JobKeeper Payment: What you need to Know

These Government announcements just keep on coming!

PLEASE NOTE - UPDATED 13th APRIL 2020 - Legislation came out from Treasury on Thursday 9th April which includes giving the ATO Commissioner the ability to apply his discretion. The ATO is responsible for administering the law. Given the 'discretion' we are awaiting the ATO's guidance on how they will administer the JobKeeper legislation, this is important! We are hoping this will be provided during the week of April 13th and will give some clarity to the turnover calculations.

Businesses significantly impacted by the coronavirus outbreak will be able to access a subsidy from the Government to continue paying their employees. THIS INCLUDES SELF-EMPLOYED!!

This assistance will help businesses to keep people in their jobs and re-start when the crisis is over. For employees, this means they can keep their job and earn an income – even if their hours have been cut.

The Government will provide $1,500 per fortnight per employee for up to 6 months.

Need to have a chat? We are business as usual, despite we are all working from home, so we are available via Zoom or phone to discuss:

Your business continuity plan to get you through this time such as
- How do pay your bills in the short term if your sales start to dry up
- How to communicate in a reassuring way with your clients and customers
- How to keep things moving with your business

We’re not suggesting in any way that we have all the answers, but it is important for us to work with you and help you and plan for what will happen in the weeks and months ahead. Contact us TODAY on (03) 5911 7000 to book in a complimentary 30 minute business continuity plan online meeting so we can discuss your business situation and make plans to assist you.

Please note - Any assistance in relation to the economic stimulus is considered tax planning and will require analysis on our side of your personal situation. We will provide a proposal for fees for these services.

In Summary

EMPLOYERS - WHAT DO YOU NEED TO DO?
To receive the JobKeeper Payment, employers must:

Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline.
Provide information to the ATO on eligible employees. This includes information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). For employees that were already receiving this amount from the employer then their income will not change. For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax. And for those employees earning more than this amount, the employer is able to provide them with a top-up.
Notify all eligible employees that they are receiving the JobKeeper Payment.
Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.

SOLE TRADERS / SELF EMPLOYED - WHAT DO YOU NEED TO DO?

To receive the JobKeeper Payment, employers must:

Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline.
Provide information to the ATO on your business. This includes your ABN for your business, nominate yourself (individual) to receive the payment and provide your Individual Tax File Number and provide a declaration as to recent business activity.
Continue to provide information to the ATO on a monthly basis, declaring your continued eligibility for the payments.

Payment will be made monthly to the individual’s bank account or the entities bank account if self-employed.

To read all the details in our UPDATED BLOG (as at 13th April 2020) click here

In Detail for Businesses with Employees

AM I AN ELIGIBLE EMPLOYER?
Eligible employers are those employers (including non-profit entities) with:

Turnover below $1bn (if part of a group for income tax purposes, then group turnover below $1bn) that have experienced a reduction in turnover of 30% or more relative to a comparable period 12 months ago (of at least a month); or
Turnover of $1bn or more that have experienced a reduction in turnover of 50% or more relative to a comparable period 12 months ago (of at least a month); and
Are not subject to the Major Bank Levy.

Charities that are registered with the ACNC are subject to slightly different rules which look at whether they have experienced a drop in turnover of at least 15%.

Government entities (including wholly owned corporations) at Federal, State, Territory, and local councils are not eligible. Foreign governments and their agencies are also not eligible. Companies in liquidation or a partnership, trust or sole trader in bankruptcy, do not qualify.

See Calculating a reduction in turnover below

ARE MY EMPLOYEES ELIGIBLE?

Eligible employees are employees who:

Were employed by the relevant employer at 1 March 2020; and
Are currently employed by the employer (including those who have been stood down or re-hired); and
Are full time, part-time, or long-term casuals (a casual employee employed on a regular and systematic basis for 12 months as at 1 March 2020); and
Were at least 16 years of age at 1 March 2020; and
Were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020; and
Were a resident of Australia for tax purposes on 1 March 2020; and
Are not in receipt of a JobKeeper Payment from another employer.

Employees on parental leave are not able to access the JobKeeper payment if they are receiving Government Paid Parental Leave or Dad and Partner Pay. If they are not receiving these payments they are eligible for JobKeeper payments if they meet the eligibility criteria. An employee will not be eligible if they are receiving support under a workers compensation scheme.

If you employ apprentices or trainees eligible for the 50% wage subsidy, you can potentially receive this subsidy up to 31 March 2020 and then the JobKeeper payment from 1 April 2020 onwards. Where a small business is eligible for the JobKeeper payment they cannot receive the apprentice and trainee wage subsidy from 1 April 2020.

