Warrnambool business accountants explain the JobKeeper Payment

Posted on 31/03/2020 by Laurisa Walther in COVID-19
Laurisa Walther
Laurisa Walther is an Associate and Managing Accountant in the Accounting and Taxation group within the Sinclair Wilson Warrnambool office. Laurisa has a diverse range of clients from all different...

On Monday 30 March 2020, the Federal Government announced a new subsidy for businesses, so they can continue to pay their employees through the COVID-19 crisis: the JobKeeper Payment.

The JobKeeper Payment has been designed to ensure businesses can keep employees ‘on their books’, even when their revenue drops away. The idea is that this will make it easier for businesses to to re-start their business once the crisis is over.

For employees, the JobKeeper payment means they can keep their job AND earn an income, even if their employer has had to shut down where they work, reduce their hours, or can’t afford to keep paying them because their business revenue has taken such a hard hit.

Sole traders and the self-employed will also be eligible for this subsidy, ensuring they can continue to earn a living through the economic downturn.

There are still many details we don’t know about this Payment yet – because they haven’t been communicated. But what we can tell you about it is outlined below.

What is the JobKeeper Payment worth?

Nationally, the JobKeeper Payment is a $130 billion program designed to fund approximately six million Australian workers.

For individuals, it is worth $1500 a fortnight, for up to six months.

Who gets it?

The JobKeeper payment will be paid to eligible employers – both businesses AND not-for-profit organisations – to on-pay to their eligible employees.

Eligible employers that register for and receive the JobKeeper payments will be legally compelled to pass it on to their eligible employees.

How does an employer qualify to receive JobKeeper payments, to pass on to their employees?

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), or
  • Their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month), and
  • The business is not subject to the Major Bank Levy (in other words, a Big Four Bank)
  • The employer was paying eligible employees on 1 March 2020
  • The business can confirm that each eligible employee is currently engaged with the business

Note that not-for-profit organisations, including charities, and sole traders or the self-employed will be eligible to apply for JobKeeper payments, provided they meet the turnover tests.

How does an employee qualify to receive JobKeeper payments?

To receive a JobKeeper payment via their employer, an employee must:

  • Be currently employed by the eligible employer (this includes employees who have been stood-down during the COVID-19 crisis)
  • Have been employed by the employer on 1 March 2020
  • Be either a full-time, part-time, or long-term casual employee of the business (or, in other words, a casual worker employed on a regular basis for longer than 12 months as at 1 March 2020)
  • Be at least 16 years of age
  • Be either:
    • 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
    • A Special Category (Subclass 444) Visa Holder

Also – and importantly – the employee cannot be receiving a JobKeeper Payment from another employer.

Another important fact to note is that receiving a JobKeeper payment may impact an employees’ eligibility for Services Australia payment. This is because the JobKeeper payment MUST be reported as income.

How will the JobKeeper payment find its way to employees’ bank accounts?

Eligible employers who register will be paid $1500 per fortnight, per eligible employee. (By the way, it’s worth noting that not all employers have to register – it’s up to employers to decide if they want to receive the payment.)

This $1500 will then be passed on to the eligible employee, by the employer. Note, the $1500 is before tax.

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, but has since ended their 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. But they will still be expected to pay superannuation on the employees’ original wage.

When will the payment reach employers?

Payments will be made to the employer monthly in arrears by the ATO, and will start from 1 May 2020.

The first payment to eligible, registered employers will cover the payments for the last couple of days of March, and all of April.

How do employers register?

There is a specific section of the Australian Tax Office website where businesses can register their interest in the JobKeeper Payment – find it by clicking here. (This received more than 100,000 registrations of interest within the first 24 hours of it being open!)

Once the program has started, employers applications will be made online.

More information will be sent to those businesses who registered their interest as soon as it is available.

The application process will require employers to notify the ATO of eligible employees on their books – and provide monthly updates of their operations, and of the employees they are paying the JobKeeper Payment to.

The ATO will use the Single Touch Payroll system to ensure payments are being made to eligible employees.

What about people who are self-employed, or sole traders?

Sole traders can also register their interest for JobKeeper payments via the Australian Tax Office website – click here for the registration form.

Sole traders will need to provide:

  • An ABN for their business
  • The Tax File Number for an individual who will receive the payment
  • A declaration outlining the recent business activity

If you are self-employed, you will need to provide the ATO with a monthly update on your business progress, so the ATO can continue to assess your operation’s eligibility to receive payments.

Eligible sole traders will be paid monthly, into a nominated bank account.

I’m not sure how my business might qualify for JobKeeper Payments!

That’s where we can help. Contact Sinclair Wilson for help to ascertain the impact COVID-19 has had on your business – we can work with you in coming months to identify if this is an option that you can use to ensure your business can continue to pay its workforce through this COVID-19 storm.