Sole traders and self-employed are included in the group of eligible employers who will now gain access to the Federal Government’s $130 billion wage subsidy program known as the JobKeeper payment.
Both sole traders who employ people, and those who do not, can access these payments.
Provided they meet the eligibility criteria (see below), sole traders will receive $1,500 per fortnight, before tax, per eligible employee, which can also include themselves if they are self-employed.
The payments will be for a maximum of six months, starting from March 30, 2020. Sole traders will receive the first payments in the first week of May, with amounts backdated to March 30, 2020.
- Sole traders will be eligible for the JobKeeper payments if their business has a turnover of less than $1 billion and their turnover is expected to be reduced by more than 30% as a result of COVID-19, compared to /a comparable period a year ago, of at least a month’.
- Businesses that have annual turnover of $1 billion or more, and which expect their turnover to be reduced by 50 % or more, will also be eligible for the payments.
- For sole traders that have employees, payments will be available for each eligible employee that was on their books as of March 1, 2020 and continues to be ‘engaged’ by the sole trader. This includes part-time and stood-down employees. Casual employees will also be eligible if they have been with the same employer on a regular basis for at least 12 months.
To be eligible, employees must also be an Australian citizen, or they must hold a visa that would allow them to access other government payments, such as the JobSeeker payment.
What do I do now?
Sole traders will need to elect to participate in the JobKeeper payment scheme by applying through the Australian Taxation Office.
Please click here to be directed to the associated website.
Business owners will then need to continue to provide information to the ATO each month, including the number of employees within the business.
HOW WILL I RECEIVE MY PAYMENTS?
Sole traders will receive the payments directly from the ATO, monthly, in arrears.
If the sole trader is receiving payments for eligible employees, they will then need to use the payments to pay their employees’ wages.
- If an employee usually receives more then $1,500 per fortnight before tax, they will continue to do so, and the JobKeeper payment would be used by the employer to subsidise these amounts.
- If an employee usually receives less than the JobKeeper payment, they must be paid $1,500 per fortnight, before tax, at a minimum.
- Employees that have been stood down will also need to be paid $1,500 per fortnight, before tax, at a minimum.
DO THE JOBKEEPER PAYMENTS INCLUDE SUPERANNUATION?
No. According to the Treasury, it will be up to the individual employers whether they choose to pay superannuation on additional wages available through the JobKeeper payments.
CAN I STILL ACCESS OTHER GOVERNMENT PAYMENTS, SUCH AS THE JOBSEEKER PAYMENT AND RENT ASSISTANCE, IF I RECEIVE THE JOBKEEPER PAYMENT?
The government has temporarily opened up the eligibility criteria for the JobSeeker payment so that more sole traders can access those payments. However, accessing the JobKeeper payment as a non-employing sole trader may change your eligibility for other government payments, as the income from the JobKeeper payment will need to be reported as such.
WHAT HAPPENS IF I AM A SOLE TRADER WHO PREVIOUSLY HAS EMPLOYEES BUT I HAD TO LET THEM GO BECAUSE OF COVID-19?
If you stood down workers before yesterday’s announcement, and they worked for your business as of March 1, 2020, you will still be able to access the JobKeeper payments for them, provided you and the employees meet the other eligibility criteria.
WHAT IF I OPERATE MY BUSINESS THROUGH A PARTNERSHIP OR A TRUST?
According to the statement from Treasurer, Josh Frydenberg on Monday, Australian businesses that are structured as companies, partnerships, trust and sole traders are all eligible for the scheme, as are not-for-profit entities and charities.
HOW DO I REGISTER TO RECEIVE THE JOBKEEPER PAYMENTS?
You can register an expression of interest on the ATO website, please click here.
The ATO is advising business they do not need to call the tax office to register.
WHAT OTHER ASSITANCE IS AVAILABLE TO SOLE TRADERS THAT ARE BEING AFFECTED BY COVID-19?
Sole traders may also be able to access other financial assistance through the Federal Government’s previously announced stimulus packages including the JobSeeker payments and the extended instant asset write-off scheme.
Sole traders that have seen a reduction in their income may also be able to access their superannuation, and sole traders are also included in the list of eligible businesses for the Government’s coronavirus SME guarantee scheme for loans.
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) 4058 1829 or at email@example.com.