What is the JobKeeper Payment?
The JobKeeper payment is a wage subsidy offered to employers and business owners to assist with the financial impact of coronavirus. The measure is intended to keep people employed by providing employers with support to continue paying their employees.
The JobKeeper scheme commences on 30 March 2020 and ends on 27 September 2020. This is a period of 26 weeks reflecting that it is a temporary measure for a limited period.
How often will JobKeeper payments be made?
JobKeeper payments will be made in respect of fortnightly periods, known as a JobKeeper fortnight, commencing on 30 March 2020.
The scheme operates on a prospective basis meaning that entitlement only arises for those JobKeeper fortnights in which employers are registered under the scheme prior to the end of a JobKeeper fortnight.
Once satisfied that an entity is entitled to the JobKeeper payments the Commissioner must pay $1,500 for each eligible employee or individual business participant no later than either 14 days after the end of the calendar month in which the fortnight ends or 14 days after the Commissioner is satisfied that the entity is entitled to the payment for the fortnight. This means that the payment will be made by the Commissioner monthly.
Does an employer need to register to receive JobKeeper payments?
Yes. The JobKeeper scheme requires an employer to actively seek to participate in the scheme. Registration must be completed using an approved form from the Commissioner which will be available from 20 April 2020. The election needs to be provided before the end of a JobKeeper fortnight for the employer to be entitled to a payment for that fortnight.
What are the transitional rules for JobKeeper fortnights during the month of April 2020?
Whilst employers will only be entitled to JobKeeper payments from the fortnight in which they are registered, for the month of April 2020 employers who register prior to the end of April will be entitled to the JobKeeper payments for the two JobKeeper fortnights commencing from 30 March 2020. Entitlement will be on the basis that the employer meets the eligibility criteria to qualify for the payments.
For all subsequent JobKeeper fortnights the employer will need to notify the Commissioner of their intention to participate before the end of the particular fortnight.
What is a JobKeeper fortnight?
The first fortnight is the fortnight beginning on 30 March 2020; and
each subsequent fortnight, ending with the fortnight ending on 27 September 2020.
What JobKeeper payments will an Employer be entitled to?
An Employer will be entitled to be paid a JobKeeper payment in a fortnight if:
- The fortnight is a JobKeeper fortnight;
- The employer qualifies for the scheme on or before the end of the fortnight;
- The payment is for an eligible employee;
- The employer satisfied the wage condition by making payments to the eligible employees; and
- The employer has notified the Commissioner of the relevant information
How does an Employer qualify for the JobKeeper scheme?
To qualify for the scheme an employer must satisfy the following requirements:
- On 1 March 2020 it carried on a business in Australia or was a non-profit body pursuing its objectives principally in Australia;
- Before the end of the fortnight it met the decline in turnover test; and
- Not be subject to the Major Bank Levy, not a government body or be subject to a liquidation, administration or bankruptcy action during the relevant fortnight.
What if the business or non-profit body ceased activities before 1 March 2020 or commenced after 1 March 2020?
An employer that was not carrying on a business in Australia or was not a non-profit body pursuing its objectives principally in Australia on 1 March 2020 due to ceasing before that date or commencing after that date is not a qualifying employer for the purposes of the JobKeeper scheme.
How much does turnover need to decline by?
A business will satisfy the turnover test where the shortfall in its turnover between the comparable periods is 30 percent or more. This test applies to businesses with a turnover of less than $1 billion.
Larger businesses need to have a greater decline in turnover to satisfy the turnover test with the shortfall in turnover needing to be 50 percent or more.
An entity that is an ACNC-registered charity only needs to demonstrate a shortfall of 15 percent, however, certain ACNC-registered charities that are public or private universities or schools or other non-profit bodies do not qualify for this lower shortfall test.
For the purposes of establishing the turnover threshold for small versus large businesses it is an entity’s aggregated turnover that must be used which includes the entity’s annual turnover along with any other businesses connected with the entity or the entity’s affiliates.
