JobKeeper Wage Subsidy
- Please check the Breaking News page
- Employee eligibility was re-defined from 3 August onwards.
- JobKeeper 2.0 has been announced.
- The ATO has issued guidance with new key dates.
- What happens if your predicted fall in turnover is ultimately incorrect
Broadly, as long as your assessment was reasonable when you made it, you will not lose eligibility for the JobKeeper Payments. If the variance between your prediction and actual results is significant, the ATO may review your calculations for reasonableness. You therefore need to retain records of your projected turnover calculations. The integrity provisions will continue to apply in respect of contrived arrangements that are aimed at ensuring that the turnover test is satisfied.
- It is clear that having access to the ATO Business Portal via MyGovID authentication method (different to MyGov) is going to be critical for employers. If you need assistance with setting up MyGovID please refer to our article outlining the necessary steps or give us a call.
- JobKeeper Rules 1.0 have been released as well as the Explanatory Statement accompanying the Rules. You can see our summary of the Rules here. Treasury has released an updated FAQ factsheet.
- Processing JobKeeper in accounting software
- JobKeeper alternative turnover tests
- JobKeeper - Action list for employers
- JobKeeper and Industrial Relations Law
- Tax audit shield insurance and JobKeeper
Employers with a turnover of below $1 billion will be eligible for the subsidy if their turnover has been or will be reduced by more than 30% relative to a comparable period a year ago (of at least a month).
The employer must have had eligible employees as at 1 March 2020, and must confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover test above are eligible to apply for JobKeeper Payments.
UPDATED 6 APRIL: Based on additional guidance issued by Treasury, for charities registered with the Australian Charities and Not-for-profits Commission (ACNC), they will be eligible for the subsidy if they estimate their turnover has fallen or will likely fall by 15% or more relative to a comparable period.
UPDATED 2 APRIL: Treasury has issued updated guidance on establishing the reduction in turnover by 30% and giving the ATO the power to exercise discretion when determining employer eligibility:
"To establish that a business has faced either a 30 (or 50) 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."
Eligible employees are employees who:
- were employed by the employer at 1 March 2020;
- are currently employed by the eligible employer (including those employees who have been stood down or re-hired - if a worker has been retrenched after 1 March, the employer can put them back on the books so they become eligible for the payment);
- are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- are at least 16 years of age;
- are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
- are not in receipt of a JobKeeper Payment from another employer.
If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper Payment as income.
Application process - businesses with employees
Please contact us to discuss if you are not sure of your eligibility.
Eligible employers are able to apply for the scheme by means of an online application.
Employers will then need to provide information to the ATO on eligible employees. For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
IMPORTANT: Based on the Prime Minister’s speech announcing the measure, it is expected that the JobKeeper payments will be administered via the Single Touch Payroll reporting as the primary channel. If you are an employer who has not yet signed up to Single Touch Payroll we urge you to contact us as soon as possible to discuss your options. While the ATO will likely develop workarounds for employers who do not use Single Touch Payroll, this may require additional administration and may cause delays. (UPDATE 6 APRIL: Treasury has confirmed that if you do not report through Single Touch Payroll, you can still claim the JobKeeper payment, however this will be through a manual claim process.)
Application process - businesses without employees
These businesses will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity.
People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.
When will the payments start?
The first payment will be received by employers from the ATO in the first week of May but are expected to be backdated to 30 March. The businesses can either start paying workers now, if they have the cash flow, or back-pay them to March 30 when the money arrives.
Eligible employers will need to identify eligible employees for JobKeeper Payments, inform these employees accordingly 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.
How will it work for employees on different levels of wages?
If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to the prevailing workplace arrangements. The JobKeeper Payments will subsidise a part or all of their employment income.
If an employee ordinarily receives less than $1,500 in income per fortnight before tax, the employer must pay them, at a minimum, $1,500 per fortnight, before tax.
If an employee has been stood down, their employer must pay them, at a minimum, $1,500 per fortnight, before tax. If an employee was employed on 1 March 2020, subsequently ceased employment and then was re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight, before tax.
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Employers will notify their employees if they are claiming the JobKeeper Payment on the employees’ behalf.
EMPLOYERS TO DO NOW:
Review your Single Touch Payroll arrangements to ensure that all your employees are correctly identified and their details are up to date.
What do employees have to do?
Employees will receive a notification from their employer that they are receiving the JobKeeper Payment. The majority of employees will need to do nothing further, however:
- Employees that have multiple employers must notify the employer that is their primary employer.
- Employees that are not Australian citizens must notify their employer of their visa status, to allow their employer to determine if they are an eligible employee.
- Employees that are currently in receipt of an income support payment must notify Services Australia of their new income.
Wages received by employees, whether subsidised by the JobKeeper payments or not, will remain taxable to employees under the usual rules.
Interaction with the apprentice and trainee wage subsidy
Eligible small businesses can receive the 50% wage subsidy for apprentices and trainees in the Supporting Apprentices and Trainees measure from 1 January to 31 March 2020, and the JobKeeper Payment. Where small businesses receive the JobKeeper Payment, they are not eligible to receive the apprentice and trainee wage subsidy from 1 April 2020 onwards.
You may wish to access the Treasury fact sheet for employers which contains some examples of how the wage subsidy is expected to operate.
UPDATED 6 APRIL: Treasury has issued a Frequently Asked Questions fact sheet in relation to the JobKeeper wage subsidy. We encourage you to review it as it provides additional details on a number of issues.
The ATO is expected to release further details in due course on their site.
Liability limited by a scheme approved under Professional Standards Legislation.
The content of this newsletter is general in nature. It does not constitute specific advice and readers are encouraged to consult their Ruddicks adviser on any matters of interest. Ruddicks accepts no liability for errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. This information is current as at 6 April 2020, and was published around that time. Ruddicks particularly accepts no obligation or responsibility for updating this publication for events, including changes to the law, the Australian Taxation Office’s interpretation of the law, or Government announcements arising after that time.
Any advice provided is not ‘financial product advice’ as defined by the Corporations Act. Ruddicks is not licensed to provide financial product advice and taxation is only one of the matters that you need to consider when making a decision on a financial product. You should consider seeking advice from an Australian Financial Services licensee before making any decisions in relation to a financial product. © Ruddicks 2020