The $130 billion JobKeeper program announced by the Government will assist those businesses impacted by the Coronavirus.
The payment is a wages subsidy to help businesses continue to pay their employees.
Under the JobKeeper program employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020 for a maximum period of 6 months.
Payments will start being received the first week of May via the ATO and will be paid in arrears.
The intent of the program is to help businesses hold onto their staff in order to be ready to restart their businesses when this crisis is over.
More details will follow over the coming days which we will keep you abreast of but below is an outline of what we know so far and what needs to be done to get access to the program.
Generally, an employer will be eligible for the wage subsidy if their business’ turnover is less than $1 billion and their turnover has fallen by more than 30% of at least a month. Note, there are further requirements for those businesses with a turnover of greater than $1 billion and the business must not be subject to the Major Bank Levy.
Below is an extract from the Treasury Fact Sheet outlining how a business can establish the required fall in turnover:
“To establish that a business has faced either a 30 per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier. Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.”
A further requirement is that the employer must have been in an employment relationship with eligible employees as at 1 March 2020 and confirm that each eligible employee is currently engaged with the business.
Not-for-profit entities and self-employed individuals (businesses without employees) will also be eligible for the subsidy where the turnover tests are met.
Employees that will be classified as eligible for the wages subsidy are employees who:
- are currently employed by the eligible employer (including those stood down or re-hired);
- were employed by the employer as at 1 March 2020;
- are full-time, part-time, or long-term casuals;
- are at least 16 years of age;
- are an Australian citizen or hold a relevant visa; and
- are not in receipt of a JobKeeper payment from another employer.
To commence the application process you can register your interest with the Australian Taxation Office (ATO):
It is understood that once the system is in place employers will be able to apply online with payments commencing the first week of May 2020.
Employers will be required to provide monthly updates to the ATO to confirm the status of eligible employees.
Employers will be legally obligated to pass on the JobKeeper payments to employees, ensuring that they receive $1,500 per fortnight before tax.
For employees that already receive $1,500 or more in income per fortnight, their income will not change. As an employer you will continue to pay them their regular wage and the $1,500 will help subsidise part of this cost.
For employees that have been receiving less than this amount per fortnight, as an employer you will need to top up their fortnightly pay to ensure they are in receipt of $1,500 per fortnight before tax.
For employees that have been stood down, as an employer you must pay, at a minimum, $1,500 per fortnight to these employees that you are receiving JobKeeper payments for.
Businesses without Employees
It is understood that self-employed people through their company and trust structures will be eligible for the program as businesses without employees. These businesses will also need to register their interest with the ATO (link above).
Businesses will need to provide an ABN and nominate an individual to receive the payment. There will be some form of declaration to be completed to support recent business activity.
In line with updates to the ATO by Employers, self-employed people will need to provide a monthly update to the ATO regarding their eligibility.
We will provide more information as it comes to hand and we are here to help with questions regarding your eligibility and getting you registered to ensure you are positioned to access what you are entitled to.
For assistance please contact your Davidsons team member direct or call our office on 03 5221 6399 or email firstname.lastname@example.org to be put in contact with a specialist that can help.
We are here to help you, your business and your family. Stay well.