What is the JobKeeper Payment?
The JobKeeper Payment is a reimbursement scheme that will be paid by the ATO monthly in arrears.
Under the scheme, eligible businesses will receive a payment of $1,500 per fortnight per eligible employee and/or for one eligible business participant (i.e., an eligible sole trader, partner, company director or shareholder or trust beneficiary).
The subsidy will be paid for a maximum period of six months (i.e., from 30 March 2020 up until 27 September 2020). It will be paid to eligible businesses monthly in arrears, with the first payments to employers commencing from the first week of May 2020.
When is an employer eligible for JobKeeper?
When their businesses have faced a
- 30% fall in turnover (for an aggregated turnover of $1 billion or less)
- 50% fall in turnover (for an aggregated turnover of more than $1 billion), or
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
Establishing whether the projected GST turnover of a business has fallen or is likely to fall
Please see guideline and how to apply the turnover test by clicking on this link:
ATO – Basic Test
Identifying who is an ‘eligible employee’
An employee or business participant is eligible under the scheme if they:
Were either a:
- Permanent full-time or part-time employee on 1 March 2020
- Long-term casual employee (regular and systematic basis for at least 12 months) on 1 March 2020 AND are not a permanent employee of any other employer
- Were at least 16 years old on 1 March 2020;
- Were an Australian citizen, holding a permanent visa or special category visa on 1 March 2020;
- Were not receiving parental leave or workers’ compensation payments during a JobKeeper fortnight; and
- Agree to be nominated by their employer (see “Enrolment” section below).
Employers must pay eligible employees at least $1,500 per fortnight – the ‘wage condition’
Eligible employees must be paid at least $1,500 per fortnight as a gross “before-tax” payment and must continue to be paid this amount for as long as you are claiming payments under the scheme.
Employers must pay their employees the minimum payment before the end of the relevant JobKeeper payment fortnight in order for the employer to be eligible to receive the JobKeeper payment. However, the ATO have already exercised discretion to allow employers to make the minimum payment for the first two April fortnights by the end of April 2020.
An example of how the monthly in-arrears payments will be made from the ATO to employers is as follows:
|Payment Received||Amount per employee||For Fortnights Ended|
|May 2020||$3,000||12 April and 26 April|
|June 2020||$3,000||10 May and 24 May|
|July 2020||$3,000||7 June and 21 June|
|August 2020||$3,000||5 July and 19 July|
|September 2020||$4,500||2 August, 16 August and 30 August|
|October 2020||$3,000||13 September and 27 September|
Tax consequences of the JobKeeper Payment
All JobKeeper payments received by an employer will be assessable income. The normal deductibility rules also apply for JobKeeper payments made to employees as wages. This results in a nil income tax impact for the employer and the employee will pay tax on gross wages as per usual.
Superannuation on JobKeeper payment
The Government still intends to not require super guarantee to be paid on additional wages paid to employees where they usually receive less than $1,500 per fortnight.
These new rules are yet to be legislated and we will update you once we have received guidance. At this point, an employer’s superannuation obligations are summarised as follows:
|Employee’s Actual Wages||Subject to Super Guarantee|
|Usually $1,500 or more||Yes|
|Usually less than $1,500|
|– Normal wage||Yes|
|– Top-up wage||No|
|Not receiving any wage e.g. after being stood down||No|
Each month, you will need to reconfirm that your reported eligible employees have not changed through ATO online services, the Business Portal or via your registered tax agent. This will ensure you will continue to receive the JobKeeper payments from the ATO.
You do not need to retest your reported fall in turnover, but you will need to provide some information as to your current and projected turnover. This will be done in your monthly JobKeeper Declaration report.
Common questions associated with the JobKeeper Scheme:
1: Do businesses have to meet the decline in turnover test on an ongoing basis?
The answer is No. Whilst a business must satisfy the decline in turnover test in order to be entitled to a JobKeeper Payment, once it is satisfied, there is no requirement to retest in later JobKeeper Payment fortnights.
That is, the decline in turnover test only needs to be satisfied once. As a result, if a business can demonstrate that its turnover has been adversely impacted by at least 30% (or 50%, as the case may be), then it will continue to meet this requirement even if its turnover subsequently recovers in later JobKeeper fortnights.
2: What if a business’s turnover has not decreased (e.g., by 30%) but it is predicted to do so in the coming month?
An employer can apply for the JobKeeper Scheme where it is reasonably expected that its GST turnover will fall by 30% or more (or 50% where applicable) relative to its GST turnover in a corresponding period a year earlier. Treasury has advised that the ATO will provide guidance about self-assessment of actual and anticipated falls in turnover.
Additionally, if a business does not meet the decline in turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment at a later time, once the decline in turnover test has been met. However, in this case, the JobKeeper Payment will not be backdated to the commencement of the scheme, although businesses can receive JobKeeper Payments up to 27 September 2020.
3: Are employers required to continue to pay employees to qualify for the JobKeeper Payment?
The answer is Yes. Employers are required to satisfy the ‘wage condition’ in respect of an employee for the relevant JobKeeper fortnight in order to qualify for the JobKeeper Payment for that employee.
Broadly speaking, a payment under the scheme is meant to be a reimbursement to the employer of an amount already paid to an eligible employee (who is participating in the JobKeeper Scheme). Specifically, the ‘wage condition’ requires the employer to pay each eligible participating employee at least $1,500 for each JobKeeper fortnight, which can be represented by salary, wages, PAYG withholding, salary-sacrificed superannuation contributions and other amounts applied or dealt with on behalf of the employee (i.e., an add-back of any salary sacrificed in return for fringe benefits).
If employers have insufficient cashflow to make such payments, Treasury has encouraged such businesses to speak to their banks about using the upcoming JobKeeper Payment as ‘collateral’ to seek short-term finance to pay their employees.
4: Can employers select which of their eligible employees are covered by the JobKeeper Scheme?
The answer is No. Once an employer decides to participate in the JobKeeper Scheme, they must ensure that all of their eligible employees (who have agreed to be nominated for the scheme) participate in the scheme. This applies to all eligible employees (i.e., irrespective of whether they are still working for the employer or they have been stood down).
As the scheme is operated on an ‘one in, all in’ basis, employers cannot ‘pick and choose’ which eligible employees will be able to participate in the scheme.
5: Are employers required to deduct PAYG withholding from the amounts paid to employees?
The answer is Yes.
6: Can a sole trader who has employees also qualify for the JobKeeper Payment?
The answer is Yes. On the basis that the sole trader’s business has satisfied all the other requirements to qualify for the JobKeeper Payment, a sole trader can qualify for the JobKeeper Payment in relation to their eligible employees and also qualify for the JobKeeper Payment themselves (i.e., in their own capacity) as an eligible business participant.
In order words, a sole trader’s entitlement to the JobKeeper Payment as an eligible business participant arises independently of their entitlement to the JobKeeper Payment in respect of their employees. Therefore, whether a sole trader has any employees or not will not impact on their ability to personally qualify for the JobKeeper Payment.