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Economic Stimulus #3: JobKeeper Subsidy

As the Coronavirus pandemic adds further risk of widespread business interruption, the Federal Government has released its third economic stimulus instalment. The $130 billion JobKeeper Subsidy is designed to keep businesses operating and people employed through the downturn.

Under the package (which received formal approval on 09 April), workers who have been in their position for at least a year will be paid $1,500 per fortnight from their employer for six months. The subsidy will be administered by the Australian Tax Office and will be paid to businesses that have experienced a downturn of more than 30% (more than 50% for businesses with an annual turnover above $1 billion).

The JobKeeper Subsidy takes effect from 30 March 2020 with first payments in the first week of May (payments will be back-dated to start date). 

Eligibility

There are two levels of eligibility; for employers and employees. 

Eligible employers are those with:

  • turnover below $1 billion that have experienced a reduction in turnover of more than 30% relative to a comparable period 12 months ago (of at least a month); or
  • turnover of $1 billion or more that have experienced a reduction in turnover of more than 50% relative to a comparable period 12 months ago (of at least a month); and
  • are not subject to the Major Bank Levy.

Sole traders and the self-employed with an ABN, and not-for-profits (including charities) that meet the turnover tests are also eligible for the JobKeeper payment.

Eligible employees are those who:

  • were employed by the relevant employer at 01 March 2020; and
  • are currently employed by the employer (including those who have been stood down or re-hired); and
  • are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 01 March); and
  • are at least 16 years of age; and 
  • 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.

While it appears that businesses without employees can potentially qualify for JobKeeper Payments, it is not clear at this stage what conditions will need to be satisfied.

How the support is calculated

The ATO will administer this program and will make the $1,500 payments based on payroll information. The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria.

The business will continue to receive the 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 relevant employer.

How the support is provided

To access the JobKeeper Subsidy, you should talk to your adviser at The Peak Partnership to help you with the registration process and calculations.

If you want to manage the process yourself, you must:

Register

Assess turnover

  • Ensure you have an accurate record of your revenue for the 2018-2019 income year and for the 2019-2020 year to date.
  • Ensure you keep an accurate record of revenue from March 2020 onwards.
  • Compare your revenue for the whole of March 2019 with the whole of March 2020.
  • Measure the percentage decline in your revenue and ensure it has declined by more than 30%.
  • If you are not eligible in March, you may become eligible in another month

Identify eligible employees

  • Nominate the employees eligible for the JobKeeper payments – you will need to provide this information to the ATO and keep that information up to date each month. The ATO will use Single Touch Payroll to pre-populate the information in most cases.
  • Notify all eligible employees that they are receiving a JobKeeper payment. Employees can only be registered with one employer.
  • Pay eligible employees at least $1,500 per fortnight (before tax). If an employee normally receives $1,500 or more per fortnight before tax the employee should continue to receive their regular income. Note: It is unclear at this stage if the employer must continue to pay their employee the same salary if it was more than the subsidy amount.
  • Pay superannuation guarantee on normal salary and wages amounts paid to employees. If the employee normally receives less than $1,500 per fortnight before tax, the employer can decide whether to pay superannuation on the additional amount that is paid as a result of the JobKeeper program. 

Sole traders and the self-employed can register their interest in applying for the JobKeeper payment with the ATO. These businesses will need to provide an ABN for the business, nominate an individual to receive the payment, provide the individual’s TFN and declare their continued eligibility for the payments. Payments will be monthly to the individual’s bank account.

Example*

Michael owns a real estate business with two employees. The business is still operating at this stage but Michael expects that turnover will decline by more than 30% in in the coming months. The employees are:

  Employee Type Salary (before tax)
  Anne Full-time $3,000 per fortnight
  Nick Part-time $1,000 per fortnight

Both Anne and Nick are still working in the business. 

Michael registers his interest in the JobKeeper scheme (from 30 March 2020), then applies to the ATO providing details of his eligible employees. Michael also advises Anne and Nick that he has nominated them as eligible employees to receive the payment. Michael will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

Michael’s business is eligible to receive the JobKeeper Payment for each employee.

For Anne, the business will:

  • continue to pay Anne her full-time salary of $3,000 per fortnight before tax.
  • receive $1,500 per fortnight from the JobKeeper Payment.
  • pay Superannuation Guarantee (9.5%) on Anne’s salary.

For Nick, the business will:

  • continue to pay Nick $1,000 per fortnight before tax salary.
  • pay Nick an additional $500 per fortnight before tax (totalling $1,500)
  • receive $1,500 per fortnight from the JobKeeper Payment.
  • pay Superannuation Guarantee (9.5%) on Nick’s wage of $1,000 per fortnight (but can choose to pay SG on the full $1,500).

For more information about the JobKeeper Subsidy and other economic stimulus initiatives, download our COVID-19 Stimulus and Support Measures - A Complete Guide and remember that our advisers are here to help with any of your questions.

NOTE: This article has been updated since the JobKeeper Subsidy was formally passed though Parliament on Thursday, 09 April 2020.

*This example is adapted from Treasury fact sheet: JobKeeper payment — information for employers.

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