Federal Government Job Keeper Payment

The latest, and possibly most significant, economic support from the government comes in the form of a “JobKeeper Payment”. The aim of the payment is for more Australians to retain their jobs and continue to receive income.

The payment will be made to businesses, including those run by sole traders and self-employed people, which have been significantly impacted by the Coronavirus. It will help employers to pay their employees and help sole traders and the self-employed to continue earning some income.

Businesses that employ people

Eligible employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.

If you’re an employer, to receive the JobKeeper Payment you will need to:

  1. Register your intention to apply with the ATO and assess that you have experienced or will experience a decline in your turnover (i.e. gross revenue). Businesses with a turnover of less than $1 billion need to have had a reduction in turnover of more than 30% compared to the same or comparable period last year – the period must be at least one month.

You can register your intention to apply via the ATO webpage here.

The above is all you can do for now, as the Government and ATO will be busy working out the processes and application forms but read on to find out what you will need to do later.

  1. Provide information to the ATO on eligible employees, which includes the number of eligible employees employed as at 1 March 2020 and those currently employed by the business (including those stood down or re-hired).

For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business, but you may need to provide additional information.

  1. Make sure that each eligible employee receives at least $1,500 per fortnight (before tax).

If you’re already paying an employee $1,500 or more before tax per fortnight as wages, then you don’t have to pay that employee anything further. The $1,500 subsidy you will receive from the Government is there to cover some of the amount you pay that employee.

If you’re paying an employee less than $1,500 before tax per fortnight, then you will now have to pay that employee a minimum $1,500 before tax (i.e. you can’t keep the difference) for the duration of the JobKeeper Payment period.

If you have stood down any employees without pay because you have no work for them, but they’re still on your books as employees, you will be able to pay them $1,500 before tax per fortnight.

Super is optional on the portion of the JobKeeper Payment that is above the current wage being paid to the employee. For example, if you’re already paying the employee $1,000 before tax per fortnight and now have to pay them $1,500 due to the JobKeeper Payment then you don’t have to pay 9.5% super on the additional $500 (unless you choose to do so).

  1. Notify all eligible employees that they are or will be receiving the JobKeeper Payment.
  2. Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.

To work out if you’re an eligible business or which of your employees are eligible, refer to the flow chart at the bottom of this article.

Sole traders and the self-employed

Sole traders and self-employed people will be able to receive the fortnightly subsidy of $1,500 for one nominated individual from 30 March 2020, for a maximum period of 6 months. However, the payment will be made monthly to the individual’s bank account rather than fortnightly.

To receive the JobKeeper Payment, sole traders and the self-employed will need to:

  1. Register their interest for the JobKeeper Payment via the ATO here.
  2. Provide an ABN for their business, as well as nominate an individual to receive the payment and provide that individual’s Tax File Number.
  3. Provide a declaration on their recent business activity (currently there isn’t more detail on what this means exactly, but presumably show that revenue or turnover has declined by more than 30%).
  4. Provide a monthly update to the ATO to demonstrate their continued eligibility for the payments.
Unanswered questions

The JobKeeper Payment is referred to as being $1,500 before tax. The question then is: do you have to withhold from the JobKeeper Payment and pay the employee an after tax amount?

The PM’s announcement says that eligible businesses can begin distributing the JobKeeper Payment immediately (the start date is 30 March). The question then is: since the payment is fortnightly does that mean the first one is due a fortnight from 30 March or can you make a payment in advance?

The PM’s announcement also says that employers will be reimbursed for payments made starting from the first week of May (that’s when cash will start flowing from the ATO to eligible businesses). However, businesses will probably take some time to work out their eligibility and will probably want confirmation from the ATO regarding that eligibility before being comfortable paying anything. Further not all businesses will have the cashflow to make all the payments required until they’ve received something. Question then is: can you make the payments to the employees in arrears after eligibility and cashflow have been worked out?

One class of eligible employee is long term casuals (i.e. employed on a regular basis for more than 12 months as at 1 March 2020). Question then is: if you changed the employee from full time or part time to casual after 1 March due to downturn and uncertainty in trading, will that employee still be considered a long-term casual?

Some clarity will no doubt be provided in the coming weeks.

The employee’s perspective

Employees that have multiple employers must notify their primary or main employer (they can receive the JobKeeper Payment from one employer only).

Employees that are not Australian citizens must notify their employer of their visa status so that their employer can work out if they are an eligible employee.

Employees that are currently in receipt of an income support payment, like the JobSeeker Payment, should advise Services Australia of their change in circumstances online at my.gov.au or by phone. They may no longer be entitled to receive the income support payment or may need to get that payment reduced.

All other employees don’t have to do anything but wait to receive a notification from their employer that they are receiving the JobKeeper Payment. They should contact their employer if they have any questions.

Eligibility Flow Chart

JobKeeper Payment – Eligibility Flow Chart

The information contained herein is of a general nature only and is not intended to be relied upon nor is it a substitute for appropriate professional advice. Whilst all care has been taken in the preparation of the material, it is not guaranteed to be accurate. Individual circumstances are different and as such, require specific examination. Asparq cannot accept liability for any loss or damage of any kind arising out of the use of or reliance upon all or any part of this material. Additional information may be made available upon request.

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