The Government has announced a further round of economic stimulus measures with the main focus being on providing income support for employees and allow businesses to continue to employ people during these unprecedented times. The JobKeeper Payment is aimed at businesses that have been significantly impacted by the pandemic. It is there to assist businesses in retaining employees and being able to pay their employees so they can restart when the health crisis is over. Importantly, the JobKeeper Payment will also be available to the self-employed.
Under JobKeeper Payment the Government will provide $1,500 per fortnight per employee for up to 6 months.
Which Employers are Eligible?
Employers (including not-for-profit organisations) will be eligible for the subsidy if:
- Business turnover is less than $1.0b and the businesses turnover will be reduced by more than 30% relative to a comparable period a year ago. The comparable period must be a period of not less than 1 month; or
- Business turnover is $1.0b or more and the businesses turnover will be reduced by more than 50% relative to a comparable period a year ago. Again, the comparable period must be a period of not less than 1 month; and
- The business is not subject to a Major Bank Levy
It is important to note that employers MUST elect to participate in the scheme. The election to participate will be completed by lodging an application with the Australian Taxation Office. When applying to participate in the scheme you will have to provide evidence that will demonstrate that the business’ turnover has reduced by the required percentage. For all of our clients you will need to demonstrate that he business’ turnover has reduced by more than 30%.
To continue to receive the subsidy you will need to report the number of eligible employees employed by the business on a monthly basis.
Who is an Eligible Employee?
Eligible employees are employees who:
- Are currently employed by an eligible employer and includes those stood down or re-hired;
- Were employed by the eligible employer as at 1 March 2020;
- Are full-time, part-time or long term casual (i.e. as 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, holder of a permanent visa, a protected special category visa holder, a non-protected special category visa holder who has been residing in Australia for 10 years or more or a special category visa (Subclass 444) visa holder; and
- Are not in receipt of a JobKeeper payment from another employer
Note that if an eligible employee receives the JobKeeper Payment then it is likely that this will affect their eligibility for payments from Centrelink (now known as Services Australia) as they must report the JobKeeper Payment as income.
Self-employed Persons & Businesses with no Employees
Self-employed persons operating as sole traders or through a trust or company will be eligible to receive the JobKeeper Payment Subsidy where their turnover has declined by more than 30% relative to a comparable period a year ago. The comparable period must be a period of not less than 1 month.
Businesses without employees (self-employed) can register their interest in applying for the JobKeeper Payment through the Australian Taxation Office from 30 March 2020. You will need to provide the ATO with the following:
- The businesses ABN
- Nominate an individual to receive the payment
- Provide the nominated individual’s tax file number
- Provide a declaration as to the recent business activity
- Monthly updates to declare your continued eligibility to receive payment
The ATO will pay the fortnightly payment of $1,500 directly to the nominated individual’s bank account.
The Application Process
The process based on the information available at the time of writing this is as follows:
- Register the businesses interest in participating in the JobKeeper Payment subsidy scheme
- Complete and lodge an online application with the ATO
- Identify all eligible employees
- Notify all eligible employees that they are receiving the JobKeeper Payment
- Provide the ATO with monthly updates demonstrating the business’ continued eligibility to participate in the scheme
How does the Business Receive Payment and What has to be Paid to the Nominated Employees?
The first payment will be made in the first week of May 2020. After that initial payment subsequent payments will be made to the employer monthly in arrears. Hence, this will require the business to cash flow the payment for a month before being reimbursed through the ATO. Employers will be paid an amount of $1,500 per nominated eligible employee per fortnight for a maximum period of up to 6 months.
Where employers participate in the scheme, their employees will receive the payment as follows:
- If an employee ordinarily receives $1,500 or more income per fortnight before tax they will continue to receive their regular income. In this case the JobKeeper Payment will assist the employer in funding that payment
- If an employee ordinarily receives less than $1,500 in income per fortnight before tax the employer MUST pay their employee at a minimum of $1,500 per fortnight before tax
- If an employee has been stood down, the employer must pay their employee at a minimum of $1,500 per fortnight before tax
- If an employee was employed on 1 March 2020, subsequently ceased employment with their employer and then has been re-engaged by the same employer, that employer must then pay their employee at a minimum of $1,500 per fortnight before tax.
Should you require assistance with registering for the JobKeeper Payment subsidy or require any further information, please do not hesitate to contact our office on 03 96291433 to discuss.