On 8 April 2020, the Federal Government passed a package of Bills through both Houses of Parliament (which received Royal Assent on 9 April 2020) to give effect to (amongst other things) the JobKeeper Scheme. Subsequent to this, a Legislative Instrument was released by the Treasurer containing the detailed rules of the JobKeeper Payment.
Please refer to the:
- Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 https://www.legislation.gov.au/Details/F2020L00419 ; and the accompanying
- Explanatory Statement. https://www.legislation.gov.au/Details/F2020L00419/Explanatory%20Statement/Text
We know this legislation affects many of our clients in various industries and occupations and is integral to the financial sustainability for many of them over the next few months. We have over the last few weeks received what could be described as a ‘colossal amount’ of phone calls and emails regarding this piece of legislation.
So to assist our clients, and for ease of reference, we have provided a detailed summary of the key aspects of the JobKeeper Payment including 50 questions and answers that hopefully walk you through the terminology, reference points, links and processes that both employers and employees will need to understand not only immediately, but over the following few weeks and months and potentially for some, the next six months up until October 2020.
We hope that the following question and answer format will help our clients work through the detail.
Question 1: As an employer, do I have to register for the JobKeeper payment?
Eligible employers must elect to participate in the JobKeeper scheme via an application to the ATO. Please click here to register your interest in the JobKeeper Payment Scheme.
Question 2: What fortnights do the JobKeeper payments relate to?
JobKeeper payments are in respect of fortnightly periods, commencing on 30 March 2020 for a maximum of 13 fortnights (provided the employer was entitled to the payment for the fortnight commencing on 30 March 2020). This means the last fortnight in respect of which a JobKeeper payment may be paid is the fortnight commencing on 14 September 2020 and ending on 27 September 2020 – a period of 26 weeks.
Question 3: Why is the government providing $1500 per fortnight?
By temporarily offsetting wage costs, the JobKeeper scheme supports businesses to retain staff – and continue paying them – despite suffering decreased turnover during this period of downturn. The payment also supports these businesses to recommence their operations or scale up operations quickly without needing to rehire when the downturn is over.
Question 4: As an employer – how much will I receive per employees from the government?
A business that is entitled to the JobKeeper payment will receive a fixed payment of $1,500 per fortnight per eligible employee.
Question 5: What does the $1500 per fortnight represent?
The payment provides the equivalent of approximately 70 per cent of the national median wage.
Question 6: Do I have to pay my employees before I receive the government subsidy?
A payment of $1500 per fortnight must have already been passed on to the eligible employee in full.
Question 7: If I am in business but do not employ people am I eligible to receive $1500 per fortnight?
A business may be entitled to the JobKeeper payment for the business owner or a nominated owner regardless of whether the business has eligible employees. A business can be entitled to a JobKeeper payment for one business participant who is actively engaged in operating the business.
Question 8: Will the payment of $1500 per fortnight from the government include GST?
Goods and services tax does not apply in relation to JobKeeper payments made to employers because the payments are not consideration for supplies made by employers to the Government.
Question 9: If I employ people – how do I know if I’m entitled to a JobKeeper payment for my employees?
In general terms, an employer is entitled to a JobKeeper payment for a fortnight if: the fortnight is a JobKeeper fortnight and;
- the employer qualifies for the scheme on or before the end of the fortnight;
- the payment is for a person who is an eligible employee of the employer;
- the employer has satisfied the wage condition by making payments to the eligible employee equal to or greater than the amount of JobKeeper payment (less PAYG withholding and salary packaging) that the employer will receive for the employee for the fortnight; and
- the employer has notified the Commissioner of a range of matters, including notification of its election to participate in the scheme.
Question 10: When does the employee need to be registered with my business to receive the JobKeeper payment?
The employee must be registered in the business as at 1 March 2020, and the following other tests must be satisfied during the fortnight in respect of which a JobKeeper payment is to be made.
An employer will qualify for the scheme for a particular fortnight if it satisfies the following requirements:
- on 1 March 2020, it carried on a business in Australia or was a
non-profit body pursuing its objectives principally in Australia;
- before the end of the fortnight, it met the decline in turnover test; and none of the following applies:
- on 1 March 2020, it had been subject to the levy imposed by the Major Bank Levy Act 2017 for any quarter ending before this date, or
- it was a member of a consolidated group and another member of the group had been subject to the levy;
- it is a government body of a particular kind, or a wholly-owned entity of such a body; or
- at any time in the fortnight, a provisional liquidator or liquidator has been appointed to the business or a trustee in bankruptcy had been appointed to the individual’s property.
Question 11: Do all my employees need to be included in the JobKeeper scheme?
Once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all these eligible employees are covered by their participation in the scheme. This includes all eligible employees who are undertaking work for the employer or have been stood down. The employer cannot select which eligible employees will participate in the scheme.
Question 12: As an employer do I need to continually register for future fortnightly payments for my employees?
