There’s a lot to take in. Details are below.

Overview

  • SME’s and not for profits will be eligible if turnover has fallen by more than 30% in comparison with the same BAS period a year ago (eg. Sales in the June 2020 BAS compared with the June 2019 BAS)
  • ‘Self-employed’ businesses are eligible to receive the payment so sole traders are eligible, however it is not yet clear if it includes ‘self-employed’ carrying on business with a trust or company and whether sole traders who also employ staff will be eligible for the payment.
  • The payment is $1,500 per fortnight per employee for up to 6 months.
  • Full-time or part-time employees who were employed at 1 March 2020 will be eligible.
  • Casual employees who have been employed for at least 12 months will be eligible.
  • Other employees on different visa types may miss out (details below of eligible visas).
  • Employers need to register and will receive payments from the ATO and process the payments to employees.
  • Legislation is still to be passed so there may be changes.
  • There are still areas of uncertainty which are expected to be clarified.

Payment Amount – how the $1,500 per fortnight is applied

If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to be paid their normal income. The employer will receive the $1,500 per fortnight JobKeeper payment. This payment will act as a subsidy to the employer to assist retain the position.

If an employee ordinarily receives less than $1,500 in income per fortnight before tax, the employer will receive $1,500 per fortnight from the ATO and must pay their employee, at a minimum, $1,500 per fortnight, before tax.

If an employee has been stood down, their employer will receive $1,500 per fortnight from the ATO and must pay their employee, at a minimum,  $1,500 per fortnight, before tax.

If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employer will receive $1,500 per fortnight from the ATO and the employee will receive, at a minimum, $1,500 per fortnight, before tax.

How the Payment Works – Examples

Employee’s normal wage is $3,000 per fortnight and normal employment continues. The employee continues to receive $3,000 per fortnight. The business receives the $1,500 per fortnight JobKeeper payment from the ATO as a subsidy to help retain the position.

Employee’s normal wage is $1,000 per fortnight. The business receives the $1,500 per fortnight JobKeeper payment and pays the employee $1,500 per fortnight.

Employer Superannuation Obligations

Any normal wage payments made by an employer will be subject to normal superannuation requirements.

examples

Employee’s normal wage is $3,000 per fortnight. The employer continues to pay superannuation on the $3,000.

Employee’s normal wage is $1,000 per fortnight. The JobKeeper payment results in an additional $500 per fortnight being paid to the employee (see example above). Compulsory superannuation is payable on the $1,000 only, however the employer can decide whether or not to pay superannuation on the additional $500.

Further Details about the 30% drop in turnover test

As listed above, the 30% drop in turnover is calculated on BAS periods and compared with the same BAS period a year ago (eg. Sales in the June 2020 BAS compared with the June 2019 BAS).

A new business or a business where turnover a year earlier is not representative of average trading may provide information to the ATO to show how coronavirus has adversely impacted the business. The ATO will then decide whether the business is eligible.

The ATO can also allow alternative tests of revenue if the business has already ceased trading or significantly curtailed its operations, indicating that eligibility will most likely be granted earlier than waiting for proof after the June BAS is lodged.

The government has stated that ‘there will be some tolerance where employers, in good faith, estimate a greater than 30% fall in turnover but actually experience a slightly smaller fall’. If this occurs to your business, it may help to have details of your turnover projections to support your belief that turnover would drop by at least 30% to help ensure the ATO exercises its tolerance.

Relationship Between JobKeeper, JobSeeker and Other Government Payments

You can not receive both the JobSeeker and the JobKeeper payments

The JobKeeper payment of $1,500 per fortnight is higher than the JobSeeker payment of around $1,100 per fortnight (the JobSeeker amount is variable and depends on a range of factors).

It is unclear whether the JobKeeper payments can also be made to someone receiving a pension (eg. a sole trader who is also eligible to receive a pension and whose business turnover has declined by more than 30%). The government has only stated that ‘Employees that are currently in receipt of, or have applied for, an income support payment should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.’

Employee Eligibility

Employees must have been employed on 1 March 2020 and continue to be engaged by that employer, including full-time, part-time, long-term casuals and stood down employees.

Casual employees eligible for the JobKeeper Payment are those employees who have been with their employer for at least the previous 12 months as at 1 March 2020.

To be eligible, an employee must be an Australian citizen, at least 16 years of age, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder. Temporary visa holders apart from New Zealanders and skilled visa holders are not eligible.

Employees can receive the JobKeeper payment from one employer only.

Application and Payment Process

Employers must elect to participate in the scheme by applying to the ATO and providing supporting information demonstrating a downturn in their business.

Where an employee has more than one employer, the employee will need to notify their primary employer to claim the JobKeeper payment on their behalf. The claiming of the tax free threshold may be taken by the ATO to indicate who the primary employer is.

The application link is https://www.ato.gov.au/general/gen/JobKeeper-payment/?=redirected_JobKeeper

Businesses without Employees

Businesses without employees, such as the self-employed, can apply for JobKeeper payments. They will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. The ATO have not yet stipulated how continued eligibility will be calculated (eg. whether it is a comparison of each month’s revenue compared with the same month in the prior year).

The ATO have not yet confirmed whether a business without an employee for JobKeeper eligibility includes a business run through a company or trust.

