The JobKeeper Payment was designed for Australian businesses to retain and continue to be connected to employees, even during a ‘hibernation’ period. Legislation received Royal Assent on Thursday 9 April and on the same day the Treasurer’s rules were announced.
Since this date additional guidance has been provided by the ATO and Treasury on the operation of these rules.
Summary
As the JobKeeper Payment was first outlined with scant detail we have followed developments closely. Our phone and email inboxes have been flooded since the first announcements.
Thank you to those who have been patient while waiting for the legislation to be passed and rules released.
For some organisations this will assist them in keeping staff on payroll or getting them off JobSeeker. However, from our conversations with clients it is clear this is not the solution for every business. Even if your business passes all the eligibility tests, you may not have the cash to fund the payments, so this is a disappointing aspect of the JobKeeper program.
However, for those willing to borrow money to “fund the gap” The Big 4 Banks have now opened a hotline to access JobKeeper overdrafts.
There is no doubt these developments will also artificially deflate the next unemployment figures released by the government.
Highlights
As the JobKeeper scheme is the hottest topic that our clients want to talk about, we have prepared a list of highlights – updated as at 28 April 2020.
A central feature is that participating businesses are being asked to act as cashflow bridges for the government, rather than Social Services (formerly Centrelink) paying out-of-work employees, and this will keep down unemployment figures – artificially.
Following are some other key features of Australia’s JobKeeper scheme:
Following are some other key features of Australia’s JobKeeper scheme:
- Self-assessment process and participation by an employer is optional
- Application form available via ATO Business Portal
- The amount is $1,500 (pre-tax) per fortnight per eligible employee and it amount must be passed on to employees. There is a transition period (to 8 May 2020) for the first two fortnights so there is still time to make catchup payments if applicable
- Payments from the ATO to the employer will be made in arrears monthly and will not be applied to overdue debt
- First payments from the ATO will be made in early May
- Single Touch Payroll will support the online claim process, but this is not yet released. Otherwise there will be a manual claims process. Xero upgraded its payroll functionality in response to JobKeeper
- To qualify, the turnover^ of a business has fallen, or will fall – it is reasonable to expect, by 30%* compared to the same period last year. However, for NFPs the rate is 15% provided the NFP is registered with the ACNC.
- Alternative tests are not available where using comparative period from a year ago is not appropriate.
- Cash or Accruals can be used to calculate turnover
- An entity is only required to pass the test once (under Basic or Alternative), but monthly reporting of turnover to the ATO is required for statistical purposes
- Eligible employees need to have been employed as at 1 March 2020
- Casuals need to have worked for the employer for 12 months on a regular and systematic basis
- Payments to employees will be available from 30 March to 27 September 2020
- Employees with Working Holiday Visa and Visa 457 are not eligible
- The Australia Banking Association has advised the upcoming JobKeeper program payment is a basis to seek credit in order to pay their employees until the scheme is making its first payments. Hotline
- Self-employed workers may be eligible for the payment, this includes Sole Traders, Trusts and Partnerships – but only one nominated person (who is not an eligible) employee per entity, and they must be actively engaged in the business.
- Employers must continue to comply with their obligations under the Fair Work Act (which has been modified in response to the introduction of JobKeeper).
For further information contact us or visit the ATO website.
ATO
https://www.ato.gov.au/general/JobKeeper-Payment/
Seeking assistance
For tailored advice on whether you are eligible for JobKeeper and what you need to do to comply with the JobKeeper rules, please contact us.
More information and guidance is being released on an almost daily basis so we encourage all employers to get appropriate advice in respect of JobKeeper.
Notes
^Turnover includes all taxable supplies and all GST-free supplies but not input taxed supplies. NFPs adjusted turnover can include donations.
*Rates above are for entities with turnover less than $1billion.
