As we near the end of what we can only describe as a very challenging week, here is the latest news of the new JobKeeper package announced on 30 March 2020 by the Federal Government. Despite the announcement made on 30 March, the changes and updates keep happening.
With every call to our clients this week, it was very overwhelming that we could not deliver on answers to all the questions that were raised. No different to the past few Stimulus Packages, the announcement gets made, then all the questions get answered during the following days. We’ve done our best to summarise what we know so far – but wait – when the legislation is drafted, some of this may change.
Under the JobKeeper Payment, any businesses impacted by 30% (or more) drop in revenue, caused by the Coronavirus, will be able to access a subsidy from the Government to continue paying their employees. This will be administered by the ATO and it is anticipated that payments will begin from 1 May 2020.
Under the JobKeeper Package, employers will be able to claim a fortnightly subsidy payment of $1,500 per eligible employee from 30 March 2020. This will be available for a maximum period of 6 months (at the moment – and could possibly change). This full amount of $1,500 must then be paid to all eligible employees, whether they are full time, part time or casuals.
The business will continue to receive the subsidy 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 business.
ELIGIBILITY – EMPLOYERS
Employers 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 per cent relative to a comparable period a year ago (of at least a month). There are a few other requirements for larger businesses.
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. This also applies to Not-for-Profit entities (including charities).
The good news is that self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.
Here is a bit more detail in respect of eligibility and how to apply.
ELIGIBILITY – EMPLOYEES
Employees eligible for JobKeeper payments are those who:
- Were employed by the relevant employer at 1 March 2020;
- Are currently employed by the employer (including those who have been stood down or re-hired);
- Are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March);
- Are at least 16 years of age;
- 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.
Businesses, both with employees and without employees (sole traders) can register their interest in applying for the JobKeeper payment with the ATO at https://www.ato.gov.au/Job-keeper-payment/. It is important to note that if someone from our team has spoken with you, then it is very likely that they have also done the application for you. Please check with us before you apply yourself.
After this has been done, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.
Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO.
Participating employers will be required to ensure eligible employees 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.
Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment, 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.
At the time of writing this, the Legislation has not yet been released or made available to us in draft. We will keep you informed as we get more information from the Government and the ATO.
One of the main questions we have been receiving is “Can I wait for the payments to come in before I pay my employees?” The Government has stated that your business will need to keep paying your employees between now and 1 May 2020 out of your cashflow, and on 1 May 2020 if you are eligible for JobKeeper payments, the ATO will then reimburse you $1,500 per eligible employee per fortnight dated from 30 March 2020. We totally understand that this will put a burden on many businesses, so if this is an issue for you, please make sure you contact our team.
Just a reminder, everyone of our team are still working and are here to help you. It is time to start doing tax planning which for this year, will be the most important thing you do. If you haven’t booked this in, please do so straight away.
Stay safe, stay healthy, and for the good of us all, please stay home.