On 8 April 2020, the Federal Government passed JobKeeper legislation to help businesses that are financially affected by COVID-19 to retain their employees. The JobKeeper Payment will be paid by the Australian Taxation Office (ATO) to eligible businesses for a maximum period of six months (from 30 March 2020 until 27 September 2020).
Under the scheme, eligible businesses will receive a payment of $1,500 per fortnight per eligible employee and/or for one eligible business participant (an eligible sole trader, partner, company director or shareholder or trust beneficiary). It will be paid monthly in arrears, with the first payments to employers commencing from 14 May 2020.
Note that if employees had been earning more than this amount before tax, the business will need to make up the rest as the employer will only get the $1,500. If they earned less than the JobKeeper payment, the employer will still be required to pay them $1,500. That is, there is no “keep the difference” scenario and not passing on the full $1,500 will cancel a business’s eligibility.
Is my business eligible for JobKeeper Payment?
An employer will only be eligible to receive a JobKeeper Payment for eligible employee if on 1 March 2020:
- They carried on a business in Australia, or
- Are a non-profit body pursuing its objectives principally in Australia
And, the business:
- Has not started liquidation or bankruptcy proceedings
- Was not a government body of any kind
- Was not subject to the Major Bank levy
And, the business meets the following decline in turnover test:
- Where aggregated annual turnover is $1 billion or less, the employer estimates that their projected GST turnover has fallen (or is likely to fall) by 30% or more; or
- Where aggregated annual turnover is more than $1 billion, the employer estimates that their projected GST turnover has fallen (or is likely to fall) by 50% or more.
Where an employer is a registered charity, it will be eligible for the JobKeeper Scheme if they estimate that their turnover has fallen (or is likely to fall) by 15% or more relative to a comparable period.
Note that if these conditions are not met, you might still qualify for JobKeeper payments later in the year.
Special conditions for business owners
Business owners who are sole traders, directors or shareholders, partners in a partnership and adult beneficiaries of a trust can qualify for JobKeeper payments if the following conditions are met:
- On 1 March 2020 the entity carried on a business that was not a not-for-profit; and
- On 12 March had an ABN: and
- Had some business income in the 2018-19 income year included in a tax return that was lodged by 12 March 2020; or
- Made some supplies connected with Australia in a tax period that started on or after 1 July 2018 and ended before 12 March 2020 and recorded this on an activity statement lodged with the ATO by 12 March 2020; and
- Passed the decline in turnover test
And, on 1 March 2020 the individual:
- Was aged 16 years or over; and
- Was actively engaged in the business; and
- Met the residency requirements; and
- Was not employed in the business, or an employee of any other business (except as a casual), or a nominated JobKeeper of another business, or receiving parental leave payments or dad and partner pay, or receiving full -time workers compensation.
The alternative turnover test for JobKeeper eligibility
The Commissioner has determined alternative tests for fall in turnover for classes of entities where there is not an appropriate relevant comparison period.
However, if an entity satisfies the basic test it does not need to go to an alternative test determined by the Commissioner.
Circumstances where an alternative test applies:
1. The entity commenced business after the relevant comparison period (the business did not exist in that period).
2. The entity acquired or disposed of part of the business after the relevant comparison period (the business is not the same business in that period as it is now).
3. The entity undertook a restructure after the relevant comparison period (the business is not the same business in that period as it is now).
4. The entity’s turnover substantially increased by:
- 50% or more in the 12 months immediately before the applicable turnover test period; or
- 25% or more in the 6 months immediately before the applicable turnover test period, or
- 12.5% or more in the 3 months immediately before the applicable turnover test period.
5. The entity was affected by drought or other declared natural disaster during the relevant comparison period.
6. The entity has a large irregular variance in their turnover for the quarters ending in the 12 months before the applicable turnover test period, excluding entities that have cyclical or regular seasonal variance in their turnover.
7. The entity is a sole trader or small partnership where sickness, injury or leave have impacted an individual’s ability to work which has affected turnover.
You can find out more about turnover tests on the ATO website.
Who is an eligible employee?
An employee is an ‘eligible employee’ if on 1 March 2020, they were:
- Aged 16 years of age and over; and
- A full-time, part-time or a long-term casual employee (i.e. one who has been employed by the employer on a regular and systematic basis for longer than 12 months); or
- An Australian resident, or a resident for tax purposes and held a Subclass 444 (Special Category) visa; and
- Not in receipt of government-funded parental leave pay, dad and partner pay, or full-time workers compensation.
Process to receive the JobKeeper Payment
Eligible employers must elect to participate in the JobKeeper Scheme via an application to the ATO. Here are the steps to take:
- Check you meet eligibility requirements including the turnover test.
- Check your employees meet the eligibility requirements and for which JobKeeper fortnights you intend to claim.
- Enrol in the JobKeeper Payment from 20 April (or your registered tax agent can do this for you) using the business portal. You’ll need a myGovID to authenticate yourself. On the online form, note how many employees you intend to claim for and if you are claiming an entitlement as a business participant. You’ll also need to provide your bank account details for payments. Note that if you intend to claim JobKeeper for April you will need to do this by 30 April.
- Notify your employees that you are intending to claim on their behalf and check they are not claiming from another employer. Provide your employees with the JobKeeper nomination notice which you can access here. The employee indicates on that form whether they agree (or not) before returning the form to the employer, who must retain it for five years.
- Ensure each eligible employee is updated in your single touch payroll system by 30 April 2020. Talk to your accountant about how PAYG withholding and superannuation guarantee applies to employee payments.
- Continue to pay at least $1,500 per fortnight to each eligible employee. For April JobKeeper payments, by 30 April 2020 you will need to have paid your employees at least $1,500 per person (before tax or salary sacrifice) for the fortnights 30 March 2020 to 12 April 2020, and 13 April 2020 to 26 April 2020.
- From 4 May 2020, you’ll be able to claim the JobKeeper amount. You’ll need to identify your eligible employees (either through single touch payroll or through the business portal) and complete the declaration. You will also need to provide your current and projected GST turnover for the next months.
- For the duration of the JobKeeper scheme, you’ll continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business and details of its turnover.
HR considerations for JobKeeper Payment
Amendments have also been made to the Fair Work Act 2009 to support the practical operation of the JobKeeper Scheme and to facilitate a range of flexible working arrangements designed to support the continued operation of businesses and the ongoing employment of employees. On 17 April we held a webinar with Ben Watts from WattsNext HR Consultants to explain these amendments. If you missed the webinar you can watch it here. WattsNext have also provided us with this fact sheet which you can view, print or share.
Should you have any questions about how JobKeeper scheme affects you or your business, or need help enrolling or setting up payroll, please contact us for further advice. You can reach us on (07) 3023 4800 or at email@example.com
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