The JobKeeper scheme operates on a prospective basis only. Entitlement only arises for those JobKeeper fortnights and later fortnights in which eligible employers are registered under the scheme prior to the end of a JobKeeper fortnight.
The only exception to this is for the month of April 2020. In April 2020 employers may register prior to the end of April and if they meet the eligibility rules receive JobKeeper payments for eligible employees for JobKeeper fortnights in the two JobKeeper fortnights commencing from 30 March 2020.
Question 13: Do I need to tell my employees that I have registered for the JobKeeper payment?
Qualifying employers that decide to participate in the JobKeeper scheme must, as a condition of entitlement, notify all employees in writing that they have elected to participate in the scheme and that their eligible employees will all be covered by the scheme.
Question 14: What is the decline in turnover test?
The decline in turnover test needs to be satisfied before an entity becomes eligible for the JobKeeper payment. Once this occurs there is no requirement to retest in later months. If an entity does not qualify for 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.
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.
A decline in turnover test that must be satisfied at the end of a fortnight for an employer to qualify. Once an entity satisfies this test it does not need to retest its turnover in later months.
There are two ways in which a business can satisfy the decline in turnover test: the basic test and the alternative test.
Question 15: How do I satisfy the basic test in the ‘decline in turnover test’?
The basic decline in turnover test works by comparing the projected GST turnover of the entity for a period (the turnover test period) with its current GST turnover as calculated for a relevant comparison period (the comparison turnover).
In effect this compares a month or quarter in the period the JobKeeper scheme applies with the corresponding period in 2019. For most businesses this will be an appropriate comparison to identify if turnover has declined significantly.
Example 1: Satisfying the basic decline in turnover test
Burke Industries assesses its eligibility for JobKeeper payments on 11 May 2020 based on a projected GST turnover for May 2020 of $10 million from its business activities. The corresponding period is the month of May 2019 for which it had a current GST turnover of $20 million.
The alternative turnover test does not apply as the month of May 2019 is an appropriate relevant comparison period. The May 2020 turnover falls short of the May 2019 turnover by $10 million, which is 50% of the April 2019 turnover. This exceeds the specified percentage of 30% that applies to business entities with less than $1 billion aggregated annual turnover, so the decline in turnover test is satisfied.
Example 2: Failing to satisfy the basic decline in turnover test
Nguyen Industries assesses its eligibility for JobKeeper payments on 3 July 2020 based on a projected GST turnover for the quarter beginning on 1 July 2020 of $80 million from its business activities. The corresponding period is the quarter beginning on 1 July 2019 for which it had a current GST turnover of $100 million. The alternative turnover test does not apply as the quarter beginning on 1 July 2019 is an appropriate relevant comparison period. The July 2020 quarter turnover falls short of the July 2019 quarter turnover by $20 million, which is 20% of the July 2019 quarter turnover. This does not exceed the specified percentage for such entities of 30%, so the decline in turnover test is not satisfied.
Question 16: How do I satisfy the alternative test in the ‘decline in turnover test’?
A business will generally satisfy the test where the GST turnover in the turnover test period falls short of the comparison turnover and the shortfall is 30 per cent or more.
However, larger businesses need to have a greater decline in turnover than smaller businesses to satisfy the basic decline in turnover test. This recognises the greater capacity of larger businesses to withstand the economic impacts of the Coronavirus.
For a large business to satisfy the decline in turnover test, the GST turnover in the turnover test period must fall short of the comparison turnover and the shortfall must be 50 per cent or more.
Satisfying the alternative test in the decline in turnover test
The alternative decline in turnover test applies if there is not an appropriate relevant comparison period in 2019. This might be the case for a new business, started for example in January 2020 or a business that made a major business acquisition in 2020. In both examples, the basic test may not accurately reflect the downturn in activity that the business has suffered.
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, by legislative instrument, determine an alternative decline in turnover test applies to a class of entities.
Example 3: Satisfying the alternative decline in turnover test
Camille’s Farms carries on a farming business and retail flower sales in Australia. It was subject to a severe drought from 2018 until September 2019 that reduced the amount of flowers it could grow. It returned to normal crop output in January 2020. Its retail flower sales became significantly affected in March 2020.
It assesses its eligibility for JobKeeper payments on 3 July 2020 based on a projected GST turnover from its farming activities for the quarter beginning on 1 July 2020 of $2,000,000. The corresponding period is the quarter beginning on 1 July 2019 – a period in which Camille’s Farms was severely affected by drought. Because of the effects of the drought, Camille’s Farms had a much lower than usual current (2019) GST turnover of $2,500,000. The July 2020 quarter turnover falls short of the July 2019 quarter turnover by $500,000, which is 25% of the July 2019 quarter turnover. This does not exceed the specified percentage of 30%, so the decline in turnover test is not satisfied.
