Budgeted to cost $130 billion, the JobKeeper Payment program will be in place for six months from 30 March 2020. The goal is to keep employers and employees connected, and enable some businesses to go into a short-term “hibernation”, and re-emerge later without having to rehire staff. This latest measure brings the government’s total economic support for the economy to $320 billion, or 16.4% of GDP.
Broadly, to qualify for the JobKeeper Payment, you must satisfy two requirements:
- You are an eligible employer; and
- You have at least one eligible employee.
Employers will be eligible for the subsidy if they carry on a business and satisfy the requirements in the applicable turnover category below. The employer can be a company, trust, partnership or sole trader.
Turnover below $1 billion
- The employer’s business has a turnover below $1 billion; and
- Turnover will fall by more than 30% “relative to a comparable period a year ago (of at least one month)”; and
- The business is not subject to the Major Bank Levy; and
- Has at least one eligible employee as at 1 March 2020; and
- The business confirms that each eligible employee is currently engaged.
Turnover is not specified as being group-wide, so presumably means only the stand-alone employer entity. It seems that the >30% turnover reduction requirement might be satisfied if, for example, the business’s turnover for April 2019 was $1 million, and the turnover for April 2020 will almost certainly be less than $700,000 (exclusive of GST, presumably). It’s unclear how a recently commenced or purchased business can satisfy this requirement.
It appears that employers will qualify on a per-eligible-employee basis as at 1 March, who is kept employed or re-engaged.
Not-for-profit employers can also qualify.
Turnover of $1 billion or more
Same as above, except the fall in turnover must be more than 50%.
Eligible employees are people who:
- Are currently employed by the eligible employer (including those stood down or re-hired); and
- Were employed by the employer at 1 March 2020; and
- 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); and
- Are at least 16 years old; and
- Are an Australian citizen, 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.
Where an employee has multiple employers, only one employer will be eligible to receive the JobKeeper Payment. The employee will need to notify their primary employer to claim the JobKeeper Payment on their behalf. In most cases, the claiming of the tax-free threshold will be sufficient notification already. Where an employer pays any part of JobKeeper Payments to an employee, the employee must report it to Services Australia as part of their income, and thus might impact various income support benefits.
Employers can register their interest on the ATO website here (very basic information for now). An online application process will follow, and will include providing support of a downturn in business. Information on eligible employees must also be provided, and the ATO will use Single Touch Payroll data to pre-populate employee details. Payments will start in the first week of May, backdated to 30 March 2020, so employers can commence any expected JobKeeper-backed payments now, and will be reimbursed in early May. Payments will be made to the employer monthly in arrears by the ATO.
Where an employer continues to pay a pre-tax wage to the employee of more than $1,500 per fortnight, that will continue according to their prevailing workplace arrangements. The employer can either keep the full $1,500 per fortnight to subsidise the wage cost, or pay some or all of it to the employee as additional wages. If the employee’s wage is less than $1,500 per fortnight, the employer must top up the wage to at least $1,500, and keep only any remainder, if any, as a subsidy. Where an employee has been stood down, the employer must pay, at a minimum, $1,500 per fortnight, before tax. Any payment to employees funded from the JobKeeper Payments will presumably be subject to PAYG withholding in the ordinary course. For any part of the JobKeeper Payments paid to employees, it is entirely voluntary as to whether the employer also pays 9.5% employer superannuation.
You must notify all eligible employees that you are receiving the JobKeeper payment. Monthly updates must be provided to the ATO. There is no information yet on the consequences of over-claiming JobKeeper Payments.
Tax treatment for employer
It has not been stated whether or not the JobKeeper Payments will be assessable income for employers, but we expect that they will be.
Self-employed people without employees can also qualify and register above.
A number of issues still require clarification, and of course the JobKeeper Payment program is subject to legislation being passed by Parliament.
In the interim, contact us at Focus Professional Group about how we can help you determine whether you qualify for the JobKeeper Payments, how much, applying for it, and maintaining your monthly updates to the ATO.