How is the turnover test applied?
There are two ways in which a business can satisfy the decline in turnover test. These are the basic test and the alternative test.
The basic decline in turnover test works by comparing the projected GST turnover of the entity for a period (the turnover test period) with its current GST turnover as calculated for a relevant comparison period (the comparison turnover).
In effect this compares a month or quarter in the period the JobKeeper scheme applies with the corresponding period in 2019.
A small business will generally satisfy the test where the GST turnover in the turnover test period falls short of the comparison turnover and the shortfall is 30 percent or more.
The periods being compared by can be periods of one or three months, where:
- If a one-month turnover test period is being used, it must be one of the following months;
- March, April, May, June, July, August or September 2020
- If a three-month period is being used it must be one of the following periods:
- The quarter that starts on 1 April 2020 or the quarter that starts on 1 July 2020
What this means is that a business can make the comparison by comparing the whole of the month of March 2020 with March 2019 or by comparing the quarter beginning 1 April 2020 with the quarter beginning 1 April 2019.
It is important to note that the choice as to how you project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS but you can choose to use your BAS reporting period if it is easier to do so.
The alternative test will apply where there is not an appropriate relevant comparison period in 2019. This test would apply to new businesses started prior to 1 March 2020 or for businesses that have had substantial changes to their operations through activities such as a major business acquisition in 2020. In essence the alternative test exists for situations where the basic test may not accurately reflect the downturn in activity that the business has suffered.
To apply the alternative test the Commissioner must be satisfied that there is no comparable period or that the comparison period is not appropriate and upon being satisfied, the Commissioner may determine an alternative decline in turnover test for the specific business or class of entities to apply. Once the alternative test has been set by the Commissioner, the entity will need to provide appropriate evidence to the Commissioner that satisfies the alternative test.
What is projected GST turnover?
Your projected GST turnover must include the value of all supplies that you have made or are likely to make in a period. A supply is likely to be made where, on the balance of probabilities, it can be predicted that the supply is more likely than not to be made. The likelihood of a supply being made must be based on a reasonable expectation and considered in the context of the facts and circumstances of a particular business.
For ACNC-registered charities and gift deductible recipients’ certain donations must be included in the calculation to work out the current GST turnover and projected GST turnover for the entity.
Do I have to continue to meet the decline in turnover test?
No. Once an entity satisfies the decline in turnover test there is no requirement to retest in later months.
There will be however ongoing monthly reporting obligations whereby the entity must notify the Commissioner of its current GST turnover for the reporting month and projected GST turnover for the following month. Reporting of this data is intended to ensure there is good information on which to assess the economic impact of the coronavirus on a monthly basis across Australia and it is stated that this information will not impact ongoing eligibility requirements of the entity. We are awaiting the approved form for reporting of this information that will be required within 7 days of the end of each reporting month.
What if I don’t pass the decline in turnover test for April 2020?
If an entity does not qualify for the month of April 2020 because its turnover has not been sufficiently affected, it can test in later months. This allows entities that only become affected part way through the six-month period of operation to continue to monitor for any decline until they qualify for the scheme in a later period.
Who is an eligible employee?
An eligible employee of an employer for a JobKeeper fortnight is a person who satisfies the relevant criteria at two specific points in time.
The first set of criteria must be met at 1 March 2020 to ensure that the JobKeeper payments are limited to employees who were employed by the entity before any impact of coronavirus was experienced. An employee who satisfies the following will be an eligible employee as at 1 March 2020:
- The person was 16 years or over;
- The person was employed other than as a casual employee of the employer or if employed as a casual was so for a period of greater than 12 months prior to 1 March 2020;
- The person was an Australian resident or was a resident of Australia for tax purposes and holds a Subclass 444 (Special category) visa.
The second set of criteria must be met at any time in a relevant JobKeeper fortnight by each eligible employee.