However, because of the effects of the drought on farming businesses, the Commissioner is satisfied that there is not an appropriate relevant comparison period for an entity that carried on a farming business. Instead, for these entities, the Commissioner determines an alternative test for which the relevant comparison period is the corresponding quarter in 2017. The Commissioner determines that the alternative test will be satisfied in these circumstances where the entity can show a 30% shortfall in turnover (for entities with less than $1 billion aggregated annual turnover) when compared to one of these alternative periods. In the quarter beginning on 1 July 2017, Camille’s Farms had a current GST turnover of $4,000,000. This represents a shortfall of 50% when compared to its projected GST turnover for the quarter beginning on 1 July 2020. This exceeds the specified percentage of 30%, so the alternative decline in turnover test is satisfied.
Example 4: Satisfying the alternative decline in turnover test
Seb Tech is a start-up technology company that began carrying on a business on 1 October 2019 selling its product to a range of businesses including cafes and restaurants. Despite strong initial sales, its sales declined substantially from March 2020. It assesses its eligibility for JobKeeper payments on 15 April 2020 based on a projected GST turnover for April 2020 of $15,000 from its technology business. However, because Seb Tech did not begin to carry on a business until 1 October 2019, there is no corresponding period in 2019 that applies.
As there is no corresponding comparison period in 2019, the Commissioner determines an alternative test under which the relevant comparison period is the average of the actual GST turnover in all of the months in which the business was being carried on prior to the turnover test period.
In October 2019 to March 2020, Seb Tech had an average monthly current GST turnover of $30,000. This represents a shortfall of 50% when compared to its projected GST turnover for April 2020 of $15,000. This exceeds the specified percentage of 30%, so the alternative decline in turnover test is satisfied.
Question 17: How do I know if I am a large business for testing purposes?
For the purposes of the decline in turnover test, a large business is a business that:
- in the income year in which the test time occurs—is likely to have an
aggregated turnover of $1 billion or more; or
- in the income year previous to the income year in which the test time
occurs—has an aggregated turnover of $1 billion or more.
Question 18: Turnover test – what periods do I use?
The periods for the turnover test can be periods of one month or three months.
One month turnover test period must be one of the following months:
- March 2020;
- April 2020;
- May 2020;
- June 2020;
- July 2020;
- August 2020;
- September 2020; or
Three month period must be one of the following periods:
- the quarter that starts on 1 April 2020;
- the quarter that starts on 1 July 2020.
Accordingly, for example, a business can make the comparison by comparing:
- the whole of the month of March 2020 with March 2019, or
- the quarter beginning on 1 April 2020 with the quarter beginning on 1 April 2019.
Question 19: How do I estimate my projected GST turnover?
Projected GST turnover includes the value of all the supplies that an entity has made or is likely to make in the period. A supply is likely to be made where, on the balance of probabilities, it can be predicted that the supply is more likely than not to be made.
The likelihood of a supply being made must be based on a reasonable expectation and considered in the context of the facts and circumstances of a particular business, such as by reference to the terms of a particular contract which requires supplies to be made in a certain period.
Question 20: What happens if employer receives the JobKeeper payments based on a forecast that turns out to be incorrect?
If an entity receives the JobKeeper payments based on a forecast that turns out to be incorrect, they may be potentially be required to refund the payments to the ATO. However, the Commissioner has indicated there will be some tolerance where employers, in good faith, estimate a 30% decline in turnover but actually experience a slightly smaller fall.
Question 21: Why don’t I just reduce my turnover to meet the eligibility criteria?
Businesses, individuals and entities that deliberately enter into contrived arrangements with the sole or dominant purpose of reducing their turnover in order to gain access to JobKeeper payments or increase the amount of JobKeeper payments they receive will not be entitled to the payment or the increased payment and the general interest charge will apply on the overpayment under section 19 of the Act. In addition, significant administrative as well as criminal penalties are also likely to apply to the parties involved in such schemes.
Question 22: I am an employer – how do I know who is an eligible employee that can receive the JobKeeper payment?
An employer is only entitled to a JobKeeper payment for a person for a fortnight if the person is an eligible employee. This reflects that the payment is a wage subsidy – it is intended to help employers to continue paying their employees during this period of downturn.
An eligible employee of an employer for a JobKeeper fortnight is a person who satisfies the following requirements:
On 1 March 2020:
- the person was aged 16 years or over;
- the person was an employee other than a casual employee of the employer, or was a long term casual employee of the employer; and
- the person was an Australian resident (within the meaning of section 7 of the Social Security Act 1991), or was a resident of Australia for the purposes of the Income Tax Assessment Act 1936 and was the holder of a Subclass 444 (Special Category) visa.
At any time during the fortnight:
- the person is an employee of the employer;
- the person is not excluded from being an eligible employee. The exclusions relate to recipients of parental leave pay and dad and partner pay under the Paid Parental Leave Act 2010, and specified recipients of workers’ compensation.