Timing

Payments will be made to the employer monthly in arrears by the ATO. 

The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May.

Employee Obligations

Employees will receive a notification from their employer that they are receiving the JobKeeper payment. The majority of employees will need to do nothing further.

Employees that have multiple employers must notify the employer that is their primary employer.   

Employees that are not Australian citizens must notify their employer of their visa status, to allow their employer to determine if they are an eligible employee.

Employees that are currently in receipt of, or have applied for, an income support payment should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.

Areas of Uncertainty

The following are areas of uncertainty. Most of these will hopefully be cleared up once the legislation is released and the ATO issues guidance.

  • New businesses and a comparative period and how the ATO will apply its discretion about the impact of coronavirus.
  • The definition of casual and part-time employees. See https://www.fairwork.gov.au/employee-entitlements/types-of-employees/casual-part-time-and-full-time and if in doubt, consult an employment lawyer. This is an area that is unlikely to be cleared up any further by the legislation and ATO guidance as it is already subject to legislation and case law.
  • Definition of self-employed for JobKeeper payment and whether this includes businesses run through trusts and companies.
  • Definition of self-employed for JobKeeper payment and whether JobKeeper payments apply to a business owner who runs a business through a sole trader structure and who also has employees.
  • Taxation of the JobKeeper payment for employers. It is expected that the receipt of JobKeeper payments will be taxable income and payments to employees will be deductible, resulting in a nil tax impact for employers.
  • Taxation of the JobKeeper payment for employees. It is expected that JobKeeper payments will be classified as ‘assessable income’ and taxed as if they were standard wages.
  • How continued eligibility for sole traders will be calculated and how the monthly reporting to the ATO will work.
  • Timing and eligibility. For example, if revenue drops in the July to September BAS period by more than 30%, will payments be from 1 July for 6 months or will they be from the date of application or backdated to the starting date of the scheme (30 March)?
  • Timing and eligibility. The government has said that payments are for 6 months from March 2020 but have not yet stipulated an end-date to apply.
  • Whether JobKeeper payments can be received by a sole trader who also receives the pension and if so, whether the JobKeeper payments are included in the definition of income for pension payment calculations.

Question and Answer Session today at 4pm

There is a question and answer session today (1 April) at 4pm via zoom at this link

https://zoom.us/j/901926037

Once the legislation has been passed and the above areas of uncertainty clarified, I will hold another question and answer session.

ATO Examples

Self-employed

Melissa is a sole trader running a florist. She does not have employees. Melissa’s business has been in operation for several years. The economic downturn due to the Coronavirus has adversely affected Melissa’s business, and she expects that her business turnover will fall by more than 30 per cent compared to a typical month in 2019.

Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.

Worker with multiple jobs

Michelle currently works two permanent part-time jobs, at an art gallery during weekdays, and at the local café on the weekend. Due to the impact of the Coronavirus, the gallery has closed and Michelle has been stood down without pay under the Fair Work Act. Michelle continues to work at the café delivering take-away orders.

Michelle can only receive the JobKeeper Payment once, from the employer from whom she nominates as her primary employer. As Michelle only claims the tax free threshold from her job at the art gallery, this will be treated as her nomination of the art gallery as her primary employer. The art gallery is eligible for the JobKeeper Payment.

The art gallery will pass the JobKeeper Payment on to Michelle, so she will receive $1,500 per fortnight before tax. During the application process, the art gallery will notify the ATO that Michelle receives the payment from them. The art gallery is also required to advise Michelle that she has been nominated to the ATO as an eligible employee to receive the payment.

The café is not eligible to receive the JobKeeper Payment for Michelle. The income that Michelle receives from her job at the café does not change her entitlement to the JobKeeper Payment she receives from the art gallery.

Employee made redundant after 1 March

Miles worked as a permanent part-time personal trainer at a gym for six months and was made redundant on 20 March 2020 in response to the Government directive that gyms close. Miles was not entitled to redundancy pay due to his length of service.

In response to the announcement of the JobKeeper Payment, the gym decides they want to re-engage Miles so they are well placed to resume their operations once the Coronavirus restrictions are lifted.

After being made redundant, Miles had registered an intent to claim with Services Australia for access to the JobSeeker Payment and the Coronavirus Supplement. Miles is single, with no children and in total he would be eligible to receive $1,124.50 before tax per fortnight.

If Miles chooses to be re-hired by the gym, under the JobKeeper Payment he will receive $1,500 a fortnight before tax while he is stood down. Miles will need to advise Services Australia of his income. He is no longer eligible for the JobSeeker Payment and the Coronavirus Supplement from Services Australia as a result of receiving the JobKeeper Payment.

Employer with 5 employees who all currently get paid more than $1,500 per fortnight

Sara runs a landscaping company, and employs five full-time gardeners. Sara is paying her employees $1,700 per fortnight before tax. She expects that her turnover will decline by more than 30 per cent over the coming months and that she will either need to lay staff off, or reduce their wages significantly. As a result of the JobKeeper Payment, Sara will be able to keep employing every gardener, and only needs to pay the $200 wage cost per fortnight before tax per employee above the $1,500 per fortnight (before tax) JobKeeper Payment.

 

 

 

 

 

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