What the JobKeeper payment scheme means for businesses

The Australian Government has announced the JobKeeper payment scheme which will keep about 6 million workers in paid employment.

Under the JobKeeper scheme, workers will receive a flat payment of $1,500 per fortnight through their employer, before tax.

The $130 billion scheme is open to businesses who have been impacted by the coronavirus (COVID-19) and will also be available to those self-employed.

The main aim of the JobKeeper payment is to enable employers to maintain their relationship with employees which will allow business to reactivate their operations quickly, without having to rehire staff once the crisis is over.

The eligibility requirements are as follows:

• Your business has a turnover of less than $1 billion and turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
• Your business has a turnover of $1 billion or more and turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
• Your business is not subject to the Major Bank Levy.

Employers must elect to participate in the JobKeeper scheme and can do so by registering with the Australian Taxation Office (ATO).

As part of the application process businesses will need to provide supporting information demonstrating the reduction of at least 30 per cent in their turnover (for business earning less than $1 billion). In addition, employers must also report the number of eligible employees employed by the business.

Eligible employees must be at least 16 years of age and include full-time, part-time, long-term casuals and stood down employees. Casual employees eligible for the JobKeeper payment are those employees who have been with their employer on a regular basis for at least the last 12 months as at 1 March 2020.

Eligible employees must also be:

• An Australian citizen
• Permanent visa holder
• A protected special category visa holder
• A non-protected special category visa holder (residing continually in Australia for 10 years or more) or
• A special category (Subclass 444) visa holder.

Eligible employers who have already stood down their employees before the commencement of this scheme will be able to participate. Employees that are re-engaged by a business that was their employer on 1 March 2020 will also be eligible.

The payment process

Eligible employers will be paid $1,500 per fortnight, per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax. Employers are able to top up the payment if they desire.

It will be up to the employer as to whether they want to pay superannuation on the JobKeeper payment. The ordinary super guarantee requirements do not apply.

Businesses must contact employees to let them know they are applying for the JobKeeper payment on their behalf.

After the initial application, businesses will need to continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.

Businesses without employees (such as sole traders)

Businesses without employees can also register their interest in applying for JobKeeper payments from 30 March 2020.

Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment including providing that individual’s Tax File Number (TFN), and provide a declaration as to the 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. Payments will be made monthly to the individual’s bank account.

The subsidy for both employers and sole traders, will start on 30 March 2020, with the first payments to be received by employers in the first week of May.

Talk to the tax experts at LDB

As this is an evolving situation, there is still some uncertainty as to how the ATO is going to interpret things such as the turnover test and the period that it compares to, as well as whether or not grouping of related business will impact the test.

The team at LDB will continue to keep you updated as and when new information is released by the government.

LDB is here to help businesses through this unprecedented time. If you would like assistance with further information or applying for the JobKeeper payment don’t hesitate to get in touch. Call us on (03) 9875 2900 or send us a message via our contact form below.