JOBKEEPER – TIME TO ACT
So you want to understand the Jobkeeper. In this blog we provide a detailed JobKeeper unpacked. The JobKeeper scheme is now law. The Government has released rules governing JobKeeper; we expect further information and explanation from the ATO over the next few weeks.
Immediate action is required.
An enrolment form will be available via the ATO business portal or tax agent portal from 20 April 2020 and must be completed by 26 April 2020 to be entitled to JobKeeper payments for wages paid from 30 March 2020.
An executive summary is as follows with more detailed information below for each major requirement in this email for your application of JobKeeper.
Summary of the JobKeeper Unpacked
This is complexed and we outline below a summary of what you need to know and what you must do.
To be eligible for the JobKeeper payment, you must;
1. Have been operating a business as at 1 March 2020
2. Have experienced, or could reasonably estimate a downturn of at least 30% (this percentage applies to most businesses) as compared to the same month or quarter in the 2019 year.
3. Be an employer of eligible employees, employed as at 1 March 2020.
4. Notify the ATO via the website after 20 April 2020 and before 26 April 2020 that you want to participate in the JobKeeper program.
5. Lodge an application document with the ATO detailing the employees for which you will claim the JobKeeper payments. Payment will begin to be made from early May.
6. Each month via ATO online services you will need to confirm that the eligible employees have not changed.
7. Notify the employee that you have made an application to the ATO to receive JobKeeper payment for them.
8. Obtain notification from the employee that they are an eligible employee and agree to be included in the scheme.
9. Pay an eligible employee a minimum of $1,500 gross per fortnight; note that this is paid before the subsidy and
10. Notify the ATO within 7 days of the end of each month the turnover for the month and projected turnover for the following month. Note once you are accepted into the scheme future months will have no bearing on your eligibility, the additional reporting appears to be for information purposes only.
The decline in turnover is a projected GST turnover and includes taxable and GST free supplies. The test can be done for one month ended March 2020 through to September 2020 or quarterly for 30 June 2020 quarter or 30 September 2020 quarter.
Owners of certain businesses that do not pay wages can still receive JobKeeper payments in certain circumstances including;
1. Sole traders
2. One individual in a partnership
3. One adult beneficiary in a trust
4. One individual/director of a company. If you would like Shuriken Consulting to register and/or apply for JobKeeper for your business, please respond to this blog ASAP. One of our staff members will contact you to obtain all the required information.
Additional detailed information regarding points above
Eligible businesses Employers will be eligible for the JobKeeper payment subsidy if:
a. on 1 March 2020, they either carried on a business in Australia or were a non-profit body pursuing its objectives principally in Australia;
b. they have suffered a decline in turnover of at least:
- 30% if their business has an aggregated turnover of less than $1 billion;
- 50% if their business has an aggregated turnover of more than $1 billion; or
- 15% if their business is a registered charity;
Decline in Turnover Test
The decline in turnover is measured against the corresponding period in the previous year. Turnover is measured in accordance with the GST legislation, and measures the entity’s taxable and GST-free supplies. The periods compared can be either a period of one month or three months, as follows:
a. if a one month turnover test period is being used, it must be one of the months from March 2020 to September 2020, as compared against the corresponding month in 2019, or
b. if a three month period is being used it must be one of the following periods:
- the quarter that starts on 1 April 2020, compared to the corresponding period in 2019; or
- the quarter that starts on 1 July 2020, compared to the corresponding period in 2019.
Where the Commissioner is satisfied that there is no such period in 2019 or it is not an appropriate relevant comparison period, the Commissioner may determine an alternative decline in turnover test. The decline in turnover test is measured on an entity by entity basis.
The decline in turnover test needs to be satisfied before an entity becomes eligible for the JobKeeper payment. Once the test is passed there is no requirement to retest in later months. If an entity does not qualify for a particular month (e.g. the month of April 2020 because its turnover has not been sufficiently affected), it can test in later months to determine if the test is met (e.g. May 2020). This allows entities that only become affected part way through the six-month period of operation of the JobKeeper scheme to continue to monitor for any decline in turnover until they qualify for the scheme in a later period.
An employer is only entitled to a JobKeeper payment for an eligible employee. An eligible employee is a person that was, on 1st March, 2020:
a. Aged 16 years of age or over,
b. On the employer’s books, and continues to be engaged by the employer – including fulltime, parttime, casuals (must have 12 months service) and stood down employees
c. 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, or a Special Category (Subclass 444) Visa Holder, and
d. not in receipt of:
- parental leave and dad and partner pay under the Paid Parental Leave Act 2010, or
- workers’ compensation.
An eligible employee can only be nominated by one employer. Where an employee has multiple employers, only one employer will be eligible to receive the payment. The employee will need to notify their employer of their eligibility to claim the JobKeeper payment on their behalf. Casual employees cannot nominate with an employer if they were permanently employed (either full time or part time) by another employer.
The fortnight beginning on 30 March 2020, and each subsequent fortnight, ending with the fortnight ending on 27 September 2020, is a JobKeeper fortnight. There are 13 JobKeeper fortnights. Employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight If the employee previously received less than $1,500 per fortnight, then they must receive an additional payment to ensure that the total of the above payments equal $1,500 per fortnight.
Top up payments to comply with the $1,500 minimum payment are not subject to superannuation guarantee. Payments will be made to the employer monthly in arrears by the ATO. The Commissioner must make the payment for a fortnight no later than the later of:
a. 14 days after the end of the calendar month in which the fortnight ends; and
b. 14 days after the Commissioner is satisfied that the employer or business is entitled to the payment for the fortnight.
The JobKeeper scheme requires:
a. an employer to actively seek to participate in the scheme;
b. an employer to notify the Commissioner in the approved form of the employer’s election to participate in the scheme before the employer can be entitled to a payment for a fortnight;
c. an employer to give information, including details of the eligible employees, to the Commissioner in the approved form;
d. an employer notify an individual in writing within 7 days of giving the Commissioner details of the individual under paragraph (c);
e. the individual to give their employer a notice in the approved format stating that:
i. they satisfy the requirements that they are an eligible employee; and
ii. they agree to be nominated by the entity as an eligible employee of the entity for the purposes of the JobKeeper scheme.
The employer election needs to be provided to the Commissioner before the end of a JobKeeper fortnight for the employer to be entitled to a payment for that fortnight, except for the first and second JobKeeper payment relating to the fortnights commencing on 30 March 2020 and 13 April 2020, where the employer has until 26th April 2020 to provide the Commissioner with its election to participate. For all subsequent JobKeeper fortnights, the employer will need to notify the Commissioner of the employer’s election to participate in the scheme before the end of the particular fortnight. The first election notification to be provided to the Commissioner must therefore be submitted by 26th April 2020.
Self-employed – If you are self-employed, as a sole trader, or operate a business through a partnership, a company or trust, you will also be eligible to receive the JobKeeper Payment where the business has suffered or expect to suffer decline in turnover relative to a comparable period of a year ago.
The individual for whom a business is entitled to the JobKeeper payment must be an individual that is an eligible business participant. An individual is an eligible business participant where the individual is not employed by the business at any time in the fortnight because the individual is the owner of the business.
Similar to the eligible employee requirements, the eligible business participant must satisfy the 1st March 2020 requirements.
More information can be provided if this is relevant to you.
Please note there are significant fines and penalties for contrived arrangements with the sole or dominant purpose of reducing turnover to gain access to JobKeeper.
for more information on Unpacking the JobKeeper check out the ATO https://social.shuriken.com/1EUj