Is my business eligible for a JobKeeper payment?

Apr 9, 2020

The government’s Jobkeeper legislation has now passed parliament. Jobkeeper provides eligible employers $1,500 per fortnight for each eligible employee for up to six months from the 30th of March 2020. Here are the details:

What do I need to do if I am eligible?

  • Determine your eligibility (see eligibility conditions below)
  • Complete a JobKeeper employee nomination notice which needs to be downloaded from the ATO website for all eligible employees. The notice needs to be signed by your employees and declares information including that they agree to be nominated by you, that they wont claim through another employer and that they don't have a permanent employer if they are a casual employee for you.
  • Apply online with the ATO before the 30th of April for fortnights beginning 30 March. If you become eligible at a later date, you need to apply before the end of the relevant fortnight. The online application wont be available until the 20th of April but you can register your interest here
  • Consider whether you need to utilise any JobKeeper enabling directions (see below) to alter employee hours and duties
  • Notify your eligible employees that you have notified the Commissioner of their details within 7 days.
  • Pay at least $1,500 per fortnight before tax to eligible employees. You are required to pay the amount in your normal pay cycle except for the first two fortnights where you are allowed to backpay the required amount before the 30th of April. There are up to 13 eligible fortnights which commence on the 30th of March 2020 and end on the 27th of September 2020.
  • You must report each month to the ATO, within 7 days of the end of the reporting month your current turnover for the reporting month and your projected turnover for the following month. This information does not affect your eligibility for the JobKeeper scheme in regards to the turnover test (which only needs to be satisfied once). It is intended to ensure there is good information for the Government to assess the economic impact of the Coronavirus. For the first period, the form will be available from the 4th of May and needs to be completed before the 31st of May. Employers will not receive payment before their form is lodged.
  • If you are a South Australian business eligible for the JobKeeper payment, you may also be eligible to apply for a $10,000 grant from the South Australian Government. For more information read our article here.

Am I Eligible?

Employers (including not-for-profits) will be eligible for the subsidy if, at the time of applying:

  • their business has an annual turnover of less than $1 billion and they estimate their turnover has fallen or will likely fall by 30 per cent or more; or
  • their business has an annual turnover of $1 billion or more (or is part of a consolidated group for income tax purposes with turnover of $1 billion or more) and they estimate their turnover has fallen or will likely fall by 50 per cent or more; and
  • their business is not subject to the Major Bank Levy

Charities registered with the Australian Charities and Not-For-Profit Commission (ACNC) will be eligible for the subsidy if they estimate their turnover has or will likely fall by 15 per cent or more relative to a comparable period.

Once an entity satisfies the turnover test, it does not need to retest its turnover in later months.

Turnover is calculated based on GST turnover which includes all supplies made or likely to be made (regardless of whether they have been invoiced). To show a decrease in turnover you can choose whether your comparative period is a month between March and September 2020 compared with the same month in 2019 or by comparing the June 2020 quarter or the September 2020 quarter with the matching 2019 quarter. The March quarter is not a test quarter. You can choose a month or a quarter as a test period regardless of whether you normally lodge your BAS monthly or quarterly. To be eligible from the 30th of March, you need to meet the turnover test based on your actual turnover for the month of March or your estimated turnover for the month of April or the April to June quarter. If your test period is a later period you will only be eligible for fortnights that occur from that test period onwards. If you apply from a later period, you will only be entitled to JobKeeper from the fortnight you apply. You cannot retrospectively apply for any fortnight except for the first two fortnights if you apply by the 30th of April.

Employers can estimate if their turnover is likely to fall in future periods to qualify. If you estimate you will have a 30% drop, in good faith, but actually experience a slightly smaller fall, there will be some tolerance. The Tax Commissioner will have flexibility where an honest mistake has been made and the business has not retained any personal benefit. However if you do not fall within that tolerance level, the business risks having to pay back all of their JobKeeper payments, of which much of them will have been paid to employees already. It is therefore very important to keep records of how you estimated your turnover would drop the required amount.

Where an employer has been in operation for less than a year or where their turnover last year was not representative of their usual turnover, the Tax Commissioner will have discretion to consider additional information to prove eligibility. An example given by the treasurer for a business that started less than a year ago is to compare their average turnover across all of the period since they started with their turnover in the current period.

It is important to note that where an employer enters into a scheme for the sole or dominant purpose of obtaining a JobKeeper payment, the Commissioner may determine that the entity was never entitled to any payments under the scheme, requiring repayment of amounts with interest and possible penalties including possible imprisonment.

For example, the Commissioner could make a determination to deny an entity the JobKeeper Payment, if the entity has deliberately altered its business arrangements to reduce its turnover in order to allow the entity to meet the turnover requirements to receive the payment.

Employers must elect to participate in the scheme. They will need to make an application to the Australian Taxation Office (ATO) and provide supporting information demonstrating a downturn in their business. The application is not yet available but you can register your interest here.

Who are my eligible employees?

Eligible employers will receive the payment for each eligible employee that was on their books on the 1st of March 2020 and continues to be engaged by that employer — including full-time, part-time, long-term casuals and stood down employees. Casual employees eligible for the JobKeeper Payment are those employees who have been with their employer on a regular and systematic basis for at least the previous 12 months as at 1 March 2020. A casual employee is likely to be employed on a regular and systematic basis where the employee has a recurring work schedule or a reasonable expectation of ongoing work. Casual employees will not later become eligible for the scheme once their service duration passes 12 months. The test is at 1 March 2020 only.

Eligible employers who have stood down their employees before the commencement of this scheme will be able to participate. Employees that are re-engaged by a business that was their employer on 1 March 2020 will be eligible.