SOLE TRADERS AND SELF-EMPLOYED

Sole traders and the self-employed with an ABN will be eligible for the payment if the following conditions are met:

Their turnover has or will fall by 30% or more;
They had an ABN on or before 12 March 2020;
They had some income in the 2018-19 income year or made some supplies between 1 July 2018 and 12 March 2020 and provided a 2019 tax return or certain activity statements to the ATO by 12 March 2020;
They were actively engaged in the business;
They are not entitled to another JobKeeper Payment;
They were aged at least 16 years of age as at 1 March 2020; and
They were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020.

Where the business is operated as a partnership, company or trust the entity can receive JobKeeper payments in relation to one nominated partner, beneficiary, director or shareholder who works in the business.

CALCULATING A REDUCTION IN TURNOVER

Now this is the challenging part for some businesses - stay tuned for our JobKeeper Webinar on Thursday April 16th as we will also provide a checklist and example template

To access the JobKeeper payment, you need to establish that the turnover of your business has reduced by 30% or more (or 50%). Most businesses will be expected to establish that their turnover has fallen in the relevant month or three month period compared with the same period from the previous year. Turnover for the JobKeeper payment is assessed in the same way as turnover for GST purposes. This means that most sales that are connected with Australia will be taken into account, although input taxed supplies such as residential rental income, interest income, dividends etc will be ignored. Where a business was not in operation a year earlier, or where turnover a year earlier was not representative of the usual or average turnover, it is expected that the ATO will have some discretion to consider additional information that the business can provide to establish that it has been adversely affected by the impacts of COVID-19. The ATO will also have discretion to set out alternative tests that would establish eligibility in specific circumstances.

HOW THE SUPPORT IS CALCULATED

The ATO will administer this program and will make the $1,500 payments based on payroll information (through single touch payroll). The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria. The payment is intended to reimburse the employer for amounts that have already been paid to employees.

JobKeeper employers must, as a minimum, pay the full JobKeeper amount to employees even if the employee is normally paid less than the JobKeeper amount (failing to do so or deliberately misusing the payment may incur penalties of up to $126,000).

That is, the rules require an employer who is eligible for the JobKeeper scheme to ensure the total amount payable to a particular employee in respect of a fortnight is at least the greater of:

The amount of the JobKeeper payment for the employee (i.e., $1,500 per fortnight before tax); or
The amount payable to the employee for the performance of work during that fortnight.

The business will continue to receive the payments for eligible employees while they are eligible for the payments. While the program runs until 27 September 2020, payments will stop if the employee is no longer employed by the relevant employer.

HOW DOES MY BUSINESS APPLY?

Initially, employers can register their interest in applying for the JobKeeper Payment via The Australian Taxation Office (ATO) from 30 March 2020. Subsequently, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.

WHAT ARE MY COMPLIANCE OBLIGATIONS?

Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO.
Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.

DO I NEED TO PAY SUPERANNUATION AND WITHHOLD TAXES?
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment. It is not compulsory.

The JobKeeper Payment is a "subsidy" before tax, and therefore if any applicable, taxes may be withheld.

HOW DOES MY BUSINESS GET PAID?

Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.

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

WHEN WILL THE SUBSIDY START?
The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May. Businesses will be able to register their interest in participating in the Payment from 30 March 2020 on the ATO website.

HOW TO MANAGE THE PROCESS YOURSELF:
1. Register

Applications are not yet open. However, you should register your intent to apply for the JobKeeper subsidy with the ATO (here). The ATO will provide you with regular updates and advise you when you can lodge your application

2. Assess turnover

Ensure you have an accurate record of your revenue for the 2018-19 income year and for the 2019-20 year to date
Ensure you keep an accurate record of revenue from March 2020 onwards
Compare your revenue for the whole of March 2019 with the whole of March 2020
Measure the % decline in your revenue and ensure it has declined by more than 30%
If you are not eligible in March, you may become eligible in another month

3. Identify eligible employees

Nominate the employees eligible for the JobKeeper payments – you will need to provide this information to the ATO and keep that information up to date each month. The ATO will use Single Touch Payroll to prepopulate the information in most cases.
Notify all eligible employees that they are receiving a JobKeeper payment. Employees can only be registered with one employer.
Pay eligible employees at least $1,500 per fortnight (before tax). If an employee normally receives $1,500 or more per fortnight before tax the employee should continue to receive not less than $1,500 (before tax).
Pay superannuation guarantee on normal salary and wages amounts paid to employees. If the employee normally receives less than $1,500 per fortnight before tax, the employer can decide whether to pay superannuation on the additional amount that is paid as a result of the JobKeeper program.

HOW WILL IT WORK IN MY SOFTWARE?
At this stage I have only heard of Xero is updating their software to accommodate ease of processing, read more here . MYOB has not released anything yet that I am aware of, however a user has posted a workaround option on their community pages

PLEASE NOTE - THE DEVIL IS IN THE DETAIL SO PLEASE JOIN US FOR OUR WEBINAR ON THURSDAY 16TH APRIL, SEE OUR EVENTS PAGE. WE WILL ALSO INCLUDE A RECORDING.

Government Information on the JobKeeper Payment

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