Question 23: I am an employee – how do I know if I am an ‘eligible employee’?
The two sets of criteria for when a person is an eligible employee are:
- Test 1 – Eligible employee test – 1 March 2020 requirements
- Test 2 – Eligible employee test – JobKeeper fortnight requirements
Test 1 – Eligible employee test – 1 March 2020 requirements
- An employee who was younger than 16 years of age on 1 March 2020 is excluded from the JobKeeper payment scheme.
- An employee is employed on 1 March 2020 i.e. needs to be an employee of an entity before it experienced significant downturn as a result of the Coronavirus.
- a ‘long term casual employee’ i.e a person who has been employed by the employer on a regular and systematic basis during the period of 12 months that ended on 1 March 2020.
- The employee satisfies the residency requirement on 1 March 2020.
Question 24: I am casual employee with less than 12 months with my current employer?
Casual employees who have not been employed between 1 March 2019 and 1 March 2020 with the same employer cannot be an eligible employee for the purposes of the JobKeeper scheme.
There is some flexibility for any changes in ownership of a business and movement of employees within the same wholly-owned group. It means that employees are not disadvantaged if these events, which are ordinarily beyond their control, occur.
A person can therefore be treated as an eligible employee of the same employer even if the business or non-profit body in which the person is employed changes hands after 1 March 2020. It also means that in working out if a person is a long term casual employee of an employer, employment in a business or non-profit body in the 12 month period ending on 1 March 2020 can be counted even if the business or non-profit body changed hands during that period.
Example 6: Long term casual employees
On 1 March 2019, Sam commences employment as a casual employee at Annie’s Bakery. Sam has a regular work schedule – working between 3 and 4 days each week. On 1 July 2019, ownership of Annie’s Bakery changes hands. Sam continues to be employed as a casual employee of Annie’s Bakery and continues to work according to their regular work schedule from that date until 10 March 2020, when Sam is stood down.
For the purposes of determining whether Sam is a long term casual employee and an eligible employee, the fact that the business has changed hands will not disadvantage Sam. Sam is able to demonstrate regular and systematic employment at Annie’s Bakery for over 12 months. He is therefore a long term casual employee for the purposes of the JobKeeper scheme.
Test 2 – Eligible employee test – JobKeeper fortnight requirements
- a person was an employee of the employer at any time during that fortnight. The person does not need to be employed for the full fortnight.
- This ensures that an employer is eligible to receive a JobKeeper payment for a
fortnight in respect of an employee who has been rehired or terminated at a point
during the fortnight, provided the other eligibility and entitlement requirements are satisfied.
Question 25: What happens if I am receiving Paid Parental Leave?
A person cannot be an eligible employee for JobKeeper if, under the Paid Parental Leave Act 2010, parental leave pay is payable to a person, and the person’s paid parental leave (PPL) period overlaps with or includes a fortnight in respect of which a JobKeeper payment may be paid. The same applies for a person who is paid dad and partner pay under the Paid Parental Leave Act 2010 at any time during the fortnight.
If a person ceases to receive parental leave pay or dad and partner pay – for example, because they have received the full amount of the pay – and the person is otherwise an eligible employee of a qualifying employer, their employer may be able to receive JobKeeper payments for their employee.
This exclusion does not extend to any employer-funded paid parental leave that is outside the scope of the Paid Parental Leave Act 2010. This is because employer-funded paid parental leave schemes vary significantly in terms of the support that is provided by the employer.
Question 26: What happens if I am receiving workers compensation?
Specified recipients of workers’ compensation are excluded from being an
eligible employee for a particular fortnight. This applies if:
- the person is totally incapacitated for work throughout the fortnight;
- an amount is payable to the person under or in accordance with an Australian workers compensation law in respect of the individual’s total incapacity for work; and
- the amount is payable in respect of a period that overlaps with or includes the fortnight.
This is intended to capture a person whose entire wage is being paid under a workers’ compensation scheme. Where this is the case, the person is not an eligible employee because the economic impact of the Coronavirus is unlikely to affect the financial support they receive under the workers’ compensation scheme.
Where a person has some capacity to work in a particular fortnight, the person is not excluded from being an eligible employee for that fortnight. This is because the person’s employer likely pays part of their wages in addition to any payments made under the workers’ compensation scheme, or would be paying part of their wages if they were not stood down as a result of the Coronavirus. Accordingly, the JobKeeper payment should be available to the employer in these circumstances to support the employee provided the other eligibility and entitlement criteria are satisfied.
Question 27: If I am an eligible employee, do I have to inform my employer?
Yes. There is a requirement that eligible employees have provided a notice to their employer agreeing:
- to be nominated by the employer as an eligible employee under the
JobKeeper scheme as the employer with which the employee will
participate in the JobKeeper scheme;
- that they confirm they have not agreed to be nominated by another
- that they do not have permanent employment with another employer if they
are employed as a casual employee with this employer.The purpose of this nomination is to assist employers to determine whether they may be entitled to JobKeeper payment in respect of the employee for a particular fortnight.
