Federal Government Stimulus #3 : JobKeeper Wage Subsidy

The Federal Government has now passed a wage subsidy scheme to complement the two economic stimulus packages already legislated.

The wage subsidy scheme provides for a flat rate $1,500 payment per eligible employee, at eligible businesses, for up to six months. These payments are called JobKeeper payments. This scheme will be administered by the Australian Taxation Office (ATO) and payments under the scheme will be processed from the first week of May onward.

So how does it work?
Providing eligibility criteria are met, the ATO will make payments in arrears on a monthly basis, to the employer. Payments will commence from the first week of May and will be backdated to cover from 30 March 2020.

Businesses do have to register for the scheme and must ensure the full $1,500 payment per eligible employee is received by the employee. The ATO will be using the Single Touch Payroll system to ensure that payments being made are being fully passed on.

OK so what are the eligibility criteria?
Eligibility is determined at both the business and employee levels.

      Firstly, the business must meet the following criteria:

        1. Turnover has significantly reduced as per the turnover test
        2. They are not:
            1. Subject to the Major Bank Levy
            2. A Federal, State or Local Government, a government agency or wholly owned corporation of Government bodies
            3. In liquidation or bankruptcy.

      The turnover test is:

        1. For businesses with a turnover below $1 billion, turnover has reduced by more than 30% in a turnover test period, relative to the corresponding period 12 months ago OR
        2. For businesses with a turnover of $1 billion or more, turnover has reduced by more than 50% in a turnover test period, relative to the corresponding period 12 months ago .

      The turnover test period can be:

        1. March 2020, April 2020 OR
        2. April to June 2020 projected quarter.

      If you do not qualify in one of the above test periods, you can test each month from May 2020 through to September 2020, however you will only receive JobKeeper payments from the application date when eligible.

      The turnover test only needs to be met once – once the test has been met, you don’t need to retest to be eligible for the remaining months in the scheme.

      The Tax Commissioner will have discretion to consider additional information or tests in specific circumstances – for example in the instance the business has been operating for less than 12 months, or in situations where the turnover 12 months prior was not representative of usual turnover.

      Secondly, employees must meet all of the following criteria:
      As at 1 March 2020, they:

        1. Were employed by the business – this includes persons who have been stood down, or re-hired
        2. Were full time or part time employees, or a casual employee who has been regularly working for the business in the 12 months or more prior to 1 March 2020
        3. Were at least 16 years of age
        4. Were an Australian resident for tax purposes
        5. Either were an Australian citizen, or a holder of either a Permanent Visa or a Special Category (Subclass 444) Visa.

      Also, the employee must:

        1. Remain employed by the business
        2. Not be currently receiving parental leave pay, or dad and partner pay
        3. Not be currently receiving workers compensation payments in regards to total incapacity to work
        4. Not receive a JobKeeper payment through another employer
        5. Be paid $1,500 gross or more a fortnight, within the relevant due month:
            1. If their salary or wages is usually less, the pay must be topped up to $1,500 gross. For example, if an employee is currently only paid $1,000 gross a fortnight, you will need to pay them an additional $500 a fortnight. You would need to fund this extra amount upfront in order for that employee to be eligible (obviously it is later paid back to you when the JobKeeper payment comes in). Note superannuation is only mandatory in relation to the salary and wages amounts for hours worked, it is not mandatory on the extra being paid to take the gross pay up to $1,500 a fortnight.
            2. If their salary or wages is usually more, the usual salary or wages and superannuation must continue to be paid
            3. If an employee is stood down and as such not working any hours, they must be paid at least $1,500 a fortnight.

      An employee can only nominate one employer regarding the JobKeeper payment. This means if an individual holds more than one job, they will need to decide which employer’s nomination form they will complete.

      I’m a sole trader or self employed – does that mean I miss out on JobKeeper?
      Not necessarily. Sole traders and those who are self employed with an ABN, are also eligible for JobKeeper payments if they meet the following criteria:

        1. Turnover has fallen, or will fall by 30% or more
        2. They had an ABN on or before 12 March 2020
        3. They had some income in the 2018-19 financial year, or made some supplies between 1 July 2018 and 12 March 2020, and provided a 2019 tax return or certain activity statements to the ATO by 12 March 2020
        4. They were actively engaged in the business
        5. They are not otherwise entitled to a JobKeeper Payment
        6. As at 1 March 2020, they:
            1. Were at least 16 years of age
            2. Either were an Australian citizen, or a holder of either a Permanent Visa or a Special Category (Subclass 444) Visa.

      My business is structured as a partnership, company or trust, but I don’t have any employees.
      This is quoted straight from the ATO website: “Other businesses in the form of a company, trust or partnership can also qualify for JobKeeper payments where a business owner (a shareholder, adult beneficiary or partner) is actively engaged in the business, or a director is actively engaged in the business. This is limited to one entitlement for each entity even if there are multiple business owners or participants.”

