The JobKeeper Payment - What You Need to Know

The JobKeeper Payment - What You Need to Know

The JobKeeper Payment - What You Need to Know

20 Apr 2020

The JobKeeper Payment - What You Need to Know teaser The following is a broad summary of the key aspects of the JobKeeper Payment, which has now been legislated.
 
What is the JobKeeper Payment?
 
  • It is a wage subsidy that will be paid through the tax system (ATO) to eligible businesses impacted by the Coronavirus.
  • Eligible businesses will receive a payment of $1,500 per fortnight per eligible employee and/or for one eligible business participant (i.e., an eligible sole trader, partner, company director, shareholder or trust beneficiary).
  • The subsidy will be paid for a maximum period of six months (i.e., from 30 March 2020 up until 27 September 2020). It will be paid to eligible businesses monthly in arrears, with the first payments to employers commencing from the first week of May 2020.
 
Basic Eligibility Requirements
 
  • The Employer (an active business) must be an eligible entity satisfying the decline in turnover test. The employer must also enrol to participate in the scheme by completing an ATO form available from the 20th April, and finally the employer must elect to participate by providing the required employee information to the ATO and prepare a nomination notice which is completed by both the employer and employee.
  • The employee(s) must also satisfy the various conditions be an “eligible employee” and will confirm that they are eligible on a nomination notice which will be completed by both the employer and employee.
  • Employers MUST pay the eligible employee(s) at least $1,500 per fortnight (before tax) before the end of each fortnightly pay cycle in order to receive the Job Keeper subsidy which is paid in arrears after the end of the month. There is an exception for the month of April where both fortnights’ wages must be paid before the 30th April.
  • Employers are required to provide a declaration report within seven days after month end.
  • If you wish to be eligible for the first 2 fortnights of Job Seeker payments for the month of April you MUST be registered before the 26th of April.
 
JobKeeper for Self Employed Business Owners
 
  • JobKeeper Payments can also be made to an entity in respect of what is referred to as an eligible business participant (i.e., generally controlling individuals who are not employees of their business).
  • A ‘business participant’ is an individual who is actively engaged in the business carried on by the entity (i.e., in the operations and activities of the entity) and is either a sole trader; an individual partner of a partnership; a director or individual shareholder of a company; or an adult beneficiary of a trust.
  • A business can only nominate one person to be an eligible business participant and that person must not be a permanent employee of another employer (regardless of whether they are receiving the JobKeeper payment from that permanent employer).
  • The JobKeeper payment is received by the entity itself and is not required to pass this on to the eligible business participant.
  • A business seeking a payment for an eligible business participant MUST enrol for the business participation entitlement using an online form which will be available on the ATO website from 20th April.
 
Outstanding Issues
 
As the government stimulus packages are still in their infancy, a few questions and issues remain unanswered. The detail around estimating or forecasting a decline in turnover is still to be provided, as well as the online forms and how to apply for the subsidies are still to be confirmed. But we are assured the ATO are working extremely hard to ensure these are available as soon as possible. Stay tuned.
 
Fair Work Act Changes
 
It is also very important to note that amendments have also been made to the Fair Work Act 2009 to support the practical operation of the JobKeeper Scheme and to facilitate a range of flexible working arrangements designed to support the continued operation of businesses and the ongoing employment of employees. This enables the ability to vary hours, stand employees down, adjust the duties being performed and where reasonable the location of the work being done amongst other options.
 
Click here for more information https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/flexibility-in-workplace-laws-during-coronavirus/jobkeeper-changes-to-the-fair-work-act
 
 
FAQ’s regarding the JobKeeper Scheme
 
  1. Do businesses have to meet the decline in turnover test on an ongoing basis?
 
No. Whilst a business must satisfy the decline in turnover test in order to be entitled to a JobKeeper Payment, once it is satisfied, there is no requirement to retest in later JobKeeper Payment fortnights.
 
  1. What if a business’s turnover has not decreased (e.g., by 30%) but it is predicted to do so in the coming month?
 
An employer can apply for the JobKeeper Scheme where it is reasonably expected that its GST turnover will fall by 30% or more (or 50% where applicable) relative to its GST turnover in a corresponding period a year earlier. Treasury has advised that the ATO will provide further guidance about self-assessment of actual and anticipated falls in turnover.
 
  1. Are employers required to continue to pay employees to qualify for the JobKeeper Payment?
 
Yes. Employers are required to satisfy the ‘wage condition’ in respect of an employee for the relevant JobKeeper fortnight in order to qualify for the JobKeeper Payment for that employee.
 
If employers have insufficient cash flow to make such payments, Treasury has encouraged such businesses to speak to their banks about the loan options or short-term finance to pay their employees.
 
 
  1. If employees have been stood down after 1 March 2020 does an employer need to pay them?
 
Yes. Employers will need to make payments to eligible employees, including employees who have been stood down. This means the employer must pay the stood down employee a minimum of $1,500 per fortnight (before tax) in the relevant fortnight.
 
  1. Are the JobKeeper Payments from the ATO assessable income to the business?
 
Yes.
 
  1. Are employers required to deduct PAYG withholding from the amounts paid to employees?
 
Yes.
 
  1. Are employers subject to Superannuation Guarantee (‘SG’) in relation to any extra JobKeeper Payments?
 
No. The Government’s intention is that employers will only be required to make SG contributions for amounts payable to an employee in respect of their actual employment, which would not include any extra payments made by the employer to satisfy the $1,500 JobKeeper Payment ‘wage condition’.
 
  1. Can businesses get the JobKeeper Payment in respect of workers who are engaged through a labour hire firm?
 
No. Businesses will not qualify for a JobKeeper Payment in respect of workers engaged through a labour hire firm.
 
  1. When do I need to register, and how do I register?
 
If you wish to be eligible for the first 2 fortnights of Job Seeker payments for the month of April you MUST be registered before the 26th of April. Businesses or their Registered Tax agents can enrol from 20th of April via the ATO Business Portal or the ATO Online portal.  
 
How we can help
 
We offer a range of solutions and options to assist with not only helping businesses and individuals navigate the complex eligibility requirements for the JobKeeper Payments, but also to plan and forecast how to get through such an unknown and volatile time that the Coronavirus has put the economy in including:
 
  • Application for the JobKeeper payment
  • Cash flow forecast and budgeting
  • Breakeven analysis and cost reduction strategies
  • Review of your circumstances and assessment on which of the various government stimulus packages you will be eligible for including any application forms as required
  • Calculation of the Cash Flow Boost payments and other subsidies which are available
  • Application to the ATO for deferral of tax payments and interest free payment arrangements
  • Consideration of access to superannuation
  • General business advice to help you to work through the economic impact of the Coronavirus
 
For further information and details please contact us directly or review the details and information available on the following websites:
ATO https://www.ato.gov.au/General/COVID-19/ 
Treasury - https://treasury.gov.au/coronavirus
 
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