What is JobKeeper?
JobKeeper is a wage subsidy being a fixed payment of $1,500 per fortnight for fortnights starting 30 March 2020 and ending 27 September 2020. The subsidy to be paid to an eligible business which is then passed on to an eligible employee. The payment must have already been passed on to the employee in full for the business to be eligible for the payment. Once in the scheme an employer cannot elect for some eligible employees to be covered by the scheme and not others.
In addition, a business may be entitled to the JobKeeper payment for the business owner or a nominated owner regardless of whether the business has eligible employees. This means businesses that operate as sole traders, partnerships trust and companies that do not have employees can qualify for JobKeeper payments. See JobKeeper explained for businesses owners without employees.
The purpose of the JobKeeper scheme is to support businesses to retain staff – and continue paying them – despite suffering decreased turnover during this period of downturn. The payment also supports these businesses to recommence their operations or scale up operations quickly without needing to rehire when the downturn is over.
When is an employer eligible for a JobKeeper payment?
An employer is entitled to a JobKeeper payment for a fortnight if the following 5 conditions are met:
1. The fortnight is a JobKeeper fortnight
A JobKeeper fortnight is a fortnight starting on or after 30 March 2020 and ending on or before 27 September 2020.
2. The employer qualifies for the scheme on or before the end of the fortnight
To qualify the following conditions need to be met:
a. On 1 March 2020 the employer carried on a business in Australia.* A business is defined as “including any profession, trade, employment, vocation or calling, but does not include occupation as an employee”
b. before the end of the fortnight, the business met the decline in turnover test. Once this test is satisfied there is no requirement to retest in later months. If a business does not qualify for the month of April 2020 because its turnover has not been sufficiently affected, it can test in later months to determine if the test is met. This allows businesses that only become affected part way through the six month period of JobKeeper scheme’s operation to continue to monitor for any decrease in turnover until they qualify for the scheme in a later period. There are two ways in which a business can satisfy the decline in turnover test, the basic test and the alternative test.
i) The basic decline in turnover test works by comparing the projected GST turnover of the business for a period (the turnover test period) with its current GST turnover as calculated for a relevant comparison period (the comparison turnover). This compares a month or quarter in the period the JobKeeper scheme applies with the corresponding period in 2019. A business will generally satisfy the test where the GST turnover in the turnover test period falls short of the comparison turnover and the shortfall is 30% cent or more.
The periods for the turnover test period being compared by can be periods of one month or three months. Monthly test periods start March 2020 and conclude September 2020, while quarterly test periods are for the quarters starting 1 April 2020 and 1 July 2020 only.
Projected GST turnover includes the value of all the sales that a business has made or is likely to make in the period which are subject to GST. However it excludes the GST itself.
ii) Satisfying the alternative decline in turnover test where the projected GST turnover can’t be compared to the same period in the prior year. The alternative test is determined by the Australian Taxation Office (ATO) and it may be that the alternative comparison period is the average of the actual GST turnover in all of the months in which the business was being carried on prior to the turnover test period.
Once an employer qualifies and decides to participate in the JobKeeper they must notify all employees in writing that they have elected to participate in the scheme and that their eligible employees will all be covered by the scheme.
3. The payment is for a person who is an eligible employee of the employer
A person is an eligible employee if:
a. On 1 March 2020:
i) the person was aged 16 years or over;
ii) the person was an employee other than a casual employee of the employer, or was a long term casual employee of the employer (ie with the employer for a period of 12 months or more); and
iii) the person was an Australian, or was a resident of Australia for the purposes or the holder of a Subclass 444
b. At any time during the fortnight:
i) the person is an employee of the employer;
ii) the person is not excluded from being an eligible employee. The exclusions relate to recipients of parental leave pay and dad and partner pay under the Paid Parental Leave Act 2010,and specified recipients of workers’ compensation.
There is also a requirement that eligible employees have provided a notice to their employer agreeing:
- to be nominated by the employer as an eligible employee under the JobKeeper scheme as the employer with which the employee will participate in 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.
Individuals with one or more full time or part time jobs are free to nominate any one of those full time or part time jobs. Similarly, individuals with multiple long term casual jobs can nominate any one of those casual jobs.
