Urgent Update: New Government JobKeeper Payments
On 30 March 2020 the Federal Government announced the $130 billion JobKeeper payment.
Please be aware that the Legislation for this payment is pending. We don’t know all the details yet so there are still many questions that we expect will be answered in further Government media releases.
We understand this is frustrating for many of you but rest assured we are working closely with our professional accounting bodies to keep you informed with accurate and practical information from the Government and the ATO when it becomes available.
Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees.
The JobKeeper payment will be administered by the ATO, and will be paid to businesses that have experienced a downturn of more than 30% (50% for businesses over $1bn).
Affected employers will be able to claim a fortnightly subsidy payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months. This full amount of $1,500 must then be paid to all eligible employees, whether they are full time, part-time or casuals.
The first payments will be made from the ATO on 1 May 2020.
The business will continue to receive the subsidy 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 business.
Eligibility – Employers
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). There are a few other requirements for larger businesses.
The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments. Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.
Sole traders and the self-employed with an ABN, and not-for-profits (including charities) that meet the turnover tests are eligible for the JobKeeper payment.
Eligibility – Employees
Employees eligible for JobKeeper payments are those who:
- Were employed by the relevant employer at 1 March 2020;
- Are currently employed by the employer (including those who have been stood down or re-hired);
- Are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March);
- Are at least 16 years of age;
- 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.
Businesses, both with employees and without employees (sole traders) can register their interest in applying for the JobKeeper payment with the ATO at https://www.ato.gov.au/Job-keeper-payment/.
At a later date, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.
Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO.
Participating employers will be required to ensure eligible employees 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. Please note employees are only entitled to receive the JobKeeper payment from one employer only.
If the employee is currently receiving a form of income support through Services Australia the employee will need to report the JobSeeker payment to Services Australia as it forms part of the income test.
Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment, provide that individual’s Tax File Number and provide a declaration as to recent business activity. People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.
Please note that your business will have to keep paying your employees between now and 1 May 2020 out of your cash flow, and on 1 May 2020 if you are eligible for JobKeeper payments, the ATO will then reimburse you $1,500 per eligible employee per fortnight dated from 30 March 2020.
Potentially the Cash Boost for Employers accessed through the BAS system will assist with cash flow to enable the continued payment of wages to employees in the interim.
For those of you who may want to look at more detailed information and worked examples please click here.
In further emails to come, we will provide more information on accessing Federal loan assistance of up to $250,000 under the Coronavirus SME Guarantee Scheme and State loan assistance of up to $250,000 through the Queensland Rural and Industry Development Authority to assist with longer term cash flow.
We are here to help all our clients in any way we can.