- The person is an employee of the employer;
- The person is not excluded from being an eligible employee, meaning they are not a recipient of parental leave pay or workers compensation.
In addition to the above criteria the eligible employee must have provided a notice to their employer agreeing:
- To be nominated by the employer as an eligible employee
- Confirming they have not agreed to be nominated by another employer
- They do not have permanent employment with another employer if they are employed as a casual with this employer.
The ATO have published an employee nomination form that will assist with the notification and confirmation process between the employer and employee.
One form per employee should be completed before the end of April for employers wanting to claim the JobKeeper payment for the month of April. All completed forms should be kept on file for future record keeping purposes.
Can an employee have multiple employment and be an eligible employee of one employer?
Individuals can have more than one full time or part time job and can choose which employer they would like to nominate for the JobKeeper scheme. This is also the case for long term casuals.
It is important to note that casual employees cannot nominate with an employer if they have permanent employment with another employer. This prevents an individual from nominating a secondary, casual employment position if their primary employment is unaffected.
Can an employee nominate a different employer?
No, once an employee has nominated an employer and the employer has received JobKeeper payments in respect of the employee that have been paid to the employee then the employee cannot nominate a different employer.
If for any reason the employment relationship ends the employee will not be able to have another employer qualify for the JobKeeper payments in respect of their new employment.
Further, if an employee has nominated more than one employer to receive the JobKeeper payment, the employee will not satisfy the nomination requirements and will not be an eligible employee for either employers.
What is the ‘one in all in rule’ for employees?
Once an employer decides to participate in the JobKeeper scheme and their eligible employees, in line with the eligible employee criteria, have agreed to be nominated by the employer, all of the employees must be covered in the scheme. This includes all eligible employees who are undertaking work for the employer or who have been stood down. The employer cannot select which eligible employees participate in the scheme and which don’t. It is one in, all in.
What are the wage conditions that an employer must meet?
The basic wage condition is that an employer pay each participating employee at least $1,500 for each JobKeeper fortnight. This requirement applies regardless of whether the employee ordinarily receives more or less than that amount. For example, if an employee:
- ordinarily receives $1,500 or more in income per fortnight before PAYG withholding and other salary sacrificed amounts, and their employment arrangements do not change they will continue to receive their regular income according to their workplace arrangements. The JobKeeper payment will assist the employer to continue operating by subsidising all or part of the income of the employee;
- ordinarily receives less than $1,500 in income per fortnight before PAYG withholding and other salary sacrificed amounts, the employer must pay the employee at least $1,500 per fortnight, subject to PAYG withholding and other salary sacrificed amounts to the value of $1,500;
- has been stood down, the employer must pay the employee at least $1,500 per fortnight, before PAYG withholding and other salary sacrificed amounts to the value of $1,500; or
- was employed on 1 March 2020, subsequently ceased employment with the employer, and then has been rehired by the same eligible employer, the employer must pay the employee at least $1,500 per fortnight, before PAYG withholding and other salary sacrificed amounts to the value of $1,500.
Do payments need to be made to employees fortnightly?
No. If an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly, for example monthly, then the payment can be allocated between fortnights in a reasonable manner.
Importantly, for the first two fortnights (30 march – 12 April and 13 April – 26 April) the ATO will accept the minimum $1,500 payment before tax has been paid for each fortnight even it is paid late, provided that it is paid by the end of April 2020.
What information on eligible employees must be provided?
The employer must provide requested information to the Commissioner in an approved form to be entitled to a JobKeeper payment in a fortnight. This information will include details of each eligible employee and other information about their entitlement including name, type of employment and residency status.
Once information has been provided there is no need for further information to be provided to the Commissioner on a fortnightly basis unless there are changes to the status of the eligible employees.
Upon providing information to the Commissioner the employer must also provide information to the eligible employees to keep them informed of the process. This must be done within 7 days of providing the information to the Commissioner.