A person who is employed by one or more qualifying employers will need to choose one employer that will receive the JobKeeper payments for their employment. Once an employee has nominated an employer and the employer has received JobKeeper payments in respect of the employee and has paid the employee, they cannot nominate a different employer. If for any reason, the employment relationship between an eligible employee and their nominated employer ends, the employee will not be able to have another employer qualify for the JobKeeper payments in respect of their new employment. Such a person may become entitled to receive other Government support, including the JobSeeker payment.
If an employee has nominated more than one employer to receive the JobKeeper payment, the employee does not satisfy the nomination requirements required to be an eligible employee. This means that no employers will be able to nominate the person under the JobKeeper scheme in the future.
If an overpayment results from an individual fraudulently nominating more than one employer, the individual will be jointly and severally liable to pay the overpayment and general interest charge on the overpayment under section 11 of the Act.
The Commissioner will also check compliance and ensure that employees have not nominated to participate with more than one employer.
Question 28: If I am a casual but I also have a full/part time job with a different employer, who do I nominate with?
Casual employees cannot nominate with an employer if they were permanently employed by another employer at the time of nomination. This ensures that an individual who is employed on a permanent basis (either full time or part time with an employer) must nominate their full time or part time employer under the scheme. This reflects that such employers are likely to be the individual’s ‘primary’ employer, and prevents an individual from nominating a secondary, casual employment position if their primary employment is unaffected.
Question 29: What if I have both a full-time and part-time job?
Individuals with one or more full time or part time jobs are free to nominate any one of those full time or part time jobs. Similarly, individuals with multiple long term casual jobs can nominate any one of those casual jobs.
Question 30: What if I work overseas but I am an Australian resident?
The residency rules ensure that Australian residents who are working overseas for an Australian based business can be an eligible employee under the JobKeeper scheme if their employer elects to participate in the scheme and the overseas based Australian resident agrees to be nominated by the employer for the purposes of the scheme.
Question 31: What happens if I was terminated before 1 March and then rehired after 1 March?
As with various tests relating to qualifying employers, the test for whether a person is an eligible employee involves applying two sets of criteria to the person at two discrete times: on 1 March 2020 and at a time during the relevant JobKeeper fortnight. This means there is no requirement for a person to satisfy all of the criteria on an ongoing basis (between 1 March 2020 and the end of a JobKeeper fortnight) in order to be considered an eligible employee for that fortnight.
Practically, this accommodates situations where a person’s employment was terminated after 1 March 2020 and the person is subsequently rehired by their employer. This may occur for example, if prior to the announcement of the JobKeeper payment an employer did not expect to be able to pay its employees but with the support of the payment is able to rehire its employees.
A person who has been stood down or is on leave is considered to be an employee of their employer under the Fair Work Act 2009 and for the purposes of the JobKeeper payment.
Question 32: Do eligible employees include contractors?
Treasury guidance indicates that fixed term contractors employed at 1 of March 2020 who satisfy the other eligibility criteria will be eligible to receive JobKeeper payments.
Question 33: Do eligible employees include company directors?
A director receiving a salary or wage who satisfies the other eligibility criteria will be eligible to receive JobKeeper payments. An eligible business operated through a company that pays director fees to non-executive directors, may nominate only one such individual to receive JobKeeper payments.
Question 34: Are employees that are on leave (paid or unpaid) eligible for the JobKeeper payment?
Employees on paid or unpaid leave will remain eligible for the JobKeeper payment, assuming they meet the other eligibility criteria.
Question 35: As an employer how do I meet the wage condition test?
For each JobKeeper fortnight, the employer is only entitled to a JobKeeper payment if the employer has satisfied the wage condition.
The wage condition requires that an employer pay each participating employee at least $1,500 for each JobKeeper fortnight. This reflects the practical operation of the JobKeeper scheme in which the JobKeeper payment is essentially a reimbursement to an employer of $1,500 where the employer has paid a participating employee at least that amount.
The component amounts that together must equal or exceed $1,500 are:
- amounts paid by the employer to the employee in the fortnight by way of salary, wages, commission, bonus or allowances (less PAYG withholding) i.e the employee’s income before tax;
- amounts withheld from payments made to the employee in the fortnight
under section 12-35 in Schedule 1 to the Taxation Administration Act 1953
– generally, this means amounts withheld by the employer for income tax or a HECS-HELP loan;
- contributions made in the fortnight to a superannuation fund or an RSA (retirement savings account) for the benefit of the employee, if the contributions are made under a salary sacrifice arrangement (within the meaning of the Superannuation Guarantee (Administration) Act 1992); and
- amounts that, in the fortnight, are applied or dealt with in any way where the employee has agreed for the amount to be so dealt with in return for salary and wages to be reduced – generally, this means amounts forming part of salary sacrifice arrangements.
