In the week starting 30th March, the Government announced the third economic stimulus package which includes a JobKeeper payment for eligible businesses that have been significantly impacted by the Coronavirus.
The information fact sheets for this payment are available here. Latest update as at 14th April.
Please note: Legislation for the JobKeeper payment passed on 8th April and ATO has released comprehensive information regarding the application process on 14th April.
Once you have done this, you will receive further instructions from ATO via email
The JobKeeper Payment is intended to subsidise some of the wages that employers pay their existing workers, whether they are still working or have been stood down. Stood down employees ordinarily do not have to be paid, but under this package, the stood down employees will be eligible for the payment.
Below is the latest information available by the Treasury, including our commentary and additional advice where relevant.
Which employers are eligible?
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); or
their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
the business is not subject to the Major Bank Levy.
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.
How to prove a reduction in turnover?
To establish that a business has faced a 30% (or 50%) fall in their turnover, most businesses would be expected 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.
Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established 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 adversely affected by the impacts of the Coronavirus.
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 ceases or significantly curtails its operations). There will 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.
How much is the payment?
The amount per employee is $1500 per fortnight (before tax). Tax should be withheld at marginal rates. The payment is up to a period of 6 months (13 fortnightly payments, totalling $19500 gross, per employee).
There is no limit to the number of employees (according to current available data). However, for Partnerships, only 1 partner can be nominated; for Company directors, only 1 director can be nominated in their capacity as a director earning directors’ fees. If the employee is receiving a salary and also happens to be a director in the company, their eligibility would be assessed in the same way as other non-associate employees)
When will the payment be received?
Payments will be made to the employer monthly in arrears by the ATO. The payment will be paid once a month (e.g. $3000 per month per employee), and the first payment will be received by the employer in the first week of May 2020.
For example, for the period 30th March to 30th April, the subsidy will be paid to employers in the first week of May, and will be equal to $1500 x 2 fortnights, i.e. $3000 per employee.
Payments must be made according to the employer's usual pay cycle, and the JobKeeper payment will be given in arrears (after the payment has been made to eligible employees). If an employer does not have the cash available for this arrangement, they might need to speak to their bank about providing emergency credit.
“The banks have said businesses may be able to use the upcoming JobKeeper payment as a basis to seek credit in order to pay their employees until the scheme is making its first payments.” - see FAQ
If the employee is still engaged in the business as usual, then the normal pay cycle and salaries will continue.
You may want to change your business’ pay cycle to allow for monthly salary payments in order for the cash to be available from ATO closer to the pay date. This can be mutually agreed between the employer and employee.
“Where an employer pays their staff monthly, the ATO will be able to reallocate payments between periods. However, overall an employee must have received the equivalent of $1,500 per fortnight” - see FAQ
What if I haven’t paid the full $1500 per fortnight?
For the first two fortnights (30 March – 12 April and 13 April – 26 April), ATO will accept the minimum $1,500 payment before tax has been paid for each fortnight even if it has been paid late, provided it is paid by the end of April. This means that employers can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.
Which employees are eligible?
Eligible employees are employees who:
are currently employed by the eligible employer (including those stood down or re-hired);
were employed by the employer at 1 March 2020;
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);
are at least 16 years of age;
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
are not in receipt of a JobKeeper Payment from another employer.
Associates of the company are also eligible (e.g. directors who were on the payroll at 1st March and meet the other requirements listed above).
New information has recently been released regarding Primary Employers. This makes the eligibility criteria of employees slightly different for employees who have more than one employer.
“Every employee is only able to receive one payment from one employer, their primary employer. The ATO will provide guidance on how to determine your primary employer.” - See FAQ
What about sole traders?
Sole traders who meet the eligibility criteria listed above will also be eligible for the payment. They will need to register their intention to claim the payment and once the application process commences, nominate themselves as the individual to receive the payment.
The information from Treasury is a little ambiguous at this stage, as to whether the Payment will apply to sole traders who also have employees (as it only refers to sole traders without employees), however, it is reasonable to deduce that sole traders who do pay wages will be able to apply for the Payment for their employees as well as for themselves. This is to be confirmed.
Is superannuation payable on the JobKeeper payment?
Superannuation is not required to be paid on the JobKeeper payment (on amounts greater than the ordinary earnings that are required to be paid) but employers may choose to pay if they want to.
Example 1 - for a stood down employee, the required pay for the period is NIL, so if the employee receives $1500 per fortnight, no superannuation applies.
Example 2 - for a full time employee who is still working their usual hours, the required pay for the period is $3000, so the employee receives $3000 per fortnight ($1500 is paid to the employer as a subsidy), and superannuation of 9.5% applies to the full $3000 (i.e. $285).
Example 3 - for a part-time employee who is still working their usual hours, the required pay for the period is $1000, so the employee receives $1500 per fortnight ($1500 is paid to the employer as a subsidy), and superannuation of 9.5% applies to the ordinary earnings of $1000 (i.e. $95).
Other information
There are working examples on the Treasury fact sheets which might assist you in determining how the payment will be implemented. Please read these fact sheets before sending any enquiries to our office about this subsidy.
ATO JOBKEEPER PAYMENT WEBSITE (added 14th April 2020)
JobKeeper Payment — Information for employees
JobKeeper Payment — Information for employers
Supporting businesses to retain jobs
Frequently Asked Questions (added 5th April 2020)
Employee nomination form (added 14th April 2020)