On 30 March 2020, the Government introduced a subsidy program to support employees and businesses. Known as the “JobKeeper” package, it is the largest package delivered by the Federal Government in response to Covid-19 to date. The JobKeeper Payment is designed to help businesses affected by the Coronavirus to cover the costs of their employees’ wages so that more employees can retain their job and continue to earn an income.
This package will provide a flat minimum payment of $1,500 per eligible employee per fortnight over the next 6 months to businesses affected by coronavirus COVID-19 (see below for details). This amount is equivalent to 70% of the median wage and represents 100% of the median wage for those industries most affected, such as tourism, hospitality and retail.
It is the intent of the JobKeeper Payment to support employers to maintain their connection to their employees. These connections will enable business to reactivate their operations quickly – without having to rehire staff – when the crisis is over.
As with all announcements from the Government during this time, it is subject to change and advice regarding practical application, however following is the advice as it is currently being provided by Treasury.
The Government will provide $1,500 per fortnight per eligible employee to an eligible employer for up to 6 months.
- If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to the prevailing workplace arrangements. The JobKeeper Payments will be paid to the employer to help subsidise part or all of the employees income up to the $1,500, meaning a $1,500 per fortnight windfall to the employer.
- If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay them, at a minimum, $1,500 per fortnight, before tax. This means that the employer again will receive such subsidy, but on this occassion the employee will be receiving a pay rise to top them up to $ 1,500 per fortnight. A windfall for both the employer and the employee this time.
- If an employee has been stood down, the employer must pay the employee, at a minimum, $1,500 per fortnight, before tax. In this circumstance there be will no windfall to the employer, however it is intended that this payment will allow the employer to begin operations again quicker, provide income to employees (even if at a reduced amount), and take pressure of the social security system (as employees will no longer receive Jobseeker payments).
- If an employee was employed on 1 March 2020, subsequently ceased employment and then were re-engaged by the same eligible employer, the employer will receive the $1,500 per fortnight subsidy from the government and pass this on, at a minimum, $1,500 per fortnight, before tax to the employee.
We have included in detail below what will be considered an eligible employer. There is a turnover test, however for the vast majority of employers the test will be that their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month).
The package commences from today and applies to employees registered with their employer from 1 March 2020. The first payment will be made via the ATO from 1 May and will be backdated to today (30 March 2020).
It will be necessary for the employer to register its intention to apply on the ATO website, at the following page:
https://www.ato.gov.au/general/gen/JobKeeper-payment/.
More detail as to employer obligations and eligibility follows, however, please feel free to call us with any queries.
OBLIGATIONS ON EMPLOYERS
To receive the JobKeeper Payment, employers must:
- Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline (https://www.ato.gov.au/general/gen/JobKeeper-payment/).
- Provide information to the ATO on eligible employees. This includes information 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.
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). For employees that were already receiving this amount from the employer then their income will not change. For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax. And for those employees earning more than this amount, the employer is able to provide them with a top-up.
- Notify all eligible employees that they are receiving the JobKeeper Payment.
- Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.
BACKGROUND ON JOBKEEPER PAYMENT
ELIGIBLE employers
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.
Currently, Treasury is stating the businesses will need to provide supporting information demonstrating a downturn in their business to the ATO, however, there is no guidance as to what form this will take.
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.
ELIGIBLE employees
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.
If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper Payment as income.
APPLICATION PROCESS
Businesses with employees
Initially, employers can register their interest in applying for the JobKeeper Payment via ato.gov.au from 30 March 2020 website (https://www.ato.gov.au/general/gen/JobKeeper-payment/).
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.
Participating employers will be required to ensure eligible employees will 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.
Businesses without employees
Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper Payment via ato.gov.au from 30 March 2020 (https://www.ato.gov.au/general/gen/JobKeeper-payment/).
Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and 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. Payment will be made monthly to the individual’s bank account.
PAYMENT PROCESS
Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Payments will be made to the employer monthly in arrears by the ATO.
TIMING
The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May. Businesses will be able to register their interest in participating in the Payment from 30 March 2020 on the ATO website (https://www.ato.gov.au/general/gen/JobKeeper-payment/).
Contact your Armada Advisor if you have questions or require clarifications. We are very much willing to answer all your queries