The requirement that the component amounts be at least $1,500 applies regardless of whether the employee ordinarily receives more or less than that amount. For example if an employee:
- ordinarily receives $1,500 or more in income per fortnight before PAYG withholding and other salary sacrificed amounts, and their employment arrangements do not change they will continue to receive their regular income according to their workplace arrangements. The JobKeeper payment will assist the employer to continue operating by subsidising all or part of the income of the employee;
- ordinarily receives less than $1,500 in income per fortnight before PAYG withholding and other salary sacrificed amounts, the employer must pay the employee at least $1,500 per fortnight, subject to PAYG withholding and other salary sacrificed amounts to the value of $1,500;
- has been stood down, the employer must pay the employee at least $1,500 per fortnight, before PAYG withholding and other salary sacrificed amounts to the value of $1,500; or
- was employed on 1 March 2020, subsequently ceased employment with the employer, and then has been rehired by the same eligible employer, the employer must pay the employee at least $1,500 per fortnight, before PAYG withholding and other salary sacrificed amounts to the value of $1,500.
Question 36: What happens if an employer pays my employees every four weeks?
If an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly, then the payment can be allocated between fortnights in a reasonable manner. For example, if an employer’s ordinary arrangement is to pay an employee every four weeks, it may be reasonable for the purposes of satisfying the wage condition if the employee is paid at least $3,000 for every four week period.
Question 37: Is superannuation paid on top of the JobKeeper payment?
Changes to the legislation will ensure that an employer will only need to make superannuation contributions for any amount payable to an employee in respect of their actual employment, disregarding any extra payments made by the employer to satisfy the wage condition for getting the JobKeeper payment.
For example, if the work actually done by an employee over a period entitled them to be paid $1,000, but the employer instead paid them $1,500 to satisfy the wage condition for a JobKeeper fortnight, then the employer will only be required to make superannuation contributions in relation to $1,000. Similarly, any liability to superannuation guarantee charge that the employer would have for not making sufficient superannuation contributions would be calculated by reference to that $1,000 base.
An employer will still be required to make the same superannuation contributions for an employee whose pay exceeds the JobKeeper payment. For example, if an employee is entitled to be paid $2,000 for their work, the employer will continue to be required to make contributions in relation to that amount, irrespective of whether they were eligible to receive the JobKeeper payment in relation to the employee.
An employer will not be required to make superannuation contributions for an employee who is stood down. This is because employers have no obligation to pay stood down employees. If an employer pays a stood down employee $1,500 to satisfy the wage condition for receiving the JobKeeper payment, then the entire amount will be disregarded for superannuation guarantee purposes.
Question 38: As an employer, do I need to notify the ATO to be eligible for the JobKeeper scheme?
The JobKeeper scheme requires an employer to actively seek to participate in the scheme. An employer must therefore 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.
Please click on the following link to complete a JobKeeper employee nomination notice to notify employees that, as their employer, you intend to participate in the scheme and ask the employees to agree to be nominated and receive payments from them as part of the scheme. The employee indicates on that same form where they agree (or not) before returning the form to the employer, who must retain it for five years.
This election generally 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.
However, there is a different timing rule where the employer wishes to participate in the scheme and receive the first or second JobKeeper payment (relating to the JobKeeper fortnights commencing on 30 March 2020 and 13 April 2020 respectively). Where this is the case, the employer has until the end of the second JobKeeper fortnight, that is, 26 April 2020, to provide the Commissioner with its election to participate. This gives employers more time to comply with the election requirement and means that fewer employers will miss out on receiving the first JobKeeper payment where it may be otherwise entitled to the payment as generally the scheme only applies prospectively to elections 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.
Employers that have difficulty meeting the timing requirements may seek such a deferral from the Commissioner.
Question 39: As an employer, what do I tell the ATO about my eligible employees?
To be entitled to a JobKeeper payment for a fortnight, the employer must have provided the following information to the Commissioner in the approved form:
- the details of each eligible employee; and
- other information about their entitlement to the JobKeeper payment.
It is anticipated that the Commissioner may require the following details for each eligible employee in the approved form:
- the name of the employee;
- the type of the employee’s employment; and
- the employee’s citizenship or residency status.
Once an employer has provided details of its eligible employees to the Commissioner, the employer must also notify each eligible employee within 7 days. This requirement is intended to keep eligible employees informed about the process.
If the information provided to the Commissioner does not subsequently change in the following JobKeeper fortnights, an employer is not required to provide the same information to the Commissioner again. However, where there is a change of circumstances – for example, a person who was an eligible employee for the previous JobKeeper fortnight is no longer an eligible employee for the relevant JobKeeper fortnight – the employer must notify the Commissioner of this in the approved form before the end of the relevant JobKeeper fortnight to satisfy the notification requirements for entitlement to a payment for that fortnight.
