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Jobkeeper scheme explained

In the recent weeks there has been much discussion around the JobKeeper payment in terms of your eligibility as a business employer, employee, business owners and sole traders.

The content below is taken from the explanatory statement that accompanies the legislation passed on the 9 April 2020. This information is subject to confirmation in government regulations which are yet to be released.

Background on JobKeeper Payment

The payment is designed to support employers to maintain their connection to their employees to reactivate their businesses when the crisis is over. The government will pay $1,500 per fortnight per eligible employee from 30 March 2020 until 27 September 2020. If you are eligible and decide to participate in the JobKeeper scheme it is “one in - all in’’ nomination of eligible employees and employees must be paid. This means an employer cannot select which eligible employees will participate and payment must be paid in the scheme.

Eligible Employer

Eligible employer qualifies for the JobKeeper scheme if:

  • on 1 March 2020, you carried on a business in Australia (or non-profit body); and
  • you must meet the decline in turnover test.

Decline in Turnover Test

  • the business has an aggerated turnover of less than $1billion and the business estimates its GST turnover has fallen or will likely fall by 30% or more; or
  • the business has an aggerated turnover of $1billion or more and the business estimates its GST turnover has fallen or will likely fall by 50% or more.

Your aggregated turnover broadly includes your annual turnover, plus the annual turnover of all the entities that are connected or affiliated with you, subject to specific adjustments (for example, for transactions between you and those other entities). These connected entities or affiliates may be based in Australia or overseas.

Eligible Employees

Eligible employees are those who on the 1 March 2020:

  • are currently employed by the eligible employer (including those stood down or re-hired)
  • are full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020)
  • are a permanent employee of the employer, or if a long-term casual employee, not a permanent employee of any other employer
  • are at least 16 years of age
  • are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder
  • were a resident for Australian tax purposes
  • are not in receipt of a JobKeeper payment from another employer

Employees under different circumstances

  • employees receiving Paid Parental Leave (PPL) & Dad and Partner Paid Leave from Services Australia are not eligible for the JobKeeper payment
  • employees receiving employer funded paid parental leave may be eligible for the JobKeeper payment
  • employees receiving workers compensation will be eligible for the JobKeeper payment if they are working (for example on reduced hours, but will generally not be eligible if they are not working)

Self Employed Person / Business Owners

Where a person/owner passes the above Eligible Employer test, the business may also nominate a person to receive the JobKeeper payment where:

  • the person is not a permanent employee of their own business or another business entity; and
  • the person is actively engaged in the business carried on by the entity.

This nomination is in addition to receiving the JobKeeper payment for any eligible employees of the business (more information is expected to be released with the government regulations).

Practically this means that:

  • where the business operates through a sole trade structure – one owner can be nominated to receive the JobKeeper payment
  • where the business operates through a partnership – one partner can be nominated to receive the JobKeeper payment
  • where the business operates through a company – one director (not deriving a wage from the business) can be nominated to receive the JobKeeper payment
  • where the business has shareholders who provide labour to the company and receive dividends in lieu of wages – one such shareholder can be nominated to receive the JobKeeper payment
  • where the business operates through a trust – one individual beneficiary (other than a corporate beneficiary) can be nominated to receive the JobKeeper payment


Calculation of Decline in Turnover Test

To calculate the business decline in turnover, the business 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
  • projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.

In the first fortnight, when you become eligible for the JobKeeper payment, you remain eligible for the duration of the JobKeeper payment period. However, you will have ongoing monthly reporting requirements which we understand you will need to report current results and projected turnover (more information is expected to be released with the government regulations).

The Commissioner of Taxation has the discretion to allow alternative tests to establish eligibility when turnover periods are not an appropriate comparison (for example, if your business has been in operation less than a year).

Payment of $1,500 fortnightly JobKeeper Payment – Breakdown of components

An employer is only entitled to a JobKeeper payments if they have paid each eligible employee a wage of at least $1,500 a fortnight.

Wages is defined as amounts paid by the employer to the employee by way of gross salary, wages, commissions, bonus or allowances.

The JobKeeper payment is a reimbursement to the employer for wages paid to the employee. We note, that this reimbursement will lag approximately one month after payment has been made by the employer.

If in the first eligible fortnightly payrun for April 2020, an error has been made (for example, you did not pay the initial $1,500), the Commissioner of Taxation will allow a correction of an underpayment to be made in the next payrun without penalties being imposed.

PAYG Withholding, Statutory Amounts Required & Other Amounts

Employers must remit all withholding obligations including the PAYG withholding and HELP debt (if applicable) and salary packaging before any payment is made to the employee.

Superannuation Guarantee (SG)

The employer will only make a super contribution in respect to the amount of wages paid for actual employment (for example, if the employer pays an employee less than the $1,500 per fortnight then SG is paid on their actual wages derived from actual employment). An employer paying a JobKeeper payment to a stood down employee is not required to remit any SG on this $1,500 payment.

Employees Entitlements

It is our understanding that employee entitlements will continue to accrue during this period.

These entitlements are subject to Fair Work Australia laws, contracts, EBA’s etc, therefore we recommend that you seek legal advice in calculation to this area of law.

Application Process for the Employer

Employers must register their interest at ato.gov.au.
From 20 April 2020 and onwards, employers must submit an online application for the JobKeeper payment, disclosing:

  • information on eligible employees (for most businesses, the ATO will populate the employee details for the business using Single Touch Payroll data); and
  • continue to provide information to the ATO on a monthly basis (current and projected turnover), including the number of eligible employees employed in the business.

Payroll Process for the Employer

  • you must identify all eligible employees before 1 March 2020 and notify all eligible employees that you are attending to pay them the JobKeeper payment
  • you must send the JobKeeper employee nomination notice to your eligible employees to complete and return to you by the 30 April 2020 if you plan to claim JobKeeper payment for April 2020 (retain on the employee files)
  • you must pay at least $1,500 (before tax) to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March 2020 to 12 April 2020)
  • ensure all employee files are completed and up to date to reflect their JobKeeper payment entitlement
  • consider changing payruns to become fortnightly to be consist with the ATO guidelines for the JobKeeper payment period and record keeping on SG on normal wage paid for actual employment

Payroll Process for the Employee

Should you wish to discuss any of the above, please do not hesitate to contact myself or Sarah Walsh of our office on 9854 8999.

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