      The “one-entitlement” limitation is as follows:

        1. Partnership – only one partner can claim
        2. Company – only one active shareholder, or one director, can claim
        3. Trust – only one beneficiary can claim (note a corporate beneficiary can not claim).

      Other eligibility criteria still apply and the person must not be a permanent employee. If you have multiple businesses, you can only apply under one business.

We are eligible, what do we do next?
Businesses and employees (where relevant) should review and action their responsibilities as per below.

      Businesses:
      Businesses need to decide whether they are going to manage the JobKeeper registration and calculation process alone, or whether they will involve their accountant or advisor. If they decide to manage it themselves, be aware there are a number of steps and some are ongoing for the duration of the claims. The key steps are:

          Step 1: Register your intent to apply for JobSeeker payments with the ATO
          Register your intent to apply for the JobKeeper subsidy with the ATO, so they notify you when applications are open, via this link: https://www.ato.gov.au/Job-keeper-payment/
          Step 2: Check eligibility criteria are met at both the business and employee levels
          Refer to the eligibility criteria listed above. Does your business meet the turnover test? If you don’t qualify initially, schedule to review this again in upcoming months, as you might still be able to benefit under the program. For example – if you only meet the turnover test in June 2020, you can still apply then and will receive at least three months worth of payments, depending on when you submit your application.

          In specific circumstances, the Tax Commissioner may be able to consider additional information to determine eligibility.

          Step 3: Send eligible employees the JobKeeper employee nomination notice
          You need to advise eligible employees you are intending to claim the JobSeeker payment for them and provide them with the JobKeeper employee nomination form. This form needs to be completed and retained on file. This is for your records and is not sent to the ATO. It is important that this form is completed and returned to you by the end of April if you want to receive JobKeeper payments for the fortnights beginning either 30 March 2020 or 13 April 2020.

          Step 4: Apply for the JobKeeper payments
          Applications open on 20 April 2020, after which you need to complete the application paperwork using the Business Portal and authenticate with your myGovID. Your registration of intent to claim is not an application.

          Payments under the scheme will only commence from when you apply. There is one exception – if you apply by 26 April 2020, you can backdate a claim to 30 March 2020. This is a very short window to lodge the paperwork if you want to access JobKeeper payments back to 30 March 2020.

          Step 5: Nominate eligible employees with the ATO
          When registrations initially open, only an estimate of the number of eligible employees is required. However the ATO needs you to nominate who the eligible employees actually are. This step will be available to complete from 4 May 2020 onwards.

          Step 6: Notify nominated employees
          Once you have nominated your eligible employees with the ATO, you need to advise those emloyees. Some may need to update Services Australia regarding this.

          Step 7: ATO processes payment
          The ATO will begin processing JobKeeper payments for your eligible employees.

          Step 8: Monthly JobKeeper Declaration report (for the duration of the scheme)
          Each month you are required to reconfirm for the ATO that employees nominated are still eligible. You also must notify the ATO if eligibility changes or an employee ceases employment. This information is to by reporting using the JobKeeper Declaration report, through either Online Services or the Business Portal. This report also requires you to submit GST turnover and projected turnover each month.

      Employees:

          JobKeeper employee nomination notice
          If your employer provides you with a JobKeeper employee nomination notice, complete and return this as soon as possible. The longer you hold onto it, the more likely you are to miss out on some or all JobKeeper payments, as the employer is required to have the completed form on record.

          If you have multiple employers, you can only claim the JobKeeper payment from one employer.

          Income Support payment recipients
          If you currently receive an income support payment through Services Australia, when you have confirmation from your employer that they will be providing a JobKeeper payment to you, you need to notify Services Australia. This is important because receiving the JobKeeper payment may void your eligibility for other income support payments and at the moment you need to know that your money is yours, not money that you have to repay to Services Australia.

A Warning On Eligibility
The ATO can claim back payments they have made to a business in relation to the JobKeeper subsidy, where they later discover the eligibility criteria has not been fully met. They may also charge interest on those amounts. However, you can’t do the same with your employees. If you have received and passed on the JobKeeper payment to an employee and you later find that either they or the business doesn’t meet the eligibility criteria, you have no recourse to get this money back from your employee. This would mean you are out of pocket $1,500 for every ineligible payment made to your employee.

Take the time to be sure of eligibility at both the business and employee levels so you don’t have a situation like that.

Helpful Resources:

If you have any questions about whether you qualify for the JobKeeper stimulus measures, or need help applying, you can call us on 03 5339 3200 or contact us here.

Thanks for reading.

The information contained on this website has been provided as general advice only.  The contents have been prepared without taking account of your personal objectives, financial situation or needs.  You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.

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