The ATO has started releasing key information to assist businesses affected by COVID-19 to assess their eligibility to access the JobKeeper payment to continue to pay their employees.
Employers can choose to participate in the JobKeeper payment and nominate the employees they want to claim the JobKeeper payment for. It is not compulsory.
Employers will be eligible for the JobKeeper payment if all of the following apply:
- On 1 March 2020, the employer carried on a business in Australia or was a not-for-profit organisation that pursued their objectives principally in Australia.
- Employed at least one eligible employee on 1 March 2020.
- Eligible employees are currently employed by the business for the fortnights the employer can claim for (including those employees who are stood down or re-hired).
- The business has faced a
- 30% fall in GST turnover (where the aggregated turnover of the business is $1 billion or less);
- 50% fall in GST turnover (where the aggregated turnover of the business is more than $1 billion); or
- 15% fall in GST turnover including donations and gifts (for ACNC-registered charities other than universities and schools).
- The business is not in one of the ineligible categories.
Aggregated turnover broadly includes the employer’s annual turnover, plus the annual turnover of all the entities that are connected or affiliated with the employer, subject to specific adjustments (for example, for transactions between the employer and those other entities). These connected entities or affiliates may be based in Australia or overseas.
An employer is not eligible for the JobKeeper payment if:
- the Major Bank Levy was imposed on the entity or a member of its consolidated group for any quarter before 1 March 2020;
- the entity is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997);
- the entity is a local governing body;
- the entity is wholly owned by an Australian government agency or local governing body;
- the entity is a sovereign entity;
- the entity is a company in liquidation; or
- the entity is an individual who has entered bankruptcy.
Sole traders can be eligible for the JobKeeper payment if their business has experienced a downturn according to the eligibility criteria. The ATO will provide more information soon about the eligibility of sole traders for the JobKeeper payment.
Business owners actively engaged in their business
Other businesses in the form of a company, trust or partnership can also qualify for JobKeeper payments where a business owner (a shareholder, adult beneficiary or partner) is actively engaged in the business, or a director is actively engaged in the business. This is limited to one entitlement for each entity even if there are multiple business owners or participants. The ATO will provide more information soon about the eligibility of these businesses for the JobKeeper payment.
How to determine a fall in turnover?
Employers only need to satisfy this requirement once – employers do not need to retest turnover each month. However, employers will have ongoing monthly reporting requirements.
At the time employers enrol in the JobKeeper payment scheme, they need to confirm that their business in a relevant period has had, or is likely to have, the required percentage fall in turnover.
How to calculate a fall in turnover for the first fortnight starting 30 March 2020
To work out the fall in turnover, employers can compare either:
- GST turnover for March 2020 with GST turnover for March 2019;
- projected GST turnover for April 2020 with GST turnover for April 2019; or
- projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.
How employers choose to project their fall in turnover is not dependent on whether they report a quarterly or monthly BAS, though employers can do that if it is easier. The turnover calculation is based on GST turnover, but there are some modifications, including disregarding GST grouping (where two or more associated business entities operate as a single GST group).
Testing the decline in turnover is also done on an individual employer entity basis. It only takes into account the GST turnover of the entity which is the employer, and not other members of a group.
The Commissioner of Taxation also has the discretion to set out alternative tests that can establish an employer’s eligibility when turnover periods are not appropriately comparable (for example, if the business has been in operation less than a year).
The ATO will provide more detailed information soon about applying the turnover test and the alternative tests.
Eligible employees are employees who:
- are currently employed by the eligible employer (including those stood down or re-hired);
- were either a:
- permanent full-time or part-time employee of the eligible employer (or another entity in the employer’s wholly owned group) at 1 March 2020; or
- long-term casual employee (employed by the eligible employer or another entity in the employer’s wholly owned group on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer;
- were at least 16 years of age as at 1 March 2020;
- were an Australian resident as at 1 March 2020 within the meaning of the Social Security Act 1991, which requires that they reside in Australia, and are one of an Australian citizen, the holder of a permanent visa, or a Protected Special Category Visa Holder. The employee can also be an Australian tax resident who is a Special Category (Subclass 444) Visa Holder. Employees who are not permanent residents of Australia must notify employers of their visa status to allow their employers to determine if they are eligible;
- were not in receipt of any of these payments during the JobKeeper fortnight:
- government parental leave or Dad and partner pay; or
- a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work;
- have not agreed with any other employer to be nominated as an eligible employee for the JobKeeper payment; and
- completed the JobKeeper employee nomination notice.
If employees have multiple employers, they can usually choose which employer they want to nominate through. However, if employees are long-term casuals and have other permanent employment, they must choose the permanent employer. Employees cannot receive the JobKeeper payment from more than one employer.
If an employee is currently receiving an income support payment, they must notify Services Australia of their new income to avoid incurring a debt that they will have to repay.
Paying eligible employees – what action is required by eligible employers?
The JobKeeper payment is a reimbursement from the ATO and cannot be paid in advance.
How to pay
Eligible employers need to re-start or continue to pay their eligible employees at least $1,500 a fortnight in line with their existing pay cycle through their existing payroll solution.
