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What exactly is the JobKeeper payment?

What exactly is it and which businesses are eligible?
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What exactly is the JobKeeper payment?

What exactly is the JobKeeper payment?

8 April 2020

On Tuesday 30 March, the Federal Government announced the JobKeeper payment plan as part of an unprecedented $130 billion stimulus package.

The JobKeeper payment is designed to help businesses keep their employees on the payroll during government-ordered closures and dwindling profits. The payment equals $1,500 per eligible employee, per fortnight.

The Government hopes that when businesses are ready to re-open after the hibernation period, employees will be able to go back to work quickly and with little interruption.  

Which businesses are eligible?

Eligible employers are businesses (including companies, partnerships, trusts, sole traders), not for profits and charities:
  • with a turnover of less than $1 billion whose turnover has fallen by more than 30% (of at least one month); OR
  • with a turnover of $1 billion or more whose turnover has fallen by more than 50% (of at least one month);
  • big banks subject to the Major Bank Levy are not eligible.

Most businesses are expected to be able to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier in 2019.

However where a business’s turnover a year earlier is not representative of their usual or average turnover, (e.g. because there was a large interim acquisition or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of COVID-19.

The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations).
There will also be some tolerance where employers, in good faith, estimate a greater than 30 % (or 50%) fall in turnover but actually experience a slightly smaller fall.

Eligible employees include full time and part-time employees, including stood down employees. Where a casual employee has been with their employer for at least the previous 12 months, they will also be eligible for the payment. Apprentices and trainees may also be eligible for the JobKeeper payment. An employee will only be eligible to receive this payment from one employer.

The subsidy will include not for profit employees and New Zealanders who work in Australia but are typically unable to access welfare support. Self-employed individuals are also eligible to receive the JobKeeper payment.

The subsidy is aimed at preventing workers from being stood down.

The Australian Government has put together a fact sheet dedicated to employers for more information.

What about my employees?

Eligible employees:
  • were employed by the employer at 1 March 2020;
  • are currently employed by the employer (including those stood down or rehired);
  • 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) or a sole trader;
  • are at least 16 years of age;
  • are an Australian citizen, the holder of a permanent visa, a protected special category visa, a non-protected special category visa who has been residing continually in Australia for 10 years or more, or a New Zealander on a special category (subclass 444) visa (all other temporary visa holders are not currently eligible); AND
  • are not in receipt of a JobKeeper payment from another employer.
  • apprentices and trainees may also be eligible for the JobKeeper payment, provided that they meet all of the relevant employee eligibility requirements.

If your employee was on your books on 1 March 2020 and continues to be engaged by you – either as a full-time, part-time, long-term casual, or they have been stood down – they are eligible to receive the payment.

If you have stood down an employee in this period and they are now receiving welfare payments (e.g. JobSeeker), they are eligible for the JobKeeper payment but must advise Service Australia of their new income.

If your employee is employed by multiple businesses, they are only eligible for one JobKeeper payment. Ask your employees if you are their primary employer – if yes, you must include them in your application to the Australian Taxation Office (ATO).

If you are not their primary employer, do not list them in your application.   

The Australian Government has put together a fact sheet dedicated to employees for more information.

What are your obligations as an employer?

The subsidy will be run by the Australian Taxation Office and will allow the Government to ensure employers are passing the payment onto their employees.

If your employee currently earns less than $1,500 a fortnight before tax, they must still receive the full JobKeeper payment. The subsidy is not proportionate to an individual’s salary.

You can also choose to pay your employees an additional wage on top of the $1,500 a fortnight if possible, but it is not mandatory.

How to apply

Initially, employers can register their interest in applying for the JobKeeper payment via from 30 March 2020.

Subsequently, 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. An employer that elects to participate is required to include all eligible employees in the scheme. Participating employers will be required to ensure eligible employees 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.

What you will need to apply:

  • supporting documents that demonstrate your business has seen, or will see a 30 or 50% decrease in revenue, depending on your turnover
  • the number of eligible workers employed by your business.

In applying for JobKeeper employers will need to provide information to the ATO on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.

Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper payment at from 30 March 2020.

The payment will be made monthly to that person’s bank account. Further details for the self-employed are see the Support for Sole Traders factsheet.

If you are self-employed you will need to provide:

  • your ABN
  • your tax file number
  • supporting documents that demonstrate your business has seen, or will see a 30% decrease in revenue.
Remember to communicate clearly to your employees during this time. They are not required to apply for the payment like other welfare payments (e.g. JobSeeker). The JobKeeper payment is to be paid directly to employees through your payroll system.

How long will the payment last?

The JobKeeker payment is a temporary measure that will last 6 months. The purpose of the subsidy is to help businesses keep their employees and be able to quickly re-start once the COVID-19 health crisis is over.

The first payment is expected to go out in the first week of May and be backdated to Tuesday 30 March when the subsidy began. Payment will be made to the employer monthly in arrears by the ATO.

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