Question 40: Can I get a JobKeeper payment from two different employers if I’m doing two different jobs?
An entity is not entitled to the JobKeeper payment for an individual who is an employee (or business owner) if another employer is entitled (either as an employer or as a business owner) to a JobKeeper payment for the individual.
In circumstances where an individual has more than one employer, only one employer is entitled to a JobKeeper payment in relation to that individual. In circumstances where an employer seeks the agreement of an employee to participate in the JobKeeper scheme and that employee has already agreed to participate in the scheme in relation to his or her other employer, the employee should not accept the later nomination.
If an employee has agreed to be nominated to participate in the JobKeeper scheme as an eligible employee of their first employer and not their second employer, but the second employer receives payments for that employee, then the second employer will not have been entitled to those payments. If this occurs, the employer will be required to repay these payments as this is an overpayment under the Act. This will not affect entitlement to JobKeeper payments in relation to the employee for the employee’s nominated (first) employer.
The taxation law contains administrative penalties that apply to a person who makes false or misleading statements to the Commissioner and other entities that are required or permitted by the taxation law. These penalties could apply to the notice provided by the employer to the Commissioner, and any statements made by an employee to the employer about whether they have agreed to be nominated by any other employer or other eligibility requirements such as residency or visa status.
Question 41: Can I earn other income while I receive JobKeeper payments?
The JobKeeper payment is not income tested. Eligible employees or other recipients of JobKeeper including sole traders, can earn additional income without losing their eligibility for the payment.
Question 42: Can I receive both the JobKeeper payment and the ‘supporting apprentices and trainees subsidy’?
No – employers are only eligible for one of the subsidies. Where an employer would qualify for both payments, they may receive the apprentice subsidy for the period 1 January 2020 to 31 of March 2020. The employer could then receive payments under JobKeeper for the period from 1 April 2020 to 27 September 2020.
Question 43: What happens if I think as an employer I am no longer eligible?
An employer is not entitled to the JobKeeper payment if they notify the Commissioner that they no longer wish to participate in the JobKeeper scheme. This notification must be made in the form approved by the Commissioner. An employer does not need to consult with or obtain the consent of its eligible employees if it no longer wishes to participate in the JobKeeper scheme.
Question 44: I am a business owner – am I eligible for the JobKeeper payment?
The JobKeeper payment entitles an employer to the JobKeeper payment with respect to its eligible employees. This could include a business owner who is an employee, including a sole trader, adult beneficiary of a trust, or a director or shareholder of a company. However, it will not include owners who are not employees such as sole traders, partners, adult beneficiary of trusts, or a director or shareholder of a company.
However, the JobKeeper scheme recognises that certain participants in a business, such as a sole trader, are also affected by the economic downturn caused by the Coronavirus. Accordingly, in order to provide a benefit to such business participants, the Rules in Division 3 extend the availability of the JobKeeper payment to certain participants in a qualifying business. The entitlement to the JobKeeper payment applies to businesses and is not available to non-profit entities.
Entitlement to a JobKeeper payment as a business participant operates similarly to entitlement to the payment as an employer with some additional integrity rules. Particularly:
- the fortnight must be a JobKeeper fortnight; and
- the business must qualify for the JobKeeper scheme on or before the end of the fortnight.
1. You must notify the ATO – An entity must notify the Commissioner of its election to participate in the JobKeeper scheme and the details of the nominated individual. Also, the entity must not have notified the Commissioner that the entity no longer wishes to participate in the JobKeeper scheme. Notification of this information must be made in the approved form.
2. No more than one individual and one entity – A business is not entitled to a JobKeeper payment under Division 3 of the Rules for more than one individual. If a business has more than one eligible participant, the business can only be entitled to receive the JobKeeper payment in relation to one of the individuals. It is up to the business to determine which individual is nominated as the eligible business participant.
Similarly, an individual can only create an entitlement for one entity. A business is not entitled to a JobKeeper payment for an individual if another business is also entitled under either Division 3 or Division 2 for the same individual. For example, where an individual is an eligible participant of two businesses – only one of those businesses is entitled to the JobKeeper payment in respect of that individual. Also, for example, where an individual is an eligible participant of a business and is entitled to a JobKeeper payment as an employee of another business–the business is not entitled to a JobKeeper payment in respect of the individual.
3. Integrity rule – The JobKeeper payment for an entity in respect of business participants is intended to support active businesses only. The only entities that are entitled to a JobKeeper payment for business participants are those that had an ABN on 12 March 2020, or such later time that the Commissioner allows.
This discretion is only able to be exercised by the Commissioner for unintended situations where the entity was running an active business prior to 12 March 2020 but was not required to have an ABN to operate it. This will occur only in limited circumstances, such as in relation to businesses that are conducted in the external Territories.
