Earlier this week the Government announced a new wage subsidy to be paid to employers; the JobKeeper payment.
This payment is designed to help businesses that are impacted by COVID-19 cover the cost of wages and keep their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee effective from 30 March 2020, for a maximum period of 6 months. However, payments won’t be made to employers until the first week of May 2020 and will be paid by the ATO monthly in arrears.
Employers must ensure that each employee it claims the JobKeeper payment for, receives at least $1,500 (gross) per fortnight in wages. This includes employees (such as casuals and part-time employees) who would normally receive less than $1,500 per fortnight.
If an employee usually earns greater than $1,500 (gross) wages per fortnight, the employer is required to continue paying the employee their usual wages. However, if the employee has been stood down, the employee is only required to pay the $1,500 (gross) wage.
The employer is not required to pay the superannuation guarantee of 9.5% on any amount that is not wages. Therefore, if the employee has been stood down, the employer has the option of paying superannuation but is not required to. If an employee usually received a wage of $1,000 and now receives $1,500, superannuation will only be required to be paid on $1,000. If an employee continues to receive a wage of more than $1,500, superannuation will be required to be paid on the entire wage.
Employers will be eligible for this subsidy if:
- Their business has a turnover of less than $1 billion and their turnover has fallen by more than 30 per centrelative to a comparable period a year ago; or
- Their business has a turnover of $1 billion or more and their turnover has fallen by more than 50 per cent relative to a comparable period a year ago; and
- The business is not subject to the Major Bank Levy.
- Businesses are expected to establish their turnover has fallen in the relevant month (for monthly BAS lodgers) or three months (for quarterly BAS lodgers) relative to turnover a year earlier.
- If a business was not operational a year earlier or its earlier turnover is not representative of its usual turnover, i.e. due to an acquisition, it was newly established, it has variable turnover; the ATO will have discretion to consider additional information provided by businesses to demonstrate it has been adversely affected by COVID-19.
- The ATO also has discretion to set out alternative tests to establish eligibility in specific circumstances.
- There will also be tolerance where employers, in good faith, estimate a greater than 30% fall in turnover but in reality, experience a slightly smaller fall.
Employees are eligible if:
- They are currently employed by the eligible employer (including those stood down or re-hired);
- They were employed by the employer at 1 March 2020;
- They are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- They are at least 16 years of age;
- They are 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
- They are not in receipt of a JobKeeper Payment from another employer.
Employees must report the JobKeeper payment as income and therefore, won’t be eligible for the JobSeeker payment (via Centrelink) while they are receiving the JobKeeper payment. In addition, employees who have multiple employers will need to notify their primary employer to claim the JobKeeper on their behalf, as only one employer will be eligible to receive the payment.
Self-employed individuals (i.e. businesses without employees) can register their interest in applying for the JobKeeper Payment from 30 March 2020. You will need to provide an ABN for your business, nominate an individual to receive the payment and provide that individual’s Tax File Number. You will also need to 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.
Both employers and the self-employed/sole traders can register their interest for the JobKeeper payment here: https://www.ato.gov.au/general/gen/JobKeeper-payment/
Our understanding, based on the information released so far, is that businesses operated through Trusts that don’t pay wages to business principals, but instead distribute profits via trust distributions, won’t be eligible for the Jobkeeper payments.
More information about this wage subsidy can be found here:
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet_Info_for_Employers_3.pdf
Information current at 3/4/20
General Advice Warning – The information in this article is educational and general in nature. It does not take into consideration your personal financial or taxation information, goals and objectives. Please ensure you seek appropriate financial and taxation advice.
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