For the latest on the JobKeeper extension announced on 24 July, please view this article.
The historic JobKeeper legislation was officially passed by Parliament on 8 April 2020. A federal government scheme, JobKeeper payments are designed to support eligible businesses through the COVID-19 crisis. This subsidy is available for up to six months, and is expected to keep six million workers in their jobs.
Though JobKeeper payments will be a welcome relief for many businesses, you’ll need to elect to participate and meet a set of criteria to receive assistance. With businesses originally required to enrol for JobKeeper payments by 30 April, this date has now been extended to 31 May.
Here’s a summary of key information for employers and payroll professionals.
What are JobKeeper Payments?
These payments are made to eligible employers so they can continue to pay employees and keep them on the payroll. The subsidy can be back-dated to commence from 30 March 2020. Each payment is $1,500 before tax per fortnight, per qualifying employee. They will be made monthly in arrears by the ATO, with the first to be received by employers in the first week of May.
For more information on the scheme, please visit the ATO website.
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Eligible businesses
Eligibility for JobKeeper payments depends on the fall in turnover you have experienced or expect to face.
If your business has a turnover of less than $1 billion, then you’ll qualify for the payment if your turnover drops by more than 30 percent. For businesses with a turnover greater than $1 billion, the decline must be more than 50 percent.
Non-profits that meet these tests will also be eligible, but businesses subject to the Major Bank Levy will not qualify.
Charities registered with the Australian Charities and Not-For-Profits Commission (ACNC) have a lower eligibility threshold of more than 15 percent decline in turnover. However, non-government schools and universities are bound by the same tests as businesses.
Establishing fall in turnover
It’s anticipated that you’ll determine your GST turnover for a relevant month or quarter, depending on your Business Activity Statement reporting period, then compare this figure to a corresponding period a year earlier.
GST turnover includes all taxable supplies and all GST-free supplies, but excludes input taxed supplies.
If your organisation has been operating for less than 12 months, the Tax Commissioner can use alternative tests to determine your eligibility.
Qualifying employees
You can receive JobKeeper payments for qualifying employees, but an individual can only qualify for JobKeeper payments for one employer. A qualifying employee must meet the following conditions as at 1 March 2020:
- Be on your payroll;
- Be a full-time or part-time employee, or a long-term casual who has been employed on a regular and systematic basis for longer than 12 months;
- Is at least 16 years old;
- Is either an Australian citizen, a holder of a Permanent Visa or Special Category (Subclass 444) Visa; and
- Is a resident for Australian tax purposes.
Additionally, the employee must be currently employed. This includes workers who have been stood down and those who were terminated then re-hired.
Employees can’t qualify for periods in which they’re receiving parental leave or payments under workers’ compensation laws.
Passing on JobKeeper payments
JobKeeper payments must be passed on in full to employees.
If the individual usually receives more than $1,500 per fortnight, then you can provide a top-up to make up the difference, or have an agreement in place to reduce their salary or hours of work.
But if an individual usually receives less than $1,500 per fortnight, the full amount must still be passed on, even if that leads to a windfall for the employee.
JobKeeper payments are treated like other employment income, so they’re taxable and subject to PAYG withholding. Superannuation is also payable. However, payments or parts of payments in excess of usual wages will not be subject to super.
Record keeping
Finally, as part of government measures to ensure the integrity of the program, you’re required to keep relevant records to support your turnover estimates and to show that JobKeeper payments have been passed on. Records should be kept for five years.
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Download our ebook to get up to speed on the 3 biggest compliance obligations facing Australian businesses in the coming year. You'll also learn 5 tips to help stay on top of ever-changing compliance obligations.
