JobKeeper Update 29 April

Please see below for a JobKeeper update, including

  • Extension of time to enrol
  • Due date for April payments to employees
  • Accounting for JobKeeper payments (including for ‘eligible
  • ATO enrolment and reporting requirements
  • Pay cycles and JobKeeper
  • PAYG withholding tax on wages, superannuation and payslips
  • Scenario if unsure you will be eligible for JobKeeper but are paying staff in April

Extension of time to enrol for the JobKeeper scheme

The ATO has extended the time to enrol to receive April JobKeeper payments to 31 May 2020.

If you enrol by 31 May you will still be able to claim for the fortnights in April and May, provided you meet all the eligibility requirements for each of those fortnights. This includes having paid your employees by the appropriate date for each fortnight.

Due Date for Payments to Employees for April JobKeeper Payments

For the first two fortnights (30 March – 12 April, 13 April – 26 April), you must pay staff the minimum $1,500 per fortnight by 8 May 2020.

If you do not pay your staff by 8 May you will not be able to claim JobKeeper for the first two fortnights.

Accounting for JobKeeper Payments

Receipt of Funds from ATO

These funds should be allocated to an ‘Other Income’ revenue account. The GST coding is GST free. JobKeeper receipts are included in the total revenue figure in your profit and loss statement for tax calculations.

JobKeeper Payments to Employees

These payments are wages and should either be allocated to the ‘Wages Payable’ liability account if you are using a payroll system in your accounting package or coded to the ‘Wages’ expense account if you don’t use a payroll system. GST coding is ‘BAS Excluded’.

Note that the payments will appear in the Profit and Loss statement as expenses, categorised as wages (or similar depending on your accounting setup).

JobKeeper Payments to ‘Eligible Business Participants’ (Directors, partners, trust beneficiaries, sole traders)

These payments should not be allocated to the wages or wages payable accounts because the eligible business participant is not an employee. They should be allocated to the account you have previously used for payments to the eligible business participant (eg. drawings).

The eligible business participant does not need to be set up as an employee in the payroll system for JobKeeper purposes.

Maintaining Employee Details with the ATO

The ATO need employee details for all who are receiving JobKeeper payments and this can be provided through single-touch-payroll software with JobKeeper settings (eg. Xero) or through the business portal.

Note that this doesn’t apply to eligible business participants. If you have an eligible business participant, remember not to include them as an employee.

If you have single-touch-payroll software with JobKeeper settings the ATO are requesting employee details by 30 April, even though the JobKeeper enrolment period has been extended to 31 May. The ATO may update this but at this stage you should stick to 30 April unless you are unsure if you are going to register.

Alternatively, you can provide details through the business portal from 4 May. No required completion date has been given to provide this information.

Monthly declarations

Each month, you must make a monthly declaration with the ATO to reconfirm the eligibility of your business and the number of your eligible employees. The declaration requires you to

  • update your eligible employees if any of your eligible employees change or leave your employment.
  • provide your current and projected GST turnover
  • re-confirm your contact and bank details for payment.

The turnover information is not a retest of your eligibility, but rather an indication of how your business is progressing under the JobKeeper Payment scheme.

You can make the monthly declaration through the business portal or I can do this for you. As per the JobKeeper enrolments, I will be employing an administrative assistant to help with this and the monthly cost is $32.50 plus GST. Please let me know if you want me to do this for you.

JobKeeper Fortnight Periods and Your Regular Pay Cycle

The JobKeeper payments fall into fortnightly periods. The table on this link shows the JobKeeper fortnight that relates to your regular pay cycle.

You do not need to change your pay cycle or pay dates to match the JobKeeper fortnights.

JobKeeper Payments and PAYG Withholding Tax on Wages

JobKeeper payments are subject to PAYG Withholding Tax on Wages. If you are using a payroll system, the payg should be calculated by the system.

Employee Payroll Processing Depending on Earnings and Superannuation

If you are using a payroll system, your employee payslips will need to include details of normal earnings and JobKeeper payments. The payslip details for various scenarios are below, along with details of what superannuation applies.

Employee remains employed and standard pay is more than $1500 a fortnight

Payslip should contain normal pay item for ordinary hours. Standard superannuation and leave will apply.

Employee remains employed and standard pay is less than $1500 a fortnight,

Payslip should contain

  1. the employee’s normal pay item for ordinary hours, which is subject to superannuation and will accrue leave, and
  2. JobKeeper payment top up pay itemwith a fixed amount to bring gross pay up to $1,500 for the fortnight. This top up pay is only subject to superannuation if the company chooses to pay the contribution

Employee is stood-down and earns nothing

Payslip should contain

  1. stand-down pay itemwith standard hours hours and a zero pay rate. The standard hours will accrue leave as normal, and
  2. JobKeeper payment top up pay itemwith a fixed amount of $1500, which is only subject to superannuation if the company chooses to pay the contribution.

Employee earns less than $1500 a fortnight, and is partially stood down
Payslip should contain:

  1. The employee’s normal pay item with the reduced hours. These hours will accrue leave and the related payment is subject to superannation,
  2. stand-down pay itemwith the hours to make up the pre-stand down full hours and a zero rate, which will accrue leave as normal, and
  3. JobKeeper payment top up pay itemwith a fixed amount to bring total pay up to $1,500 per fortnight. This is only subject to superannuation if the company chooses to pay the contribution

What to do if you haven’t yet registered for JobKeeper because you are not sure if you will meet the 30% revenue decline test but have made wage payments for April

If your employees are receiving more than $1,500 per fortnight, you don’t need to make any changes in how they are paid.

If your employees are receiving less than $1,500 per fortnight, in order to receive JobKeeper payments for April you will have to pay them a total of $1,500 per fortnight for April ‘JobKeeper fortnights’ by 8th May. If you end up being ineligible for JobKeeper, you will be out of pocket for the difference between their standard pay and the amount paid to bring them up to $1,500.

Eg. Bill normally earns $1,000 per fortnight. You think you will get JobKeeper but are not sure by the 8th of May, so you need to pay Bill another $500 per fortnight for both April fortnights. It ends up you are ineligible for JobKeeper so you are out of pocket by the $500 per fortnight you have paid Bill. The extra $1,000 is a wage expense subject to payg withholding and superannuation and will appear as an expense on your Profit and Loss statement.

Your alternative would be to enrol in JobKeeper to receive payments from May. In this situation you wouldn’t risk being out of pocket.

For enrolment purposes, you have until 31 May to register and you will have to provide employee details through the business portal rather than single touch payroll software (unless the ATO extends to date for reporting through single touch payroll software).

 

 

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