The ATO has been charged with running the JobKeeper Payment scheme, which is intended to support businesses that are financially affected by COVID-19 to help keep their staff employed. With new legislation, rules and ATO guides constantly being updated, Australia’s accountants have been heavily replied upon in the last month to interpret and administrate the enrolment of around 6 million Australians onto JobKeeper, taking care to assess business’s eligibility and ongoing obligations to ensure payments flow through to where they are needed.
Employers will be required to pay their eligible employees a minimum of $1,500 a fortnight, before tax, to claim the JobKeeper payment. This is then paid in arrears back to the employer each month by the ATO.
Note that if a staff member had been earning more than this amount before tax, the business will need to make up the rest as the employer will still only get the $1,500. If they earned less, the employer will still be required to pay them $1,500. There is no “keep the difference” option in these cases, and not paying the full $1,500 cancels a business’s eligibility.
Payments are made each fortnight, with the first fortnight period (30 March to 12 April) already having passed. The run of fortnights is intended (at present) to end at 27 September. There is no need to adjust any payroll periods already adopted, but the JobKeeper reimbursements will follow this fortnightly schedule.
Entitlement to JobKeeper reimbursements will usually pivot on a business’s payroll, but the ATO says the first two fortnights can be deemed as already compliant as long as staff had been paid the required amounts by the end of April (deadline now extended to 8 May, see below).
All JobKeeper payments are assessable income of a business, and the normal rules on deductibility apply on their payment to eligible employees.
The payments are not subject to GST. Super guarantee obligations apply to previous income levels, but there is no SG on additional payments resulting from the scheme.
Deadlines – Extensions of time to enrol and pay employees
Many businesses lock-down affected had difficulty financing the up-front payments of staff wages (waiting for the banks to get on board). Many enrolments were also pending interpretation of alternative rules for eligibility. So the ATO recently extended the enrolment deadline for initial payments from 30 April to 31 May 2020. This means if a business enrols by 31 May, it can still receive JobKeeper payments for the fortnights ending in April and May.
Top-up payments to eligible employees previously had to paid by 26 April, to ensure they were paid minimum $1,500 per fortnight before-tax for the employer to be subsidised. However, the ATO is now allowing the JobKeeper payments for the first two fortnights ending 12 April and 26 April provided that employees are paid by 8 April.
The central measure on gaining access to the JobKeeper payments is a fall in turnover. A business with an aggregated turnover of $1 billion or less will qualify if facing a 30% fall in turnover (the trigger is 50% for greater aggregated turnover businesses and 15% for registered charities).
If an employer wants to be involved with JobKeeper payments for the months of April and May 2020 (just by way of example), the fall in turnover is found by comparing either:
- GST turnover for April 2020 with GST turnover for April 2019
- projected GST turnover for May 2020 with GST turnover for May 2019
- projected GST turnover for the quarter starting May 2020 with GST turnover for the quarter starting May 2019.
Reporting BAS monthly or quarterly does not necessarily influence the outcome, and once the decline in turnover is established there is no need to keep testing each month. Also the Commissioner has discretion to use an “alternative” measure if the above is inappropriate (if for example the business has been operating for less than a year). The ATO has released a set of alternative tests for turnover, and we can explain these if appropriate to your circumstances.
Eligibility also generally depends on you having been carrying on a business on 1 March and employing at least one eligible employee. Sole traders, partners in partnerships, beneficiaries in trusts, shareholders of companies and directors of companies who are not employed in the business can participate in the JobKeeper scheme – but only one per entity and only if they are actively engaged in the business. This rule applies whether or not the business has other employees, but a further qualifying factor is that the entity must have held an ABN at 12 March.
Government bodies or companies in liquidation are unable to enrol for JobKeeper. Individuals that are bankrupt also cannot enrol.
As far as employees go, they can be permanent full or part time, or casual if employed on a regular or systematic basis for at least 12 months at 1 March. They must also be Australian residents (as defined) aged 16 or over, not receiving parental leave or dad and partner pay, nor workers compensation. Note that they cannot receive payments from more than one employer.
Steps to enrol
A central part of receiving the benefits of the JobKeeper package is of course for you to put your hand up and let the government know it is required. Your employees will also have to a form to fill out and return.
Before you enrol for JobKeeper, you need to complete the JobKeeper employee nomination notice to:
- notify eligible employees that you intend to participate in the scheme
- ask them if they agree to be nominated and receive payments from you as part of the scheme.
We can supply you with the necessary forms, and can help guide you in filling them out.
Finally, note that the JobKeeper rules are something of a moving feast at the moment and therefore it is vital to get professional assistance in relation to eligibility for the support. The ongoing reporting obligations to ensure continued eligibility and payments will probably be the most difficult aspect for those who enrolled themselves without completely understanding how JobKeeper works.
We are available to assist our clients with ATO Representation regarding all aspects of JobKeeper.
We also encourage businesses that have not yet moved to cloud accounting and employers who are not yet using Single Touch Payroll to set this up as soon as possible, as it makes administrating JobKeeper a great deal more manageable. As Xero Gold Partners, we can establish your cloud accounting system correctly for your business and provide holistic ongoing services to keep you on top of JobKeeper and cash flows and ready to make the most of new opportunities.
We hope this was helpful. Please contact us for assistance with your JobKeeper enrolment, and any ongoing accounting, payroll and reporting needs.
The material and contents provided in this publication are general and informative in nature only. This article is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required with your own affairs, professional advice should be obtained.