To be eligible, an employee must be an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder as at 1 March 2020. The employee must also be a resident for Australian tax purposes and aged 16 years or older and not be a full time student aged 17 or under on 1 March 2020. Employees who are receiving paid parental leave are ineligible during the period they are receiving paid parental leave. If you elect to participate in the JobKeeper scheme, you cannot select which eligible employees will participate in the scheme. It is a one in, all in scheme.

Employers must receive a JobKeeper employee nomination notice from their employee agreeing:

  • to be nominated by the employer as an eligible employee under the JobKeeper scheme
  • that they confirm they have not agreed to be nominated by another employer and
  • that they do not have permanent employment with another employer if they are employed as a casual employee with this employer

Where an employee has multiple employers they are only eligible to receive a JobKeeper payment from their primary employer. Where an employee has a permanent position (either full time or part time), they are ineligible to nominate a casual employer. Where an employee has more than one permanent employer, they are free to nominate any one of those employers to receive the JobKeeper payment. Where an employee has no permanent employer then they can nominate any one of their casual employers to receive the JobKeeper payment.

Am I eligible for a payment as a business owner?

Eligible businesses are also eligible to receive the payment for one business owner who is actively engaged in the business. This can be a sole trader, a partner in a partnership, an adult beneficiary of a trust or a director or shareholder of a Company. If two or more owners are actively engaged in the business, but not receiving wages from the business, only one owner is eligible. To be eligible, the business participant must be either an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder as at 1 March 2020. A business participant is ineligible to be paid JobKeeper as a business participant if they are a permanent employee of an employer. As with the rules for employees, any particular person is only eligible to receive the JobKeeper allowance once. A person cannot receive a JobKeeper payment as an employee or an eligible business participant from more than one entity.

Eligible businesses have an additional requirement to be eligible for a payment for a business participant. The business must have had an ABN on the 12th of March 2020 and have either lodged their 2019 Tax Return prior to the 12 of March 2020 (or such later time as allowed by the Commissioner) reporting business income or lodged a 2019 or 2020 Financial Year BAS prior to 12 March 2020 (or such later time as allowed by the Commissioner) showing a taxable supply (business income that is not GST Free or input taxed income).

How do I pay the JobKeeper Payment?

Eligible employers will be paid $1,500 per fortnight, per eligible employee, within 14 days after the later of:

  • the end of the calendar month in which the fortnight ends or
  • when the Commissioner is satisfied the employer is eligible.

Employers must pay eligible employees at least $1,500 per fortnight, before tax. If an employer ordinarily pays employees monthly they can continue to do so but must ensure that $3,000 is paid for every four week period. The method of payment means that employers will need to fund up to three fortnights of payments to employees out of their own funds before getting reimbursed by the Government, putting further pressure on already cash strapped businesses.

If an employee would normally receive less than $1,500 per fortnight, they must be paid $1,500 per fortnight before tax. If an employee would normally receive more than $1,500 per fortnight they must be paid their normal entitlement for hours worked. However, if your employee normally earns more than $1,500 per fortnight, you may be able to give a JobKeeper enabling direction that effectively reduces their pay to $1,500 per fortnight if an employee cannot usefully be employed for the employee’s normal days or hours during the JobKeeper enabling stand down period because of business changes attributable to the Coronavirus pandemic. The reduction must be achieved through a reduction in hours or days worked as the employees hourly rate or annual salary cannot be reduced. This temporary change to the Fair Work Act is available to employers who qualify for the JobKeeper scheme and also enables an employer to:

  • give a direction to an employee about the nature of the employee’s duties, within their skill and competency or to perform duties at a place different from their normal place of work, including the employee’s home
  • give a direction to an employee to work different days or at different times compared with the employee’s ordinary days or times of work
  • request an employee to take paid annual leave, including at half pay (half pay doubles the period of leave). An employee must consider (and must not unreasonably refuse) their employer’s request to take annual leave, provided that the leave arrangement would not result in reducing the employee’s leave balance to fewer than two weeks.

An employee does not have to comply with a JobKeeper enabling stand down direction if it is unreasonable in all the circumstances and a JobKeeper enabling stand down direction does not apply while an employee is taking paid or unpaid leave authorised by the employer (for example, annual leave), or is otherwise authorised to be absent (for example, on a public holiday). Therefore regular pay must continue on these days.

JobKeeper enabling directions must be in writing which could include by electronic means.

During a period when an employee is subject to a JobKeeper enabling direction, the period counts as service and regular leave entitlements are accrued. Therefore if your business is shut down and you are paying JobKeeper payments, you continue to incur a liability for annual, sick and long service leave where applicable.

No superannuation guarantee payments are required to be paid on any additional payment made because of the JobKeeper Payment. Super guarantee obligations only arise in relation to wages earned by actually working. For example, if a persons wage would ordinarily be $1,000 per fortnight for the hours they have worked, there is no obligation for the employer to pay super guarantee on the extra $500 required for the JobKeeper payment. If an employee has been stood down and then paid JobKeeper there is no super contribution required. The JobKeeper payment is not included in calculating Payroll Tax in South Australia but there is no word yet whether it will be included in working out your Workcover liability.

An employee can elect to salary sacrifice part or all of the JobKeeper payment.

The subsidy commences on 30 March 2020 with the first fortnightly pay period ending on the 12th of April. The final pay period at this stage ends on the 27th of September 2020. To be eligible for payments from the 30th of March you need to register by the 30th of April.

Anyone who receives a JobKeeper payment will not be eligible for a JobSeeker payment for that period. If you have employees who are not eligible for JobKeeper, they may be eligible to apply for JobSeeker through Centrelink. The maximum entitlement for JobSeeker is around $1,100 per fortnight which is about $400 less than if they were eligible for JobKeeper.