There’s so much information swirling around right now about the stimulus measures available to assist business during the coronacrisis. If you run a business, you’re no doubt wondering what you might be eligible for. With JobKeeper payment at the top that list for many businesses right now, let’s take a look and see if this is something you can claim.
What is the JobKeeper payment?
In a nut shell, JobKeeper payment is a Government initiative to support businesses significantly impacted by the coronavirus. It provides assistance, by way of a $1,500 per fortnight payment (that’s before tax), to eligible employers, who keep paying their eligible employee’s salary. You’ll notice the use of that word eligible – so who is eligible?
As an employer, to be eligible for JobKeeper payment you’ll need to meet all of the following criteria:
- On 1 March 2020 you carried on a business in Australia. You might be a not-for-profit, a sole trader, an SME or receiving a dividend in a partnership or trust;
- You employed at least one eligible employee on 1 March 2020. So, if you’re a sole trader and were the only employee, you may be eligible;
- Your eligible employees are still employed by your business, and continue to be employed for each of the fortnights you claim for. So, even if they’re at home in isolation and not currently able to physically work in your business, you can still claim JobKeeper payment.
- Of course, that means that you still need to be paying each staff member you claim for. The idea here is to retain your most valuable asset – your staff. It also means when you recommence operations, or scale up quickly, you can do so without needing to rehire.
- Your business has been adversely impacted by coronavirus with a downturn of:
- 30% or more in GST turnover (for aggregated turnover of $1 billion or less);
- 50% or more in GST turnover (for aggregated turnover of more than $1 billion); or
- 15% or more in GST? turnover (for ACNC registered charities).
- The downturn is calculated by comparing either a month between April and September, or quarter 3 or 4, in 2020, with the corresponding month or quarter from 2019. For businesses who may not have commenced during the corresponding timeframe in 2019, the Commissioner will make exceptions.
An employee is eligible under the JobKeeper payment scheme if they meet the following criteria:
- Are employed by you and were either a permanent full-time or part-time employee from 1 March 2020;
- Were at least 16 years of age on 1 March 2020;
- Were an Australian resident as at 1 March 2020 or the holder of a special category (subclass 444) visa;
- Did not receive payments such as government parental leave, Dad and partner pay, or a worker’s comp payment during the JobKeeper fortnight;
- Agree to be nominated by you for JobKeeper payment. Employees can only receive JobKeeper payment from one employer;
- Note that casual employees are not eligible unless they were employed by you on a regular basis for at least 12 months as at 1 March 2020.
Changes announced on 24 April 2020
As of 24 April 2020, The Treasurer, Josh Frydenberg MP, has announced the following updates to eligibility to keep the system fair:
- Full time students aged 16 and 17 years will no longer be eligible for JobKeeper payments;
- A ‘one in all in’ policy now applies. So, if you opt-in for JobKeeper you must do so for all of your eligible employees not just some of them;
- If you intend to claim JobKeeper for the first two fortnights (30 March – 12 April, 13 April – 26 April), you must pay all eligible employees the minimum $1,500 payment for each fortnight before 8 May 2020.
How much is the payment?
As a business owner you’ll receive $1,500 per fortnight for each eligible employee that you continue to pay. This amount is the minimum pre-tax amount to be paid to each eligible employee. So, if you have an employee who would normally earn less than $1,500 per fortnight, the onus is on you as the employer, to ensure that you top up their wage to the minimum amount payable.
Note that the subsidy starts from the fortnight that you are eligible, with the earliest date being 30 March 2020. It will be in place until 27 September 2020. So, if you only qualify in May, for example, the payments are only paid from May 2020.
It’s also important to note that as an employer you’ll still be responsible for SGC payments on regular wages paid to your employees. However, if the $1,500 per fortnight JobKeeper payment is more than you’d normally pay your employee, then it’s up to you if you pay SGC on that ‘additional’ payment.
