On the 30th March, the Federal government announced it’s biggest economic response to the coronavirus to date. The JobKeeper payment is intended to provide funds to employers to retain staff during the downturn.
This payment of $1,500 per fortnight pre-tax is intended to begin in the first week of May, and that first payment includes a backdated payment to the 30th March.
Businesses (not just employers) who have turnover of less than $1b and their turnover will be reduced by more than 30% are eligible.
To be eligible for the first two fortnight’s payments, businesses will need to show their turnover in March (quarter or month) 2020 is 30% lower than the same period last year – or that their expected April turnover is down 30% compared to last April.
The ATO will have discretion for ‘lumpy’ or irregular income, such as new businesses or business acquisitions, on a case by case basis.
Your business may not have triggered the 30% test until later on. Once it is triggered however, you are eligible for the payment for each fortnight thereafter until the end of September.
Employees who are covered
Any employee who was either full-time, part-time, long-term casual or a stood down employee as of the 1st March – that is, you need to take a snapshot of your workforce at that date. A long-term casual means that you worked regularly with the employer for 12 months up to the 1st March.
If you have part-time or full-time staff they do not need to have worked for 12 months prior to the 1st March. This only applies to casuals.
Employees must be either Australian citizens or holders of certain visas, and over 16.
Employees who have been stood down since the 1st March can be re-engaged by the business will be eligible, so you can re-employ those casuals that were stood down to help them access JobSeeker.
A business who passes the turnover test can nominate one individual to be ‘self-employed’, being for example a partner in a partnership, a beneficiary of a trust, an active shareholder or director of a company.
Employees can only have one primary employer and must notify their employer of their choice. It’s intended that claiming the tax-free threshold from the employer is sufficient notification (on the presumption that they do not claim the tax-free threshold from secondary employer(s)). Their receipt of the payment does not stop them from earning income from other work, it only stops them from earning the $1,500 more than once.
You will need to ensure your employees fill out a nomination form (available here) and return to you asap.
The employer will be paid $1,500 per fortnight for each employee as a flat rate. Where the employee receives more than $1,500 per fornight, they will not receive any more. Where the employee receives less than $1,500 or none at all, this payment will top them up to $1,500 per fortnight. Thereby, each eligible employee will need receive $1,500 per fortnight regardless of whether they are working or not.
Payments for the first two fornights in April must be paid for the business to be eligible.
It is optional for the employer to pay super on the ‘topped up’ amount.
Normal rates of witholding apply.
The ATO is asking for those employers who may be eligible to register now here. As of the 20th April, businesses will be able to submit applications online via the business portal or you can contact Charman Partners and we can lodge via the tax agent portal. These need to be completed by the 26th April.
Once registered, businesses will need to make monthly declarations to the ATO regarding a confirmation that their eligible employees are still correct and to state their turnover – note that even if turnover bounces back, once eligible you stay in the program until the end of September – indicating this is an data-collection exercise only.
Our advice for businesses now is to review your turnover to see if you will be likely to have it reduced by at least 30%, or at very least have the ability to collect that data as it will be reported to the ATO.
Secondly make sure you have all your employee details as of the 1st March ready, including service periods for casuals.
Jane runs a hotel that has been severely impacted by the coronavirus outbreak. She employs herself as a manger, John as a part-time chef, Sam in the bottleshop and Sally in the bar. Whilst Jane and John’s hours remain the same, Sam’s hours have been reduced and Sally needed to be stood down. Her current fortnightly wages are now $8,000.
Jane’s business applies for and receives $6,000 per fortnight. Jane and John earn over $1,500 so none of the Jobkeeper payment is required to be paid to them. Sam who would ordinarly have received $1,000 now has another $500 topped up from the Jobkeeper payment. Sally can remain as an employee of Jane’s business and receive $1,500.
It is important to remember that all employees need to have been paid their $1,500 per fortnight prior to the end of April to be eligible.
Prior to 26th April: Register interest on ATO website, check turnover test eligibility
26th April: Provide eligible employee nomination form, keep on file.
20th to 26th April: Enrol for the payment online (contact us for help)
30th April: Ensure all eligible employees have been paid the first two fornightly minimum payments.
4th May onwards: Apply for payment by identifying eligible employees via your STP data or online (contact us for help).
Monthly: Confirm the number of eligible employees with the ATO as well as actual and projected turnover.
If you have any questions, please contact a member of our staff.