JobKeeper Payment – Information for employers
The Proposed JobKeeper Payment
The Federal Government has announced a new JobKeeper Payment to assist eligible employers (and self-employed individuals) who have been impacted by the Coronavirus pandemic to continue to pay their workers.
The following is a broad summary of the key aspects of the proposed JobKeeper Payment.
1. What is the JobKeeper Payment?
The JobKeeper payment is a subsidy that will be paid through the tax system (i.e., by applying to the ATO) to eligible employers (and self-employed individuals) impacted by the Coronavirus.
Eligible employers will be able to claim a subsidy of $1,500 per fortnight, per eligible employee, from 30 March 2020 (with payments commencing from the first week of May 2020), for a maximum period of 6 months. This subsidy will be paid by the ATO monthly in arrears and will ensure that an eligible employee receives a gross payment (i.e., before tax) of at least $1,500 per fortnight.
Self-employed individuals (i.e., businesses without employees) can also qualify to receive the JobKeeper Payment.
2. When is an employer or business eligible for the JobKeeper Payment?
Employers will be eligible for the JobKeeper subsidy where:
for a business with a turnover of less than $1 billion – its turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
for a business with a turnover of $1 billion or more – its turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and
the business is not subject to the Major Bank Levy.
Self-employed individuals (i.e., businesses without employees) and not-for-profit entities (including charities) that satisfy the above requirements will also be eligible to apply for the JobKeeper Payment.
3. When can the JobKeeper Payment be claimed in respect of an employee?
Before an eligible employer can claim the JobKeeper subsidy payment in respect of an employee (‘eligible employee’), the employee must satisfy the following requirements:
The employee is currently employed by the employer (which includes an employee who has been stood down or re-hired after they had already lost their job).
The employee was employed by the employer as at 1 March 2020.
The employee is a full-time or part-time employee, or a long-term casual employee who has been employed by the employer on a regular basis for longer than 12 months at 1 March 2020.
The employee is at least 16 years of age.
The employee is an Australian citizen, or 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.
The employee is not in receipt of a JobKeeper Payment from another employer.
In practical terms, this means that eligible employers will receive the JobKeeper Payment for each eligible employee who was on the employer’s books on 1 March 2020 and continues to be engaged by that employer (including full-time, part-time, long-term casuals and stood down employees).
Employees who have multiple employers will need to notify their primary employer to claim the JobKeeper Payment on their behalf, as only one employer will be eligible to receive the payment.
4. How does a business apply for the JobKeeper Payment?
Initially, businesses can start to register their interest in applying for the JobKeeper payment from 30 March 2020. The first payments under this measure are expected to be made to an eligible business from the first week of May 2020.
Eligible employers that apply for the JobKeeper Payment will need to provide supporting information demonstrating a downturn in their business, and must report the number of eligible employees employed by the business on a monthly basis.
Businesses without employees (e.g., self-employed individuals) will need to provide an ABN for the business, nominate an individual to receive the JobKeeper payment and provide that individual’s Tax File Number, as well as provide a declaration on the recent business activity (to demonstrate the downturn in the business). These businesses will also need to provide a monthly update to the ATO in order to declare their continued eligibility for the JobKeeper Payment.
In the coming weeks, we will register on behalf of all our clients who qualify as eligible employers under the scheme. We will also prepare you with the relevant information that the ATO will require monthly to maintain your eligibility and continue to receive the JobKeeper Payment Subsidy.
5. How does the JobKeeper payment apply to an eligible business?
The underlying purpose of the JobKeeper Payment is to ensure that eligible employees are paid a gross minimum amount of $1,500 per fortnight before tax.
If an employee receives a salary of $2,000 in gross salary per fortnight, they will continue to receive their regular salary according to their prevailing workplace arrangements. In this case, the JobKeeper Payment will effectively subsidise the employer for part of the employee’s gross fortnightly salary income.
If an employee receives a salary of less than $1,500 in gross salary per fortnight, their employer must pay the employee a minimum gross fortnightly salary income of $1,500 under the JobKeeper Payment scheme.
If an employee has been stood down, their employer must pay the employee a minimum gross fortnightly salary income of $1,500 under the JobKeeper Payment scheme.
If an employee that was employed as of 1 March 2020, has subsequently ceased employment with their employer, and then has been re-engaged by the same employer, the employee will receive a minimum gross fortnightly salary of $1,500 under the JobKeeper payment scheme.
An eligible employer receiving the JobKeeper Subsidy Payment in respect of one or more employees will be required to notify each employee that they have been nominated as eligible employees for the employer to receive the payment. Furthermore, an eligible employer has the option of choosing whether or not to provide superannuation guarantee support in respect of any additional salary income (to the extent that it relates to the JobKeeper Payment) paid to an eligible employee by an employer.
Where an employer receives the JobKeeper Subsidy Payment for an eligible employee who has also been receiving income support through Centrelink as a result of having been stood down or their hours being reduced, the employee will need to report the JobKeeper Payment as income, as this could affect their entitlement to such Centrelink support.
The following examples illustrate how the JobKeeper Payment is expected to apply to employers;
Example 1
Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The employees are:
Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;
Example 2
Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time
beauticians, but the government directive that beauty salons can no longer operate has enquired her to shut the business. As such she has been forced to stand down her three beauticians without pay.
Zahrah’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three beauticians for up to six months.
Zahrah will maintain the connection to her employees and be in a position to quickly resume her operations.
Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.
If Zahrah’s employees have already started receiving income support payments like the JobSeekers Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
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