payments?
If the employee is not performing work for you but is receiving the JobKeeper payment from you, you are not required to pay superannuation on the JobKeeper Payment.
If the employee is still performing work, you must still pay superannuation on their salary. See examples below.
Example 1: Employee normal fortnightly earnings are $1000
You are required to pay superannuation on the $1000. You are not required to pay superannuation on the additional $500 paid to them as a result of JobKeeper Payment.
Example 2: Employee normal fortnightly earnings are $2000
You are required to pay superannuation on the full $2000, as they are still performing work for you and are entitled to that amount.
We encourage you to seek professional advice from your accountant/bookkeeper to meet superannuation and Australian Tax obligations.
Over To You
We hope our blog has been helpful to you in getting some answers about the JobKeeper Payments during the challenging time.
If you have a bookkeeper, this is the time to lean on them for support. They are your closest confidante and biggest ally. They see your day-to-day accounts and business practices. Sometimes they even know the business better than you do!
They are the ones best equipped to help you ride out the storm and get your business on track, and get you the support you need. Remember it’s the path forward that counts, we’re in this together.
Don’t have a bookkeeper yet? We’d be happy to help. Get in touch with us today, we have a fantastic team ready to help you. If talking over the phone is more your thing, reach us on 02 9437 1785.