In relation to an entity that has an ABN, it is additionally required that:
- an amount was included in the entity’s assessable income for the 2018-19 income year in relation to it carrying on a business and the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the amount should be so included; and
- the entity made a taxable supply in a tax period that applied to it that started on or after 1 July 2018 and ended before 12 March 2020 and the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the entity had made the taxable supply.
For the purposes of determining whether the entity made a taxable supply, it should be assumed that the entity is registered, the supply is neither GST-free nor input taxed, and the external Territories are part of the indirect tax zone.
4. Must be eligible business participant – 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 (that is, because the individual is the owner of the business ie a nominated business participant not an employee of the business);
- satisfies the business participation requirements at any time in the fortnight;
- satisfies the 1 March 2020 requirements; and
- satisfies the nomination the requirements.
The business participation requirements are that, at any time in the fortnight, the individual is actively engaged in the business carried on by the entity. The individual must be actively engaged in the operations and activities of the body.
Further, depending on the type of entity the business is, the individual must have a particular
role within the business. In the case of an entity that is a:
- sole trader—the individual must be the entity;
- partnership—the individual must be a partner in the partnership;
- trust—the individual must be an adult beneficiary of the trust; and
company—either a director or shareholder in the company.
Question 45: What if I’m not registered for GST?
Whilst the legislation requires an entity to make a taxable supply, the Commissioner has discretion to allow businesses that are not required to be registered for GST due to the GST turnover test of $75,000, to receive the JobKeeper payment.
Question 46: When exactly will the ATO pay the $1500 per fortnight to the employer?
Once the Commissioner is satisfied of an entitlement to a JobKeeper payment, the Commissioner must pay $1,500 to the employer for each eligible employee or to the business for its participating individual. The Commissioner must make the payment for a fortnight no later than the later of:
- 14 days after the end of the calendar month in which the fortnight ends; and
- 14 days after the Commissioner is satisfied that the employer or business is entitled to the payment for the fortnight.
This means that, while entitlement to a payment is assessed in relation to a JobKeeper fortnight and the amount is a fortnightly amount, an entitled employer or business will receive the JobKeeper payment monthly. For example, a participating employer with one eligible employee who qualifies for both fortnights in June 2020 will generally receive $3,000 by 14 July 2020.
Question 47: What about the first payments for the month of April 2020?
There are transitional rules that allows the Commissioner to make an advance payment for the JobKeeper fortnights ending in the month of April without being satisfied that the entity is entitled to that payment.
This is necessary to ensure that payments in respect of the first and second JobKeeper fortnights (being the fortnights starting on 30 March 2020 and 13 April 2020 respectively) can be made quickly to assist entities affected by the Coronavirus.
However, before the Commissioner can make such an advance payment:
- the entity must have notified the Commissioner in the approved form of its election to participate in the scheme; and
- the Commissioner is satisfied, on the basis of the information provided by the entity in the approved form, that it is reasonable in the circumstances make the payment.
If the Commissioner subsequently determines that the entity was entitled to a lesser amount or a nil amount in respect of the relevant JobKeeper fortnights, then the overpayment rules in the Act would apply and the entity would be required to repay the overpaid amount.
Conversely, if the Commissioner subsequently determines that the entity was entitled to a greater amount, the Commissioner must make an additional payment to account for the difference.
Question 48: As an employer how do I report to the ATO on a monthly basis to be eligible for the JobKeeper payment?
The JobKeeper scheme requires monthly reporting. An entity that is entitled to a JobKeeper payment for a fortnight must notify the Commissioner of:
- its current GST turnover for the reporting month; and
- its projected GST turnover for the following month.
The reporting month is a month in which there is a fortnight for which the entity is entitled to a JobKeeper payment. The report must be made to the Commissioner in the approved form and must be made within 7 days of the end of the reporting month.
The information provided as part of this report does not affect an entity’s eligibility, including in respect of the decline in turnover test (which only needs to be satisfied once). It is also not intended to verify whether the projection given as part of the decline in turnover test was accurate. Rather, it is intended to ensure that there is good information on which to assess the economic impact of the Coronavirus on a monthly basis across Australia.
Question 49: When will the JobKeeper payments stop?
JobKeeper payments are intended to only be available in respect of fortnights up to the fortnight ending on 27 September 2020, although payments may still be made in respect of those fortnights beyond this time.
While it is expected that most JobKeeper payments will be paid by October 2020, it may be appropriate for a payment to be paid to an entity beyond this time.
Question 50: What do I do now?
We are here and we want to help our clients. We appreciate that sometimes there is complexity in the law but it is our job to help you navigate through this by providing both a practical understanding and ‘hands on approach’ to solving your questions where we can.
Over the following months good solid planning to prepare for various possible outcomes is going to be the key for many of our clients and we want to be a part of that.
So as always, please do not hesitate to contact us to review your situation and determine what action is required. We can be reached, as always on our office number (02) 4958 1829 or at firstname.lastname@example.org.