On 30 March 2020, the Government announced a $130 billion JobKeeper Payment to help keep Australians in jobs as the country seeks to deal with the significant economic impact from the Coronavirus.
Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.
For employees, this means they can keep their job and earn an income – even if their hours have been cut. The JobKeeper Payment will also be available to the self-employed.
Employers (including not-for-profits) will be eligible for the subsidy if:
- their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
- their business has a turnover of $1 billion or more and their 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.
The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.
Blaze Acumen Comment
While not entirely clear, it appears that this measure will look at the turnover of the employer only and not “Aggregated Turnover” which is the turnover of the employer and connected and associated entities.
Eligible employees are employees who:
- are currently employed by the eligible employer (including those stood down or re-hired);
- were employed by the employer at 1 March 2020;
- are full-time, part-time, or long-term casuals (a casual 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 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.
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, and employers are able to top-up the payment.
Where employers participate in the scheme, their employees will receive this payment as follows.
- If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s).
- If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
- If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
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 receive, at a minimum, $1,500 per fortnight, before tax.
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment. Payments will be made to the employer monthly in arrears by the ATO.
Businesses without employees
Businesses without employees, such as the self-employed, will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to 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. Payment will be made monthly to the individual’s bank account.
Timing of payment
The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May.
A business with two employees is still operating at this stage, but it is expected that turnover will decline by more than 30% in the coming months.
The employees are:
- A permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
- A permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
The business is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
- The business continues to pay the permanent full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of the employee’s salary and will continue paying the superannuation guarantee on the employee’s income;
- The business continues to pay the permanent part-time salary of $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of the employee’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that the employee is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to the employee under the JobKeeper Payment.
The business can register its initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about its eligible employees. In addition, the business is required to advise their employees that they are nominated as eligible employees to receive the payment. The business will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
Employer obligations – what action is required?
To receive the JobKeeper Payment, employers must:
- Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline.
- Businesses can register their interest in participating in the Payment on the ATO website via the following link > https://www.ato.gov.au/general/gen/JobKeeper-payment/. If you require assistance in registering please contact your Blaze Acumen Advisor.
- Provide information to the ATO on eligible employees. This includes information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). For employees that were already receiving this amount from the employer then their income will not change. For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax.
- Notify all eligible employees that they are receiving the JobKeeper Payment.
- Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business
Employee obligations – what action is required?
Employees will receive a notification from their employer that they are receiving the JobKeeper Payment. The majority of employees will need to do nothing further.
Employees in the following circumstances will have additional obligations.
- Where employees have multiple employers – only one employer will be eligible to receive the payment. The employee will need to notify their primary employer to claim the JobSeeker Payment on their behalf. The claiming of the tax free threshold will in most cases be sufficient notification that an employer is the employee’s primary employer.
- Employees that are not Australian citizens must notify their employer of their visa status, to allow their employer to determine if they are an eligible employee.
- Employees that are currently in receipt of an income support payment must notify Services Australia of their new income.
For further details regarding the Government’s economic response to the Coronavirus see https://treasury.gov.au/coronavirus
If you have any questions about your eligibility for the JobKeeper Payment, please contact your Blaze Acumen advisor.