When to pay
Eligible employers should pay their employees for each JobKeeper fortnight they plan to claim for. The first fortnight is from 30 March – 12 April and each JobKeeper fortnight follows after that.
For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight has been paid even if it has been paid late, provided it is paid by the end of April. This means that employers can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.
If employers usually pay their employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight.
How much to pay
Eligible employers must pay the minimum $1,500 before tax to each eligible employee per fortnight to claim the JobKeeper payment for that fortnight.
If eligible employees earn less than $1,500 per fortnight before tax, employers must pay them at least $1,500 for each fortnight to claim the JobKeeper payment. This is a ‘top up’ of their salary or wages and will ensure they remain eligible.
Employers cannot pay employees less than $1,500 per fortnight and keep the difference. Employers will not be eligible for the JobKeeper payment if they pay the nominated employee less than $1,500 before tax per fortnight.
If eligible employees earn more than $1,500 per fortnight, employers should continue to pay them their regular salary or wages. However, employers will only receive $1,500 for each eligible employee. Any amount paid above $1,500 per fortnight is not subsidised by the JobKeeper payment.
If an employee has been stood down after 1 March 2020, employers can start paying them $1,500 per fortnight to qualify for the JobKeeper payment for that employee.
If an employee ceased working for an employer after 1 March 2020, the employer can re-engage them and pay them at least $1,500 per fortnight. The employer will only be eligible to claim for the fortnights after they re-engaged the employee within the pay period.
If employers usually pay their employees monthly, the payment can be allocated between fortnights in a reasonable manner. For example, if an employer pays its employees on a four-week pay cycle, the employees must have received at least $3,000 for every four-week period.
All JobKeeper payments are assessable income of the business that is eligible to receive the payments. The normal rules for deductibility apply in respect of the amounts a business pays to its employees where those amounts are subsidised by the JobKeeper payment.
The JobKeeper payment is not subject to GST.
Normal PAYG withholding rules apply to the payments made to the employees.
New rules are being introduced by the Government with the intention to not require super guarantee to be paid on additional payments that are made to employees as a result of JobKeeper payments. The ATO will update this information once legislation is in place.
Enrol for the JobKeeper payment (from 20 April onwards)
Eligible employers can enrol for the JobKeeper payment as follows:
- Step 1 – Register the employer interest and subscribe for JobKeeper payment updates. (https://www.ato.gov.au/Job-keeper-payment/)
- Step 2 – Check the employer and employees meet the eligibility requirements.
- Step 3 – Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April).
- Step 4 – Notify eligible employees that the employer is intending to claim the JobKeeper payment on their behalf and check the employees aren’t claiming JobKeeper payment through another employer or have nominated through another business.
- Step 5 – Send the JobKeeper Employee Nomination Notice (available at https://www.ato.gov.au/Forms/JobKeeper-payment—employee-nomination-notice/) to nominated employees to complete and return by the end of April (if claiming JobKeeper payment for April). The nomination form does not need to be provided to the ATO however employers are required to keep a copy of the completed form as part of their record keeping obligations under the law.
- Step 6 – From 20 April 2020, employer’s can enrol with the ATO for the JobKeeper payment using the ATO Business Portal or via their registered tax agent. This enrolment must be completed by the end of April to claim JobKeeper payments for April.
- Step 7 – In the online form, provide the employer bank details and indicate if the claim is an entitlement based on business participation, for example if you are a sole trader.
- Step 8 – Specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).
Confirmation of eligible employees and receipt of payment (available from 4 May 2020 onwards)
Eligible employers can apply for the JobKeeper payment for their eligible employees as follows:
- Step 1 – Apply to claim the JobKeeper payment via the ATO Business Portal or registered tax agent.
- Step 2 – Ensure each eligible employee has been paid a minimum of $1,500 per JobKeeper fortnight before tax.
- Step 3 – Identify eligible employees in the application form by
- selecting employee details that are prefilled from STP pay reports if payroll information is reported through an STP enabled payroll solution, or
- manually entering employee details in ATO online services or the Business Portal if employer does not use an STP enabled payroll solution, or
- using a registered tax agent who will submit a report on your behalf through Online services for agents.
- Step 4 – Submit the confirmation of eligible employees online and wait for confirmation email or SMS showing application has been received.
- Step 5 – Notify eligible employees they have been nominated.
- Step 6 – The ATO will pay the JobKeeper payment for all eligible employees after receiving the application.
- Step 7 – Each month, employers will need to reconfirm that the reported eligible employees have not changed through ATO online services, the Business Portal or via a registered tax agent. This will ensure employers will continue to receive the JobKeeper payments from the ATO. Employers do not need to retest their reported fall in turnover, but will need to provide some information as to their current and projected turnover. This will be done in a monthly JobKeeper Declaration report.
- Step 8 – If eligible employees change or leave employment, employers will need to notify the ATO through their monthly JobKeeper Declaration report.
For further details regarding the latest information on the JobKeeper payment see https://www.ato.gov.au/General/JobKeeper-Payment/
If you have any questions about your eligibility for the JobKeeper Payment, please contact your Blaze Acumen advisor.