The JobKeeper Payment is a temporary scheme open to businesses impacted by the Coronavirus. The JobKeeper Payment will also be available to the self-employed.
The Government will provide $1,500 per fortnight per employee for up to 6 months.
Eligibility – Employer
Employers (including non-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 relative to a comparable period a year ago (of at least a month); or
- their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month).
The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
Eligibility – Employee
Eligible employees are employees who:
- are currently employed by the eligible employer (including those stood down or re-hired);
- were employed by the employer at 1 March 2020;
- 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);
- are at least 16 years of age;
- are not in receipt of a JobKeeper Payment from another employer; and
- an Australian citizen;
- the 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.
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, and employers are able to top-up the payment.
The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May. Businesses will be able to register their interest in participating in the Payment from 30 March 2020 on the ATO website.
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.
Example 1 – Employer with multiple employees
Adam owns a real estate business with three employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in 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.
- Fred, who was recently stood down from the business without pay.
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, totaling $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.
- The business must start paying Fred a gross salary of $1,500 per fortnight, which is fully subsidised by the JobKeeper payment. It is up to Adam whether he wants to pay superannuation on this amount paid under the JobKeeper Payment scheme. If Fred commenced receiving the JobSeeker Payment from Centrelink, he will need to advice Centrelink of his JobKeeper payment.
Example 2 – Self employed
Melissa is a sole trader running a florist. She does not have employees. Melissa’s business has been in operation for several years. The economic downturn due to the Coronavirus has adversely affected Melissa’s business, and she expects that her business turnover will fall by more than 30 per cent compared to a typical month in 2019.
Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis in arrears.
Q. Are employees on student visas or working holiday visas eligible for the JobKeeper payment?
A. No. At this stage, the subsidy is not available for employees on temporary visas except New Zealanders on 444 visas.
Q. Who has to register for the JobKeeper payment?
A. Employer will need to register and nominate eligible employees and provide monthly updates to the ATO. Employer should notify the eligible employees of the nomination.
If an employee has multiple employers, he/she has to notify their primary employer.
Q. When will the payment start?
A. Businesses are expected to start receiving payments from the 1st week of May, however they will be backdated to 30 March.
Q. Would part time or casual employees who usually make less than $1,500 per fortnight still get the full $1,500 subsidy?
A. Yes, they effectively get a pay rise for 6 months form this measure. This is the case even if they stay at home for 6 months.
Q. How can a business that has not traded for more than 12 months prove 30%+ drop in revenue?
A. 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, the ATO will have discretion to consider additional information to determine eligibility. The ATO will also have 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% fall in turnover but actually experience a slightly smaller fall.
Q. If a casual worker has worked on a regular basis since Nov 2019, is he/she eligible for the JobKeeper payment?
A. The causal worker has not worked for 12 months as at 1 March 2020 and thus is seemingly ineligible for the JooKeeper payment.
Q. Is the Jobkeeper payment assessable to the employer?
A. Yes, it will be under S.6-5 or S.15-10 of the ITAA 1997. In contrast, the Boosting Cash Flow announced in the stimulus package stage 2 will be tax free.
Q. Business owners that received profit distribution or dividends can apply for JobKeeper Payment?
A. Not very clear at the moment. They could convert drawings or dividends to wages and wait for the update.
Q. Since the JobKeeper Payment won’t be made until the 1st week of May, can employer pay wages after receiving the JobKeeper Payment?
A. The ATO will give the JobKeeper payment in arrears. So, if you don’t pay your employees, the ATO is not going to give you the $1,500 a fortnight.
Q. Do employers have to pay Workcover premium on the JobKeeper Payment?
A. Potentially liable to pay as there are no exemptions at the moment.
Q. Do leave entitlements can accrue in respect of the JobKeeper Payment?
A. Potentially yes, resulting in additional liabilities for employers.
The above proposed JobKeeper Payment is not yet law and therefore the above measures are subject to the relevant legislation passing through the Parliament.