JobKeeper Payment Legislation Summary

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JobKeeper Payment Legislation Summary

Carmen Lawson • April 13, 2020

Update to JobKeeper details after legislation on 8th April

Entitlement

There are only two points to be entitled to the JobKeeper payment as a business. These being that you:

• Must have carried on a business in Australia on the 1st March 2020
• Must have satisfied the decline in turnover test (30% for most businesses or an Alternative test per below)

Carried on a business

This means that you don’t have to have employed staff. Business owners are eligible

This is limited to one person (so no more than one business owner is eligible). It does not matter if both yourself and your spouse work in the business, only one business owner will be eligible for the payment.

You can also be trading in a Trust, Sole Trader, Partnership or Company to be eligible (i.e. not just for sole traders).

If you are in this category, the eligible person is as follows:

Sole Trader The entity (yourself)

Partnership - One partner in the partnership
Trust - An adult beneficiary of the Trust (no children)
Company - A shareholder in or a director of the company

Turnover Test

30% decline in Turnover

The main point here is to you need to be able to show a 30% decline in turnover (total sales as you would report on your BAS) – so all GST reportable income. To calculate the 30% decline – it is taken from the comparative Month/Quarter in the 2019 year. For example, if your sales in April 2019 was $100,000 – 30% of this is $30,000, so sales for April 2020 would have to be less than $70,000 to be eligible. The turnover is your ‘GST Turnover’. Therefore, if you report your BAS on a cash basis (sales received by you), this is the basis that you must report your test period on. If Accruals (sales incurred/invoiced, but not necessarily paid), then your test period must be Accrual sales.

Decline in Turnover – Test periods

Ok, so you must demonstrate that you have had a 30% or more decline in turnover for a specific test period. The tests periods can be for a calendar month (not 4 weeks) and can only be for a period after 30th March 2020 (so the full months of either March, April, May, June, July, August, September 2020). Or a quarter beginning 1st April 2020 (June Qtr) or 1st July 2020 (September Qtr).

The big thing here is that you only have to show a single month (or quarter) decline to be eligible from that month (or quarter) onwards. So, if you don’t show decline in March don’t worry – you may show it in say May. If this is the case you will be eligible for May, June, July, Aug & Sept payments. You don’t have to pass the test again to get the future months payments.

Decline in Turnover – Alternative decline period

If your business does not have a realistic test period, for example your business was new in the 2020 year, or your business suffered in the 2019 year say from drought or bushfires or something else that was out of your control, you can apply to the Commissioner to use an alternative test period. This may be the 2018 year or a prior month (if your business is new).

Time period of JobKeeper payments

Starts on the pay week beginning 30th March 2020 and will end on the 27th September 2020.

Eligible Employees

These are as follows:

• Individuals who is employed by the entity at any time in the fortnight

• They must have been aged 16yrs or over on the 1st March 2020 and be an Australian resident (or hold a Subclass 444 special category visa)
• They must have been employed by your business on the 1st March 2020 (so doesn’t cover new employees)
• If they are casual employees, they must have been employed by the business for 12 months prior to the 1st March 2020.
• They employee can not be nominated for the payment more than once (so no other employer is receiving the payment for this employee).
• They also can’t be on Parental Leave, Dad & Partner pay, totally incapacitated for work throughout the fortnight (no sick leave in the fortnight) or receiving payments under Workcover.

How Much and When Is It Paid?

Amount

We all know this is $1,500 per employee (including the business owner) per fortnight.

This is the minimum and the maximum amount. Therefore, the amount of wages paid to an employee must be $1,500 per fortnight.

If you do not pay your employee this amount, you will not be entitled to claim the JobKeeper payment AT ALL for that employee (You cannot get portions of this amount).

Therefore, you must ensure that your employee’s pays are ‘topped up’ to the $1,500 a fortnight pay.

Understand this is PER FORTNIGHT not $750 per week. The pays can vary per week, so long as the fortnight’s total pay add up to $1,500.

When is it Paid?

