The JobKeeper Payment – Your Questions Answered
On 8 April 2020, the Federal Government passed a package of Bills to give effect to the JobKeeper Scheme. The following is a broad summary of the key aspects of the payment based on the Treasurer’s Legislative Instrument and updated informaion currently available on the Treasury website .
What is the JobKeeper Payment?
The JobKeeper payment is a wage subsidy that will be paid through the tax system to eligible businesses impacted by the Coronavirus. Under the scheme, eligible businesses will receive a gross payment (i.e. before tax) of $1,500 per fortnight per eligible employee and/or for one eligible business participant (i.e. an eligible sole trader, partner, company director or shareholder or trust beneficiary).
The subsidy will be paid to eligible businesses monthly in arrears for a maximum period of six months (starting from 30 March 2020), with the first payment to employers commencing from May 2020.
When is an employer eligible for JobKeeper?
An employer will only be eligible to receive a JobKeeper Payment in respect of an eligible employee if, at the time of applying:
- has an aggregated annual turnover of $1 billion or less – the employer estimates that their projected GST turnover has fallen or is likely to fall by 30% or more; or
- has an aggregated annual turnover of more than $1 billion – the employer estimates that their projected GST turnover has fallen or is likely to fall by 50% or more; and
- the business is not specifically excluded from the scheme (i.e. subject to the major bank levy, is in liquidation etc)
- A charity’s turnover has fallen or likely to fall by 15% or more.
Eligible employers must elect to participate in the Job Keeper Scheme via an application to the ATO. An employer will also need to provide information to the ATO on all eligible employees and continue to so on a monthly basis.
What if a business’s turnover has not decreased but predicted to do so in the coming month?
An employer can apply for the JobKeeper Scheme where it is reasonably expected that its turnover will fall by 30% relative to a corresponding period a year earlier. If a business does not meet the decline in turnover test as at 30 March 2020, the business can start receiving the JobKeeper payment at a later time, once the decline in turnover test has been met. But the payment will not be backdated to the commencement of the scheme.
What if a business was not in operation a year ago?
Where a business was not in operation last year, or where the turnover of a business a year ealier was not representative of their usual or average turnover, the ATO will have descretion to consider additional information that the business can provide to establish it has been significantly affected by the Coronavirus. Currently the ATO has not released any information on what factors it will take into account when considering exercising this discretion.
Who is an ‘elegible employee’?
An ‘eligible employee’ is an employee who:
- is currently employed – which includes an employee who has been stood down or re-hired.
- was employed as at 1 March 2020
- is a full-time or part-time employee, or a long-term casual employee (i.e. one who has been employed on a regular and systematic basis for longer than 12 months as at 1 March 2020).
- was at least 16 years of age on 1 March 2020
- a resident of Australia for social security purposes e.g. and Austalian citizen, holder of a permanent visa or protected special category visa OR a resident of Australia for tax purposes and was a holder of a Sublass 444 (special category) visa.
- has not given any other employer a nomination notice (refer below)
- is a long-term casual employee that is not a permanent employee of any other employer
- is not in receipt of a government-funded parental leave pay or dad and partner pay or fully supported by a workers’ compensation scheme.
The ATO requires an employer to complete a JobKeeper employee nomination notice to notify eligible employees that the employer intends to participate in the scheme. If an eligilbe employee has multiple employers who each send them a nomination form, they can only accept a nomination from one employer.
Employers must pay eligible employees at least $1,500 per fortnight.
The Jobkeeper payment scheme requires employers to pay their eligible employees a minmum of $1,500 (before tax) each fortnight and will operate as follows:
- If an employee has been receiving at least $1,500 or more gross per fortnight since 30 March 2020, they will continue to receive their regular income. In this case, the payment will effectively subsidise the first $1,500 of the employees gross fortnightly income.
- If an employee has been receiving less than $1,500 in gross income per fortnight since 30 March, the employer must pay the employee a ‘top-up” payment to ensure the employee as been paid at least $1,500 to be eligible to receive the JobKeeper Payment. This means some emplyees will receive more than their ordinary salary and wages derived from the employer.
- If an employee has been stood down without pay after 1 March 2020 their employer must pay the employee a minimum gross fortnightly income of $1,500 from 30 March 2020 to be eligible to receive the JobKeeper Payment.
- If an employee was employed on 1 March 2020, has subsequently ceased employment with their employer, and then has been re-engaged by the same employer, the employer must pay the employee a minimum gross fortnightly salary of $1,500 under the JobKeeper Scheme.
A payment under the scheme is meant to be a reimbursement to the employer of an amount already paid to an eligible employee. To be eligible for the payment from the 30 March 2020, the employer needs to pay or top-up their employees wages before the end of April 2020. Going forward, the minimum payment will need to be strictly made by the end of the relevant fortnight.
Are employers subject to Superannuation Guarantee in relation to any extra JobKeeper Payments?
The Government’s intention is that employers will only be required to make superannuation contributions for amounts payable to an employee in respect of their actual employment.
An employer’s superannuation obligations are summarised in the following table:
|Employee’s actual wage||Subject to Superannuation Guarantee|
|Employee’s wage is $1,500 or more||Yes|
|Employees wage is less than $1,500|
|– Normal wage||Yes|
|– Top-up wage||No|
|Employee is not receiving any wages (e.g. where employee is stood down)||No|
When can a business claim the JobKeeper Payment for a business participant?
The JobKeeper Schemed also recognises that controlling individuals who are not employees of their business have also been affected by the economic downturn caused by the Coronavirus.
A ‘business participant’ is an individual who is actively engaged in the business carried on by the entity and is either:
- a sole trader
- an individual partner of a partnership
- a director or individual shareholder of a company
- an adult beneficiary of a trust
While a business may have more than one buisness participant, it can only nominate one of these individuals. There are conditions that will need to be satisfied for the business participant to be eligible for the JobKeeper Payment. Some of these include:
- The business meets the decline in turnover test
- The business had a ABN on or before 12 March 2020 and either the business:
- had an amount included as assessable income for the 2019 year and it was included in their tax return lodged on or before 12 March 2020
- lodged a BAS on or before 12 March 2020
- The relevant business participant was:
- actively engaged in the operations and activities of the entitiy as at 1 March 2020
- not entitled to another JobKeeper payment, either as a nominated eligible business participant of another business or as an eligible employee
- not an employee of any other employer
- at least 16 years of age as at 1 March 2020; and
- on 1 March 2020 was either an Australian citizen, a holder of a permanent visa or protected special category visa or a resident of Australia for tax purposes and was a holder of a Subclass 444 visa.
This is a broad summary of the key aspects of the JobKeeper payment. Employers and individuals that breach the JobKeeper Rules may be subject to penalties imposed by the ATO and have to pay back the money received from the JobKeeper Scheme.
If you need help in applying for the JobKeeper Payment or have additional questions, we are here to help.