Government Stimulus Package – JobKeeper Payments

The Australian Parliament passed $130 billion Jobkeeper package which is expected to be accessed by 6 million workers. 

Summary

• Eligible businesses affected by COVID-19 are able to apply for Jobkeeper payments
• Eligible businesses will receive $1,500 (pre-tax) per eligible employee per fortnight for up to 6 months
• Payment must be paid to staff
• Jobkeeper payments are budgeted to be paid for six months

Eligible Employers

Employers (including not-for-profits) will be eligible for the subsidy if, at the time of applying:

• their business has an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their turnover has fallen by more than 30 per cent or more; or
• their business has an annual turnover of $1 billion or more (for income tax purposes) and they estimate their turnover has fallen or will likely fall by more than 50 per cent; and
• the business is not subject to the Major Bank Levy.
  

The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and can confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.

Note:
Partnerships – one partner in a partnership can be nominated to receive the JobKeeper payments.

Trusts – where beneficiaries of a trust receive distributions, rather than being paid salary and wages for work done, one individual beneficiary can be nominated to receive the JobKeeper payment.

Company – one Director can be nominated to receive the payment, however, the Director may not receive the payment as an employee. Businesses that pay shareholders dividends for their labour can nominate one shareholder to receive the payments.

Self-employed – self employed individuals will be eligible to receive JobKeeper payment where they meet the relevant turnover test and are not a permanent employee of another employer.

Eligible Employees

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 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 at 1 March 2020
• are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020
• were a resident for Australian tax purposes on 1 March 2020
• are not in receipt of a JobKeeper Payment from another employer

Assessing Decrease in Turnover

Business needs to establish that the turnover has or will likely fall (30% or 50% depending on annual aggregated turnover) in the relevant month or quarter relative to their turnover in a corresponding period a year earlier. If the business submits quarterly BASs to the ATO, then quarters need to be compared, if the business submits monthly IASs – then monthly figures need to be compared.

The Tax Commissioner will also have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of COVID-19.

This will be done with the following cases:

– the business was not in operation a year earlier
– the turnover a year earlier was not representative of the usual average turnover (due to a large interim acquisition, newly established business or highly variable turnover)

Turnover is calculated as it is for GST purposes, and is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies.

Eligible Payment Periods

Employers will need to satisfy payment requirements for their eligible employees in respect of each 14 day period covered by the scheme. The first period starts on Monday 30 March 2020 and ends 12 April 2020.

The payment requirement is that the employer pays their eligible employees a minimum of $1,500 per fortnight in the scheme payment periods. Where an employer pays their staff monthly, the ATO will be able to reallocate payments between periods, however, overall an employee must have received the equivalent of $1,500 per fortnight.

The final payment period is from 14 September 2020 to 27 September 2020.

Payment Process

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.

Where employers participate in the scheme, their employees will receive this payment as follows:

• If an employee receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee.
• If an employee would otherwise receive less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.
• If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.

Superannuation

Where an employee is paid more than $1,500 a fortnight ordinarily, the employer’s superannuation obligations will not change when the employee gets paid JobKeeper payments. Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper payment, it will be up to the mployer if they want to pay superannuation on any additional wages paid by the JobKeeper payment.

Payments will be made to the employer monthly in arrears by the ATO. However, for the month of April, the Commissioner can make an advance payment.

Application Procedure

Businesses need to register their interest in participating in the JobKeeper program from 30 March 2020 through the following link:
https://www.ato.gov.au/Job-keeper-payment/

A formal application process with the ATO will be released whereby employers will need to fill out their details and eligible employees’ details.

The first payment will be received by employers from the ATO in the first week of May. Eligible employers will need to identify eligible employees for JobKeeper payments and must provide monthly updates to the ATO. Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.

Integrity Measures

Employers are warned that serious consequences, including large penalties and possible imprisonment, will apply to businesses trying to illegally benefit under the JobKeeper scheme. Businesses using Single Touch Payroll will need to submit supporting information for the JobKeeper payment claims for their eligible employees. Businesses should not be entering into artificial schemes in order to get inappropriate access to payments.

If you require further information, please don’t hesitate to contact us on (07) 3174 5010 or email admin@tradiesaccountant.com