As you are no doubt aware, on 30 March 2020, Scott Morrison unveiled a $130 billion stimulus package, the third package released so far to combat the economic fallout of COVID-19. This passed parliament on 9 April 2020 and a central plank to this package was the JobKeeper payment, a $1,500 per fortnight payment to help businesses keep employees on their books and ease the transition back to business as normal.
A lot has been written about the JobKeeper payment in the past few weeks and now that the time has come for businesses to apply for the payment, we thought we would give you all you need to know to make that application.
What is it?
JobKeeper is a $1,500 fortnightly wage subsidy paid to eligible employers for each eligible employee to subsidise businesses who keep employees on their books from 30 March 2020 to 27 September 2020, though this end date may change. It is reimbursed to the employer for the preceding month, ie wages paid in April will be paid to the employer from the first week of May.
Which Businesses Can Claim JobKeeper?
To qualify, a business will need to have been carrying on business as at 1 March 2020. Businesses with annual turnover under $1 billion will need to evidence an actual or projected fall in revenue of at least 30%. For businesses with over $1 billion turnover, the relevant decline is 50%. For registered charities, they only need to establish that their turnover will fall by 15%.
Commonwealth, State and Local governments and agencies, including wholly-owned corporations of these bodies, companies in liquidation and bankrupts are not eligible.
The Turnover Test:
In determining whether there has been a sufficient actual or projected fall in revenue, the entity must compare either calendar months (from and including March to September 2020) or the quarters starting on 1 April or 1 July to the correspondent month or quarter in 2019, using their Business Activity Statements. For example, on 6 April projected income for April was $6 million but revenue in April 2019 was $10 million, showing the decline is 40% of April 2019 revenue and the business is eligible for JobKeeper. A link to the ATO website for calculating turnover is Here: https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Applying-the-turnover-test/?anchor=Basictest#Basictest
To qualify from 30 March 2020, a business may use either March or April turnover. To qualify from a later time, the business must use the month in which it intends to claim JobKeeper.
Where the business was not in operation 12 months earlier or the turnover was not representative of usual turnover for some reason, the ATO may consider additional information about the business to determine if the business has been significantly impacted by COVID-19.
Which Employees are Eligible
To be an eligible employee, that person must, as of 1 March 2020, be:
(a) 16 or over;
(b) An employee or long term casual (meaning a person regularly and systematically employed by the business from at least 1 March 2019 to 1 March 2020);
(c) An Australia resident, permanent resident, New Zealander on a special category (subclass 444) or other particular categories of visa;
(d) An Australian resident for tax purposes on 1 March 2020;
An Eligible Employee can only be eligible under one employer, which is particularly relevant for long term casuals of multiple employers, such as in hospitality. The employee and employer may both be liable to repay any overpayments as a result of 2 claims for JobKeeper in relation to that employee.
Note that an employee who was with an employer on 1 March 2020 but was subsequently stood down, redundant or terminated may be re-employed and still eligible for JobKeeper.
Employees are not eligible if an employee is receiving:
(a) Workers’ compensation and is incapacitated from working. If they are working in the business, such as on reduced hours, the payment for those hours is eligible; or
(b) Parental Leave Pay or Dad and Partner Pay under the Paid Parental Leave Act 2010, though employees on parental leave from their employer will be eligible.
Non-Employees: Eligible Business Participants
If you are actively engaged in a business but are not an employee, you may still qualify as an Eligible Business Participant if you are a sole trader, partner in a partnership, beneficiary of a trust or shareholder/director of a company. The person must be 16 or over and an Australian resident.
The Eligible Business Participant is to give notice to the business in much the same way an employee is required to, except for sole traders where the notice is given to the ATO. Note that only one Eligible Business Participant is allowed per business and that person cannot be an employee or eligible business participant at another business.
How much is it?
Participating employers will be required to ensure eligible employees receive, at a minimum, $1,500 per fortnight before tax. If an employee usually receives less than $1,500 per fortnight before tax, their employer must pay them, at a minimum, $1,500 per fortnight, before tax. It is therefore possible for a long-term casual or part-time worker to receive more than their ordinary pay.
Employers must continue to pay the superannuation guarantee on regular wages but it is up to employer whether they pay superannuation on additional JobKeeper payments. Legislation is still to be passed regarding superannuation on JobKeeper payments.
When Can you Claim and Continuing to Claim?
The ATO has extended the time to enrol so that a business can enrol up to 31 May 2020 in order to be eligible for all JobKeeper payments from 30 March 2020. An employer must have paid at least $1,500, before tax, to an eligible employee for each fortnight from 30 March 2020 to 27 September 2020. For the first 2 fortnights, ie 30 March to 26 April, payments to employees only need to have been made on or before 8 May 2020 but for subsequent fortnights from 27 April, businesses must pay employees in line with its existing pay cycle through its existing payroll solution in order to receive JobKeeper for that employee.
For example, if you pay employees monthly, then you continue to pay monthly, provided you pay the employee the equivalent of at least $1,500 per fortnight ending that month. In May 2020, 2 JobKeeper fortnights end that month (on the 10 May and 24 May) so a company would need to pay at least $3,000 before tax to comply and in August 3 Jobseeker fortnights end (2, 16 and 30 August) so $4,500 needs to be paid for that month.
The ATO will, by the 14th of each month, make payment of the JobKeeper payments for the fortnights ending in the preceding month. Therefore, for the 2 fortnights ending in April 2020, payment will be made in the first 14 days of May 2020, as long as all documentation has been submitted.
Each business must, in the first 7 days of a month, must notify the ATO of the businesses turnover for that month and projected turnover for the next month.For example, for May 2020, a business must, before 7 June 2020, report May’s turnover and June’s anticipated turnover in order to be eligible to be reimbursed for amounts paid to employees in May 2020.
How do you claim?
8.1. Enrol through MyGov, by going to the MyGov business portal, select “Manage Employees” and then the link for the JobKeeper payment. You will need to include financial information such as a BAS for either March or April for both 2020 and 2019.
8.2. Identify all potentially Eligible employees and Eligible Business Participants
8.3. Inform the Eligible employees and Eligible Business Participants in writing within 7 days that you have nominated them for the JobKeeper payment. The form can be found here for employees: https://www.ato.gov.au/assets/0/104/300/362/004e4999-5aee-480a-a38e-a668d9078aa0.pdf
Or here for Eligible Business Participants: https://www.ato.gov.au/assets/0/104/300/362/5f4639ad-8475-4d66-a4f3-4ff0ef2d79f7.pdf
8.4. The employee or Eligible Business Participant completes the nomination form and returns it to the business for the business to submit in order to be able to claim JobKeeper.
The business must continue to pay employees in accordance with its existing pay cycle through its existing payroll solution in order to receive JobKeeper for that employee.
Every month, the business must login to the Business Portal in MyGov to reconfirm its reported eligible employees and its current and projected turnover.