The information below is based on publicly available information from the legislation, explanatory memorandum, and the fact sheets and the ATO website.
The JobKeeper or wage subsidy payment has passed both houses and been given royal assent. The treasury has released the rules for this payment and this article is a brief overview of the legislation and rules. As everyone’s situation will be different, we encourage you to reach out to us via e-mail or phone to determine eligibility and how this will work for you, once you’ve read through this article.
The portal to register for JobKeeper will be available from the 20th April. For now the link to register your interest is still active here – https://www.ato.gov.au/general/gen/jobkeeper-payment/, or we can do it on your behalf.
The purpose of this stimulus is as follows:
- The JobKeeper payment is intended to assist businesses affected by the Coronavirus to cover the costs of wages of their employees.
- It also there to encourage businesses to maintain a connection with those employees stood down (or made redundant), to be ready for when things return to normal.
- The payment made to businesses (and in some cases individuals) will be based on $1,500 per fortnight, but paid by the 14th day of the following month.
- The fortnightly periods begin 30th March, 2020, and ends 27th September, 2020
- Individuals who aren’t remunerated via a wage or salary from their structure may also be eligible
- Payment by the ATO will be made within 14 days of the end of the month, or within 14 days of lodgement of required information.
This payment will apply to everyone who meets the criteria, no matter how they are structured. Whether company, trust, partnership or sole trader – so long as you meet the eligibility criteria listed below – you will become eligible for the above payment. The only difference is, the way you have structured your business and the way you have been remunerated – will determine your level of benefit, and how it is paid.
Criteria to be eligible is as follows:
- You carried on a business through an ABN on and prior to the 1st March, 2020.
- The business must have suffered a 30% decline in GST turnover (or total sales) compared to a relevant corresponding period e.g. (but not limited to) March 2020 compared to Marchl 2019, or alternatively Quarter ending 30th June, 2020, compared to same quarter 2019. This is NOT based on your BAS lodgement cycle, but can be if you wish it to be.
- Where you have employees:
- They must meet the definition of an employee (see below)
- These employees must be paid a minimum of $750 per week, $1,500 per fortnight, or $3,250 per month.
To determine how much you turnover has declined – I would suggest working your way through the following:
- Compare month of March 2020 vs March 2019. If more than 30% down – you qualify. If not…
- Estimate your April 2020 vs April 2019 turnover. Will you be down more than 30%? If yes – you qualify (note will need to be backed up by actuals – otherwise ATO may determine you are ineligible), if not…
- Estimate your quarter ending 30th June, 2020 versus quarter ending 30th June. 2019 prior year. Do you believe you will be down more than 30% – if yes you qualify. If no.
- If you do not pass one of the above, you will be ineligible for the month of April. If you find your income in a later month such as May or June is going to decline, you can register yourself at that point, or any month afterwards.
Please take notice of this critical point. If at any time the commissioner determines that you are actually ineligible to receive the JobKeeper payments, for example if your revenue does not decline by the 30% (the ATO may allow a small % difference here), you will be asked to pay the JobKeeper payments you have received back to the ATO. That is why the turnover calculations and estimations are extremely important to get right.
If there is no comparable period for 2019, the ATO may determine that an alternative test can apply. More information on these alternative tests will be coming shortly.
Once you have met the turnover test for any month, or quarter, there is no need to retest in a later month or quarter. You will continue to be eligible right up to the last fortnight. Also note the word ‘business’ is used, you need to be running a business. Income from passive investments such as rentals will not be included
DEFINITION OF EMPLOYEE:
An employee is someone who is the following:
- Someone who was an employee on the 1st March 2020, and either:
- Permanent Part time or Full time employee; or
- A long- term casual employee (employed more than 12 months as at 1st March, 2020), and not a permanent employee of any other employer.
- They are currently employed by the business or have been stood down or re-hired.
- They must be at least 16 years of age
- Must be an Australian citizen, holder of a permanent visa, holder of a protective special category visa, or resident for tax purposes and holds a Subclass 444 (special category) visa. Note if unsure on this – please get further advice.
Note casuals who have been employed less than 12 months to the 1st March, 2020 are not eligible to receive a JobKeeper payment from the ATO.
DEFINITION OF BUSINESS PARTICIPANT:
This is for an owner of business who does not get paid a wage from the business but instead get a distribution or profit split.
How this works by entity type.
|If the entity is a…||The individual must be:|
|Trust||An adult beneficiary of the trust|
|Partnership||A partner in the partnership|
|Company||A shareholder in or a director of the company|
|Sole Trader||The individual in business|
The individual who receives this payment needs to be actively engaged in the business, and they cannot have received a wage or salary in any fortnight.
Where a business participant is nominated the payment will be made directly to their bank account, and not through the business bank account.
The three scenarios listed below are the main ways for how the payment will work for your employees:
|Employee’s Gross Wage (Per Fortnight)||Impact On Employee Payment||Impact On Super|
|More than $1,500||None||None|
|Less Than $1,500||Wage Gets topped up to $1,500||Super on normal wage – No change Super on topped up wage – voluntary|
|Wage is $0 (not been paid by business)||Wage gets topped up to $1,500||Super is voluntary|
In all situations the appropriate amount of tax is withheld based on the payment. If normal wage cycle is weekly – then figures above are divided by 2.
STEPS TO WORK THROUGH FOR JOBKEEPER PAYMENT:
The following are steps that need to be taken in order to correctly apply, process, and remain eligible for the JobKeeper Payment
- Determine your fall in turnover per the eligibility section above.
- Determine eligible employees: Create a list and work through the definitions above to ensure they are eligible.
- Nomination forms: All employees need to fill out a declaration form to nominate themselves (or decline to nominate themselves. Link here: https://www.ato.gov.au/Forms/JobKeeper-payment—employee-nomination-notice/
- From April 20 onwards – enroll for JobKeeper payment through business portal or get accountant to on your behalf through their portal.
- From 4th May onwards – fill out monthly form on portal (or get accountant to on your behalf) including:
- Confirmation of eligible employees (will be able to see STP data)
- Confirm monthly turnover for previous month, and provide estimate for current month (this needs to be done every month you are in the JobKeeper system)
- If you don’t do wages via STP you need to notify the ATO of the wages paid in the fortnights provided.
- Ongoing (and prior to some of the above steps): ensure all staff are paid up to the $1,500 per fortnight or equivalent amount for different pay period. Note April fortnights are allowed to be back paid so long as they are paid before the end of April.
We believe the main software providers will be providing solutions through their payroll areas to enable the correct reporting of wage information including relevant Jobseeker information. This will also cover single touch payroll (STP) information.
If you are not registered for STP, or don’t use software to lodge your wage information – then there will be a form to fill out where you can lodge the relevant information with the ATO. We expect that form to be available in the coming weeks. This will need to be done Monthly with the other information required.
Here are the links to the ATO website with all of their detail and information for more in-depth reading.
Here is the link to the treasury website which contains the various fact sheets that relate to this payment. These have been updated at the same time as the rules.
If you went to delve into the detail – here are the links for:
JobKeeper Rules: https://www.legislation.gov.au/Details/F2020L00419
Explanatory Statement: https://www.legislation.gov.au/Details/F2020L00419/Explanatory%20Statement/Text