The bill supporting the JobKeeper scheme was passed in parliament on April 8 (and 9!), and the ATO has formulated the specific requirements for administering the scheme, so we now know a lot more than we did when JobKeeper was first announced at the end of March. JobKeeper will provide $1,500 per fortnight, per eligible employee for up to 6 months beginning 30 March.
Participating in JobKeeper may seem like a fairly straightforward process for employers but in reality there are some traps that could lead to employers being out of pocket when they thought JobKeeper would cover the payments made to employees. Let’s go through the basics of eligibility and registration for JobKeeper first. Please note that this information has been tailored to be relevant to our clients, and so some aspects of the eligibility and administration of the scheme have been omitted.
ELIGIBILITY FOR BUSINESSES
Employers will be eligible for the JobKeeper payment if all of the following apply:
• On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
• You employed at least one eligible employee on 1 March 2020.
• Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).
• Your business has faced a 30% fall in turnover (for an aggregated turnover of $1 billion or less).
• Your business is not in one of the ineligible categories (e.g. a bankrupt or a company in liquidation).
Sole traders can also be eligible for JobKeeper if they meet the decline in turnover criteria, as can business owners who are not on the payroll such as trust beneficiaries, company directors and shareholders who are active in the business. Where there are multiple business owners, eligibility for JobKeeper is limited to one individual.
You only need to satisfy the turnover requirement once to become eligible, and can use a projected turnover to do so. That means that you can become eligible from the start date (30 March) even if your March turnover is not down 30% compared to last year, so long as your projected April turnover is down 30% compared to last year. With the exception of the month of April, you cannot backdate JobKeeper so it is important to make the correct decisions about assessing turnover monthly vs quarterly, and actual vs projected.
ELIGIBILITY FOR EMPLOYEES
A business’ employees are eligible provided that they;
• Are currently employed by the business (including stood down).
• Were either a;
o Permanent full-time or part-time employee at 1 March 2020.
o Long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer.
• Were aged 16 or older at 1 March 2020.
• Were either;
o An Australian resident (within the meaning of the Social Security Act 1991) – visit the Services Australia website and read residence descriptions.
o An Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as at 1 March 2020.
• Were not in receipt of any of these payments during the JobKeeper fortnight;
o Government parental leave or Dad and partner pay under the Paid Parental Leave Act 2010.
o A payment in accordance with Australian worker compensation law for an individual’s total incapacity for work.
JobKeeper is a ‘one in, all in’ scheme which means that employers who participate must nominate all eligible employees. Employers must provide eligible employees with a JobKeeper Employee Nomination Notice, and employees must return the completed notice to their employer by the end of the first fortnight for which the employer intends to claim JobKeeper. The notice does not need to be provided to the ATO.
Eligible businesses must register for JobKeeper via the ATO’s Business Portal or Tax Agent Portal. This requires an eligible business owner or director to have a myGovID linked to the business’ ABN. Please note that due to what must be one of the most spectacular failures of bureaucracy in world history, myGovID is not the same thing as myGov! If you have a myGov user name and password that you use to access your personal Centrelink, ATO and super details it will not give you the required access to apply for JobKeeper. You will need to go to www.mygovid.gov.au to create your myGovID and link it to your business. Alternatively, as your tax agent ID Accounting & Wealth Solutions will be able to manage the JobKeeper application process on your behalf.
• JobKeeper payments to employers are made in arrears, and will only be paid if the employees have already been paid at least $1,500 per fortnight. That means that employers need to fund JobKeeper out of their own pockets until they are reimbursed by the ATO. It also means that employees who ordinarily earn less than $1,500 per fortnight must be paid $1,500 or the employer will not be reimbursed. If you don’t pay your staff at least $1,500 each (before tax) per fortnight for the periods ending 12 April and 26 April, by 26 April, then your business will NOT be eligible for JobKeeper payments for that period. If you normally pay your employees monthly then they must receive the monthly equivalent of $1,500 per fortnight.
• If an employee fraudulently or incorrectly nominates to receive JobKeeper where they are not eligible (for example, they nominate twice), both the employee and the employer can be held liable for repayment of any JobKeeper incorrectly paid – even though it would not be the employer’s fault! It is therefore important for employers to protect themselves and ask relevant questions of the employees if they have reason to believe that employee is not eligible for JobKeeper through their business.
• Superannuation is only payable on “earned” payments, so if your staff receive JobKeeper but you have stood them down and they are not working then there is no requirement to pay their super. If they work a little bit then you must calculate the super based on the hours they have worked at their normal rate of pay.
• Other states (WA and SA) have announced that JobKeeper is exempt from payroll tax, so we assume that the Victorian State Revenue Office will follow suit but to date in Victoria, there has not been an announcement regarding JobKeeper and payroll tax.
As the readers of this article would appreciate, this is a constantly changing landscape. At ID Accounting & Wealth Solutions we are working hard to keep our team informed and up-to-date regarding JobKeeper and other stimulus measures. More information is contained in the attached document from Tax & Super Australia, and on the ATOs website at http://www.ato.gov.au/general/jobkeeper-payment. We encourage you to contact us with JobKeeper questions, and we are committed to providing assistance with understanding and implementing JobKeeper for our clients. Please contact us as soon as possible to discuss JobKeeper issues that may affect your business.
Please follow the below link to view the JobKeeper Rules:
Tax & Super Australia JobKeeper