The proposed JobKeeper Payment is a temporary scheme open to businesses impacted by the coronavirus.
This JobKeeper Payment will also be available to the self-employed.
For eligible businesses, this historic wage subsidy from the Government will provide $1,500 per fortnight before tax per employee for up to 6 months. This incentive is to help support employers to maintain their connection to their employees and enable businesses to reactivate their operations quickly – without having to rehire staff – when the crisis is over.
This payment is a subsidy to businesses and will be paid directly to employers, for each eligible employee who;
- was on their books on 1 March 2020: and
- is retained or continues to be engaged by that employer.
Every eligible employee must receive at least the $1,500 per fortnight before tax from their employer.
Eligible employers who have stood down their employees before the commencement of this scheme will be able to participate.
Employers (including Not-for-Profits) will be 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. This is relative to a comparable period a year ago (of at least a month); or
- $1 billion or more and their turnover will be reduced by more than 50 per cent. This is relative to a comparable period a year ago (of at least a month).
Eligible employers will need to:
- apply to the ATO and when requested provide supporting information demonstrating a downturn in their business, and report the number of eligible employees employed by the business on a monthly basis (including those stood down or rehired) — the ATO will use Single Touch Payroll (STP) data to pre-populate the employee details.
Self-employed individuals will be eligible to receive the JobKeeper Payment where they have suffered or expect to suffer a 30 per cent decline in turnover relative to a comparable prior period (of at least a month).
To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most 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. Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have the discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. The Tax Commissioner will also have the discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.
In regards to self-employed, the information on business.gov.au has expanded on this definition:
You may be eligible to receive the JobKeeper Payment if your turnover has been reduced because of the coronavirus. Following registration by the eligible business, the Government will provide $1,500 per fortnight per eligible employee for a maximum of 6 months. The JobKeeper Payment is available to eligible employers, businesses including companies, partnerships, trusts and sole traders, not-for-profits and charities.
The intent of the JobKeeper Payment is to enable any eligible self-employed person to get a wage subsidy regardless of what business structure they use, where:
- the partners in a partnership only receive a share of profits – one partner can be nominated to receive it.
- directors of a company only receive dividends – one director can be nominated to receive it.
- beneficiaries of a trust only receive distributions – one individual beneficiary (i.e. not a corporate beneficiary) can be nominated to receive it.
The JobKeeper Payment will be available to all of the following:
- full-time employees and part-time employees;
- stood down employees; and
- casual employees who have been with their employer on a regular basis for at least the previous 12 months as at 1 March 2020 and are 16 years of age.
- are Australian citizens;
- hold a permanent visa;
- hold a Protected Special Category Visa;
- hold a non-protected Special Category Visa and have been residing in Australia for at least 10 years; or
- are New Zealand citizens in Australia and hold a Special Category (Subclass 444) visa.
Please note: We are still waiting for more clarification around casual employees to see if there are further parameters and are expecting more information during the legislative process.
How and when will the JobKeeper Payments be received?
The program commenced on 30 March 2020. If your business is eligible it can begin distributing the JobKeeper Payment immediately and will be reimbursed by the ATO from the first week of May 2020.
Eligible employers will receive the payment for each eligible employee as follows:
- The first payments will be received by eligible businesses as monthly arrears in the first week of May 2020 from the ATO.
- Eligible employers will be paid $1,500 per fortnight per eligible employee.
- Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.
- An employee with multiple employers will only be eligible to receive the JobKeeper Payment from one employer.
- Employers are able to top-up the payment where the employee’s usual salary and wages exceed $1,500 per fortnight.
Eligible employees are those employees who were on the books on 1 March 2020 and are currently engaged by that employer.
Is superannuation guarantee payable on the JobKeeper Payment?
No superannuation guarantee obligations arise in relation to the payment made by the ATO to the employer, as the payment is a subsidy.
It is entirely up to the employer if they want to pay the superannuation guarantee on any additional wages paid because of the JobKeeper Payment, but the JobKeeper Payment will not be taken to be ordinary times earnings and is therefore not subject to Superannuation Guarantee when paid to the employee.
The employer’s Superannuation Guarantee obligations on the employee’s usual salary or wage are unchanged.
More details will be available once the legislation is available, and ATO guidance is provided
Businesses with employees
Initially, employers can register their interest in applying for the JobKeeper Payment via ato.gov.au from 30 March 2020. Subsequently, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May. Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO. Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax. It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Businesses without employees
Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper Payment via ato.gov.au from 30 March 2020. Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity. People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.
Examples, as per Treasury Papers
Employer with employees on different wages
Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in the coming months. The employees are:
- Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
- Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
- Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
- The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;
- The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.
Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees. In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
Employer with employees who have been stood down without pay
Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.
Zahrah’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee and then pass on the $1,500 per fortnight before tax to each of her three beauticians for up to six months. Zahrah will maintain the connection to her employees and still be in a position to quickly resume her operations.
- Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment.
- It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.
- If Zahrah’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.
For regular updates regarding the JobKeeper payment you can register here.