Are business owners entitled to the JobKeeper payment?
Where business owners were registered as employees of their business on 1 March 2020, they will be eligible to the JobKeeper payment as an employee assuming the relevant eligibility criteria are met.
Where business owners were not registered as employees, entitlement to the JobKeeper payment as a business participant is available and operates similarly to entitlement to the payment as an employer where the business itself qualifies for the JobKeeper scheme within a JobKeeper fortnight.
What criteria must a business participant meet to receive the JobKeeper payment?
The entity must notify the Commissioner of its election and nominate an individual to receive the JobKeeper payment. The nomination must be limited to one individual and each individual can only create an entitlement from one entity. This prevents one individual from claiming the JobKeeper payment from multiple entities. Further guidance on the nomination process will be provided by the ATO in the coming weeks.
The JobKeeper payment for business owners is intended to support active businesses only so the entity must not be a non-profit entity and it must have held an ABN on 12 March 2020. The Commissioner has some discretion for the ABN to be held at a later date but it will be applied in limited circumstances on a case by case basis.
In addition to having an ABN it is a requirement that the entity has declared business income in its 2019 income tax return and has made a taxable supply in a tax period that started on or after 1 July 2018 and ended before 12 March 2020 that the Commissioner has been notified of by way of lodgement on or before 12 March 2020 or at a later time allowed by the Commissioner.
The ATO have advised that they will provide more information on eligibility in the coming weeks for business owners.
Who are eligible business participants?
An individual will be an eligible business participant where they:
- are not employed by the business at any time in the fortnight
- satisfy the business participation requirements at any time in the fortnight
- satisfy the 1 March 2020 requirements
- satisfy the nomination requirements
What are the business participation requirements for a business participant?
At any time in the fortnight the individual nominated must be actively engaged in the business carried on by the entity and must have a particular role within this business. In the case of an entity the eligible roles are:
- sole trader – the individual must be the entity
- partnership – the individual must be a partner in the partnership
- trust – the individual must be an adult beneficiary of the trust
- company – either a director or shareholder in the company
What are the 1 March 2020 requirements for a business participant?
To be an eligible business participant the individual as at 1 March 2020 must satisfy the following:
- was aged 16 years or over;
- satisfied the business participation requirements; and
- satisfied the Australian residency requirement.
What are the nomination requirements for a business participant?
The individual must agree to be nominated by the entity as an eligible business participant and confirm that they have not agreed to be nominated by another entity. This reflects the intention that an individual can only entitle one business to receive the JobKeeper payment for the business participant.
If you are an employer and wanting to claim JobKeeper payments you can enrol from 20 April 2020 and follow the steps below. These steps can be found on the ATO website. Please note that step 1 registering of your interest is not formally enrolling for the scheme.
- Register your interest and subscribe for JobKeeper payment updates.
- Check you and your employees meet the eligibility requriements.
- Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April 2020).
- Notify eligible employees that you are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming the payment through another employer or have nominted through another business.
- Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April.
- From 20 April 2020 enrol with the ATO for the JobKeeper payment using the Business Portal and authenticate with myGovID or ask your Tax Agent to assist with your enrolment. You must do this before the end of April to claim the April JobKeeper payments.
- In your enrolment form include your bank details and indicate If you are claiming an entitlement based on business participation as a business owner.
- Specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 march – 12 April) and the second JobKeeper fortnight (13 April – 26 April).
From 4 May 2020 you can confirm the eligible employees you will claim the JobKeeper payments for. It is intended that this will be done via the employer’s ATO Business Portal or by the employer’s tax agent. Refer to the ATO JobKeeper info page for further information on this process.
If you are a business owner actively engaged in your business, information will be published by the ATO soon in relation to the registration process.
The team at Davidsons can help you with this process or provide you with more information in relation to the JobKeeper scheme. Please call us on 03 52216399 or email us at firstname.lastname@example.org for assistance.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.