For example: Your employee normally earns $1,000 per fortnight. You claim the Job Keeper payment for that employee and pay them the required $1,500 per fortnight. As the employer you must pay SGC on the employee’s regular wages, ie: $1,000 per fortnight. It’s then up to you if you choose to pay SGC on the additional $500 payment.
When will I receive JobKeeper payment?
Here’s where it gets tricky, especially for those businesses with no revenue right now. Once you satisfy the eligibility test, JobKeeper will be paid in arrears with the first payment due to be received in the first week of May 2020.
That means as an employer, if you want to receive JobKeeper payment, you will need to continue to pay each of your eligible staff for as long as you wish to claim Job Keeper payments.
What if I don’t qualify for JobKeeper right away?
For many businesses, March 2020 was largely business as usual; the impact of coronavirus only hit from mid-March/early April. So, if you’ve compared turnover in March 2020 to turnover in March 2019 and don’t currently qualify, but believe you will qualify in April, for example, then consider registering for JobKeeper payment as soon as possible.
At this stage, you’ll be able to opt into the scheme at any time over the next 6 months provided your business and employees meet the criteria above.
So, if you’re a business, a sole trader or have another eligible entity (such partnership or trust) here’s a step-by-step guide on the next steps:
- Check that your business and your employees meet the eligibility requirements;
- You must continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight. The first JobKeeper fortnight is the period from 30 March 2020 to 12 April 2020;
- Let your eligible employees know that you intend to claim JobKeeper payment on their behalf. You’ll need to make sure they aren’t claiming JobKeeper payment through another employer or have nominated through another business. Each employee can only claim JobKeeper payment through one employer;
- Send the JobKeeper employee nomination notice to your nominated employees. They’ll need to complete and return the notice to you for your records. If you plan to claim JobKeeper payment for April, your employees should return the notice to you by the end of April. Make sure you keep these notices on file. If you use a registered tax or BAS agent consider sending them a copy as well. Filing your notices in the ‘files section’ of your cloud-accounting software might also be a good idea;
Mark April 20, 2020 in your calendar! It’s the date enrolment for JobKeeper payment opens. You may have already registered for information on JobKeeper payment but it’s not the same as registering with the ATO to receive the payments.
To register, you can use the ATO Business Portal and authenticate with your myGovID, or ask your tax or BAS agent to do this on your behalf.
NB: If you intend to claim JobKeeper payments for April, you must register by 31 May 2020.
- Ensure you provide your correct bank details on the registration form. You’ll also need to indicate if you’re claiming an entitlement based on business participation, for example if you are a sole trader;
- When you register, you’ll need to specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April 2020) and the second JobKeeper fortnight (13 April – 26 April 2020);
- To ensure you continue to receive JobKeeper payment, each month you’ll need to reconfirm that your reported eligible employees have not changed. You can do this through ATO online services, the Business Portal or via your registered tax or BAS agent. You won’t need to retest your reported fall in turnover, but you’ll need to provide some information about your current and projected turnover. This will be done in your monthly JobKeeper Declaration report;
- If your eligible employees change or leave your employment, you’ll need to notify the ATO through the monthly JobKeeper Declaration report.
You will receive the JobKeeper payment once your application has been received by the ATO. Payments will commence on/after 4 May 2020.
A last word on Sole Traders
Whilst sole traders and entities such as partnerships and trusts, may also be able to opt into the JobKeeper payment scheme under the business participation entitlement, it’s worth taking some time to make sure you’re eligible. There’s information and some great examples that cover the gamut of possibilities for sole traders here.
There’s a limit of one $1,500 JobKeeper payment per fortnight per eligible business participant. If you have employees, you may also be able to claim additional JobKeeper payments. The application process and reporting requirements will be the same as above.
Get a copy of the JobKeeper employee nomination notice here.
Further information on turnover and aggregated turnover can be found here.
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NB: All information in this article was sourced from ato.gov.au and the Treasury and current as of 19 April 2020. The information is general in nature and every business is unique so make sure you discuss JobKeeper payment with your tax professional when proceeding.