The JobKeeper payment will be paid to you shortly after the end of each calendar month (so first payment beginning of May, another beginning of June, then July, August, September and finally October 2020).

The payments will include the fortnights ended within that calendar month. These will be paid in arrears, meaning that you must register what you have paid your employees the month before (usually via your Single Touch Payroll program) to then get the payment made to you the following month. You will have to have cashflow available to you in the month of April to cover these pays in April.

You must notify your employee in writing

You must notify your employee in writing that you have given their details to the ATO and that you are enabling that employee to be eligible for the JobKeeper payment.

The employee is also required to provide a notice to their employer agreeing to the following:

• To be nominated by the employer as an eligible employee under the JobKeeper Scheme

• That they confirm they have not agreed to be nominated by another employer; and

• That they do not have permanent employment with another employer if they are employed as a casual employee

I have attached a sample of wording that I would use for this purpose.

Note – it is up to the employee which employer they chose to receive the JobKeeper payment from (it is not the employer’s choice).

Also, as a side note, the payment will come directly to you as an employer (not to the staff at all). It is a reimbursement payment to you.

The JobKeeper fortnights

The eligibility is per the below fortnights. If your fortnightly pays don’t fall on these end dates, then you may have fortnightly pays that are ineligible for the JobKeeper payments (as you need to have a full fortnight of pay included). This may be a little messy. It may be easier to change your fortnightly wage periods to run in line with the ATO’s fortnights. I would need to find out more on how strict they are with this one.

April Fortnights - 12/04/2020 & 26/04/2020
May Fortnights - 10/05/2020 & 24/05/2020
June Fortnights - 7/06/2020 & 21/06/2020
July Fortnights - 05/07/2020 & 19/07/2020
August Fortnights - 02/08/2020, 16/08/2020 & 30/08/2020
September Fortnights - 13/09/2020 & 27/09/2020

Superannuation Obligations

As an employer, you are still required to pay superannuation on your employee’s gross ordinary earnings even if payments are made under the JobKeeper arrangements.

Superannuation obligations do not form part of the JobKeeper minimum payment of $1,500.

If your employee in a normal circumstance earns under $1500 per fortnight and you have increased their wages to a minimum $1500 per fortnight. It is up to the employer if they pay superannuation on the extra amount that you pay the employee to be eligible for the JobKeeper payment. For example, if their normal fortnightly pay is $1,000 gross and you have increased their pay by $500 per fortnight to be eligible for the JobKeeper payment, you do not have to pay superannuation of the extra $500 (you do however need to pay the superannuation on the normal $1000 gross payment).

Overpayments

There is details in the legislation for the requirement to payback any JobKeeper payments that you have received but may not have been eligible for. This could happen because the proof of your reduction in income is based on your estimates for April whereas actuals may not have resulted in a loss of turnover.

You could also be required to payback the payments if the Commonwealth sees fit that you contrived schemes aimed at falsely making an entity entitled to the payment. We strongly believe that the ATO in the coming year will actively target audits towards these businesses.

The ATO will charge interest and backdate this interest to the first payment date of the JobKeeper payments.

Reporting Requirements

The ATO will require you to report on the current month’s turnover together with an estimate of your future months projected GST turnover. If you anticipate your future months turnover to increase, this does not mean you will not be eligible for the JobKeeper payment. The future months predictions are for the Commonwealth to ascertain the economic impact of the Coronavirus on a monthly basis across Australia.

Registration

If you believe that you are entitled, you need to register with the ATO (registration is via the ATO’s website at www.ato.gov.au). You can not wait until the end of the periods to register – as the payments are meant to assist with your business throughout the period – not after the end of the period.

We will have a look at each of our clients that we prepare BAS’s for to let you know if we believe that you are entitled or not. If we don’t prepare your BAS’s and have questions, please let us know. The ATO has not yet released the actual form that you will be required to complete yet. Once this becomes available (should be very soon) we will let you know – but we anticipate that once you are registered the ATO will automatically issue you with the required form.

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