The Federal Government has announced (as part of its Coronavirus Stimulus Package) the introduction of a new JobKeeper Payment to assist eligible employers (and self-employed individuals) who have been impacted by the Coronavirus pandemic to continue to pay their workers.
The following is a broad summary of the key aspects of the proposed JobKeeper Payment, based on the Government’s Joint Media Release dated 30 March 2020 and the information that is currently available on the Treasury website at www.treasury.gov.au. The Government intends to introduce legislation into Parliament to give effect to the JobKeeper Payment measure, which has not yet occurred.
1. What is the JobKeeper Payment
FA subsidy of $1,500 per fortnight per eligible employee, administered by the ATO, will be paid to businesses that have experienced a downturn of more than 30% (50% for businesses over $1 billion) impacted by Coronavirus.
To be a part of the subsidy, employers will need to ensure that their employees receive at least $1,500 per fortnight (before tax).
Employers can register their interest in applying for the JobKeeper Payment from 30 March 2020. The first payments under this measure are expected to be made from the first week of May 2020.
2. Who is eligible for the JobKeeper Payment?
There are two levels of eligibility: for employers and employees.
Eligible employers for the subsidy are those with:
- for a business with a turnover of less than $1 billion – its turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
- for a business with a turnover of $1 billion or more – its turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and
- the business is not subject to the Major Bank Levy.
Sole traders and the self-employed with an ABN and not-for-profit entities (including charities) that satisfy the above requirements will be eligible to apply for the JobKeeper Payment.
Eligible employees for the subsidy are those who:
- Were employed by the relevant employer at 1 March 2020; and
- Are currently employed by the employer (including those who have been stood down or re-hired); and
- Are full time, part-time, or long-term casuals (a casual employee employed on a regular basis for 12 months as at 1 March 2020); and
- Are at least 16 years of age; and
- Are an Australian citizen, hold a permanent visa, are 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.
Employees who have multiple employers will need to notify their primary employer to claim the JobKeeper Payment on their behalf, as only one employer will be eligible to receive the payment.
Employees that receive income support through Centrelink as a result of having been stood down or their hours being reduced, will need to report the JobKeeper Payment as come, as this could affect their entitlement to such Centrelink support.
While it appears that businesses without employees can potentially qualify for JobKeeper Payments, it is not clear at this stage what conditions will need to be satisfied.
3. How the support is calculated
The ATO will administer this program and will make the $1,500 payments based on payroll information. The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria. Employees will receive this payment basically as follows;
- If the employee ordinarily receives at least $1,500 in gross salary income per fortnight, they will continue to receive their regular income according to their prevailing workplace arrangements. In this case, the JobKeeper Payment will effectively subsidise part or all of the employee’s gross fortnightly salary income.
- If the employee ordinarily receives less than $1,500 in gross salary income per fortnight, their employer must pay the employee a minimum gross fortnightly salary income of $1,500 under the JobKeeper Payment scheme.
- If an employee has been stood down, their employer must pay the employee a minimum gross fortnightly salary income of $1,500 under the JobKeeper Payment scheme.
- If an employee was employed on 1 March 2020, has subsequently ceased employment with their employer, and then has been re-engaged by the same employer, the employee will receive a minimum gross fortnightly salary of $1,500 under the JobKeeper payment scheme.
The business will continue to receive the payments for eligible employees while they are eligible for the payments. While the program is expected to run for 6 months, payments will stop if the employee is no longer employed by the relevant employer.
4. How does a business apply for the JobKeeper Payment?
To access the JobKeeper subsidy, you could ask us to assist you with the registration process and calculations, otherwise you will be able to do the registration process yourself.
If you want to manage the process yourself, you must:
- Applications are not yet open. However, you should register your intent to apply for the JobKeeper subsidy with the ATO (here). The ATO will provide you with regular updates and advise you when you can lodge your application
- Assess turnover
- Ensure you have an accurate record of your revenue for the 2018-19 income year and for the 2019-20 year to date
- Ensure you keep an accurate record of revenue from March 2020 onwards
- Compare your revenue for the whole of March 2019 with the whole of March 2020
- Measure the % decline in your revenue and ensure it has declined by more than 30%
- If you are not eligible in March, you may become eligible in another month
- Identify eligible employees
- Nominate the employees eligible for the JobKeeper payments – you will need to provide this information to the ATO and keep that information up to date each month. The ATO will use Single Touch Payroll to prepopulate the information in most cases.
- Notify all eligible employees that they are receiving a JobKeeper payment. Employees can only be registered with one employer.
- Pay eligible employees at least $1,500 per fortnight (before tax). If an employee normally receives $1,500 or more per fortnight before tax theemployee should continue to receive their regular income. Note: It is unclear at this stage if the employer must continue to pay their employee the same salary if it was more than the subsidy amount.
- Pay superannuation guarantee on normal salary and wages amounts paid to employees. If the employee normally receives less than $1,500 per fortnight before tax, the employer can decide whether to pay superannuation on the additional amount that is paid as a result of the JobKeeper program.
Sole traders and the self-employed can register their interest in applying for the JobKeeper payment with the ATO. These businesses will need to provide an ABN for the business, nominate an individual to receive the payment, provide the individual’s TFN and declare their continued eligibility for the payments. Payments will be monthly to the individual’s bank account.
It is expected that more information will be provided about applying for the JobKeeper Payment, for businesses with employees and for the self-employed, on the ATO’s website.
The following examples further illustrate how the JobKeeper Payment is expected to apply. The examples have been adapted from the Treasury publications “JobKeeper Payment – Information for employers” and “Supporting businesses to retain jobs”.
|EXAMPLE 1 – Employer affected by Covid-19 with multiple employees
Adam owns a business whose turnover has declined by more than 30% as a result of the downturn due to the Coronavirus. The business had the following three employees as at 1 March 2020:
Adam is eligible to receive the JobKeeper Payment for each employee of $1,500 per fortnight (before tax), for a maximum period of six months (which would be paid monthly in arrears). The JobKeeper Payment would provide the following benefits for the business and its employees:
(a) The business continues to pay Anne her full-time gross salary of $3,000 per fortnight, as well as superannuation guarantee support on this income. In this case, the $1,500 per fortnight JobKeeper Payment effectively partly subsidises the cost of Anne’s salary.
(b) The business continues to pay Nick his $1,000 gross fortnightly salary and an additional $500 gross amount per fortnight, resulting in a total gross fortnightly salary of $1,500. In this case, the JobKeeper Payment fully subsidises the cost of Nick’s salary.
The business must continue to provide Nick with superannuation guarantee support on the $1,000 fortnightly salary amount, but has the option of choosing to pay superannuation on the additional $500 gross amount paid to Nick under the JobKeeper Payment scheme.
(c) The business must start paying Fred a gross salary of $1,500 per fortnight, which is fully subsidised by the JobKeeper Payment. The business has the option of choosing to pay superannuation on this amount paid to Fred under the JobKeeper Payment scheme. If Fred commenced receiving any Centrelink support (e.g., JobSeeker Payment), he will need to advise Centrelink of his JobKeeper payment.
|EXAMPLE 2 – Self-employed affected by Covid-19 with no employees
Melissa is a sole trader running a florist without any employees.
The economic downturn due to the Coronavirus has adversely affected Melissa’s business and she expects that her business turnover will fall by more than 30% compared to a typical month one year ago (i.e., in 2019).
On this basis, Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight (before tax), which will be paid to her on a monthly basis in arrears.