JobKeeper Wage Subsidy Support

The Federal Government has announced a wage subsidy support package with the new JobKeeper payment. The wage subsidy support package will pay eligible employers $1,500 per fortnight for each eligible worker, about 70% of the national median wage.


In order to receive a payment, both the employer and employee must meet eligibility criteria.


Eligible employers:

Eligible employers (including companies, partnerships, trusts and sole traders), not-for-profits and charities:

  • businesses that have a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or

  • businesses that have a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month)


According to the Australian Taxation Office(ATO) website there are two ways for entities to satisfy the reduction in turnover requirement: the basic test and the alternative test.


The basic test compares the business revenue turnover of any single month from March to September 2020, or the quarters that start on 1 April 2020 or 1 July 2020, with the corresponding period in 2019. For example, 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 on 1 April 2020 with the quarter beginning on 1 April 2019. A business will generally satisfy the test where the 2020 business revenue falls short of the comparison 2019 business revenue by 30 per cent or more in the turnover test period (i.e. the selected month or quarter).


The alternative test applies where there is not an appropriate relevant comparison period in 2019. According to the government, this might be the case for a new business or a business that made a major business acquisition in 2020. This alternative decline in turnover test will be determined by the ATO. Currently there is no information relating to the proposed ATO approach (16/04/2020).


Once a business satisfies the decline in turnover test, it does not need to retest its turnover in later months.


Eligible employees:

  • Were employed by an eligible employer at 1 March 2020

  • Can be sole traders, full-time and part-time employees, or

  • Long-term casuals 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, a non-protected special category visa who has been residing continually in Australia for 10 years or more, or a New Zealander on a special category (subclass 444) visa.


How will it be paid?

Eligible employers will be paid $1,500 per fortnight per eligible employee from 30 March 2020, for a maximum of six months. Eligible employees will receive from their employers a minimum of $1,500 per fortnight, before tax. Employers are able to top up the payment. Employers will pay employees as usual and payments will be made to the employer monthly in arrears by the Australian Tax Office (ATO).


If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay them, at a minimum, $1,500 per fortnight, before tax. It is therefore possible for a long-term casual or part-time worker to receive more than their ordinary pay.


What if an employee was stood down or sacked?

If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax. This means that employees of businesses that shut down due to various restrictions – such as cafes, restaurants, theatres, casino workers and the like – will continue to be paid even if they are not working.


If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will also receive, at a minimum, $1,500 per fortnight, before tax.


When will it start being paid?

The wage subsidy will start on 30 March, with the first payments to be received by employers in the first week of May. In the meantime, employers must continue paying their employees and then claim the money from the first week of May.


What about superannuation?

Employers must continue to pay the superannuation guarantee on regular wages, if the employee continues to work for the employer. But if the employee is stood down, the employer is not required to pay superannuation.


Businesses without staff/employees

Sole traders can be eligible for the JobKeeper payment if their business has experienced a business revenue turnover downturn of at least 30%. The ATO will provide more information soon about the eligibility of sole traders for the JobKeeper payment (16/04/2020).


Other businesses in the form of a company, trust or partnership can also qualify for JobKeeper payments where a business owner (a shareholder, adult beneficiary or partner) is actively engaged in the business, or a director is actively engaged in the business. This is limited to one entitlement for each entity even if there are multiple business owners or participants. The ATO will provide more information soon about the eligibility of these businesses for the JobKeeper payment(16/04/2020).


JobKeeper and other government payments?

A person receiving the JobKeeper payment cannot also receive the JobSeeker payment (formerly Newstart). People who have already applied for JobSeeker can withdraw and shift to JobKeeper payments if they are re-engaged by their employer. An individual cannot be in receipt of JobKeeper payments from two or more employers.


Enrol for the JobKeeper payment (from 20 April onwards)

  • Register your interest and subscribe for JobKeeper payment updates. Do this NOW

  • Continue to pay at least $1,500 (before tax) to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April).

  • Notify your eligible employees that you are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming JobKeeper payment through another employer or have nominated through another business.

  • Send the ‘JobKeeper employee nomination notice’ (see attached) to your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April. Keep it on file and provide a copy to me

  • From 20 April 2020, you can enrol with the ATO for the JobKeeper payment. You must do this by the end of April to claim JobKeeper payments for April.

  • In the ATO online form, we need to provide your bank account details and indicate if you are claiming an entitlement based on business participation, for example if you are a sole trader.

  • In the ATO online form, we need to 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).

  • If you decide to participate in the JobKeeper scheme, you must ensure that ALL of your eligible employees are asked to complete the ‘JobKeeper employee nomination notice’.


Confirmation of eligible employees we will claim JobKeeper Payment for (available from 4 May 2020 onwards)

We will need to apply for the JobKeeper payment for your eligible employees:

  • Step 1 - Apply to claim the JobKeeper payment by using ATO website

  • Step 2 - Ensure you have paid each eligible employee a minimum of $1,500 per JobKeeper fortnight before tax.

  • Step 3 - Identify your eligible employees in the application form by selecting employee details that are prefilled from your STP pay reports (if you report payroll information through an STP enabled payroll solution), or manually entering employee details in ATO online portal (if you do not use an STP enabled payroll solution, or I am submitting the report on your behalf through the ATO).

  • Step 4 - Notify your eligible employees you have nominated them.

  • Step 5 - The ATO will pay you the JobKeeper payment for all eligible employees after receiving the completed application.


Monthly reporting

Each month, we will need to complete the JobKeeper Declaration report. We will need reconfirm that the reported eligible employees have not changed (i.e. If your eligible employees change or leave your employment). This will ensure that you will continue to receive the JobKeeper payments from the ATO. Effectively, this means we would need to repeat the 5 steps above, each month.


Along with the 5 steps above, we will also need to report your current business revenue for the reporting month and your projected business revenue for the following month. This will also be reported on the ATO’s monthly JobKeeper Declaration report. Please note that this is NOT retesting your reported fall in business revenue.


For more information, email mail@nationaltaxation.com.au


Disclaimer

The information presented is general in nature and not to be used, relied or acted upon without seeking professional advice to ensure that the information appropriate for your individual circumstances. National Taxation accepts no liability for any errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. www.nationaltaxation.com.au. ABN 63 665 545 130

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