4. The employer has satisfied the wage condition
The employer must make payments to the eligible employee equal to or greater than $1,500 (less PAYG withholding and salary packaging). The employer will receive this amount for the employee for the fortnight as a wages subsidy. The requirement that the component amounts be at least $1,500 applies regardless of whether the employee ordinarily receives more or less than that amount.
If an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly, then the payment can be allocated between fortnights in a reasonable manner. For example, if an employer’s ordinary arrangement is to pay an employee every four weeks, it may be reasonable for the purposes of satisfying the wage condition if the employee is paid at least $3,000 for every four week period.
5. The employer has notified the ATO of a range of matters.
The ATO is to be notified:
a. Of the employers election to participate in the scheme. This election generally needs to be provided to the ATO before the end of a JobKeeper fortnight for the employer to be entitled to a payment for that fortnight. The exception is to the first two fortnights of the scheme ending 12 April and 26 April 2020. Employers have until 26 April 2020 to provide the ATO with their election to participate in the scheme.
b. information about eligible employees and the wage condition, including:
i) the name of the employee;
ii) the type of the employee’s employment; and
iii) the employee’s citizenship or residency status.
Once an employer has provided details of its eligible employees to the ATO, the employer must also notify each eligible employee within 7 days. This requirement is intended to keep eligible employees informed about the process. If the information provided to the ATO does not subsequently change in the following JobKeeper fortnights, an employer is not required to provide the same information to the ATO again.
When will payment be made?
Payments will be made monthly in arrears with each payment being made within 14 days of the end of the month.
How will payment be made?
Payment will be made into the bank account nominated at the time of enrolment into the JobKeeper program.
However, the ATO may direct that payment be made in a different way. No details have been provided, as yet, as to what this may be.
Are there any other requirements to participate in the JobKeeper scheme?
A business that is entitled to a JobKeeper payment must notify the ATO, on a monthly basis, of:
- its current GST turnover for the reporting month; and
- its projected GST turnover for the following month.
The report must be made within 7 days of the end of the month.
The information provided as part of this report does not affect a businesses eligibility, including in respect of the decline in turnover test (which only needs to be satisfied once).
It is also not intended to verify whether the projection given as part of the decline in turnover test was accurate. Rather, it is intended to ensure that there is good information on which to assess the economic impact of the Coronavirus on a monthly basis across Australia.
Furthermore you must keep records for five years to substantiate any information that the business provided to the ATO in relation to the payment before and after the business received the JobKeeper payment.
What if I accidentally under pay an employee?
There are provisions made within the JobKeeper rules to deal with the situation where an employee may be accidently underpaid in a fortnight and then later receives a back-pay in the next fortnight in recognition of the underpayment. In cases like this the ATO may decide that it is reasonable to treat the employee as having received the $1,500 in the earlier fortnight.
What if I receive a JobKeeper payment that I am not entitled to?
A business that receives an overpayment of the JobKeeper payment is required to repay the overpaid amount and a general interest charge to the ATO. Interest will apply from the date of the overpayment until the date of repayment.
Will I need to pay superannuation on JobKeeper payments?
Employers will only need to make superannuation contributions for any amount payable to an employee in respect of their actual employment. Any extra payments made by the employer to satisfy the wage condition for getting the JobKeeper payment can be disregarded.
For example, if the work actually done by an employee over a period entitled them to be paid $1,000, but the employer instead paid them $1,500 to satisfy the wage condition for a JobKeeper fortnight, then the employer will only be required to make superannuation contributions in relation to $1,000. Similarly, any liability to superannuation guarantee charge that the employer would have for not making sufficient superannuation contributions would be calculated by reference to that $1,000 base.
An employer will still be required to make the same superannuation contributions for an employee whose pay exceeds the JobKeeper payment. For example, if an employee is entitled to be paid $2,000 for their work, the employer will continue to be required to make contributions in relation to that amount, irrespective of whether they were eligible to receive the JobKeeper payment in relation to the employee.
An employer will not be required to make superannuation contributions for an employee who is stood down. This is because employers have no obligation to pay stood down employees. If an employer pays a stood down employee $1,500 to satisfy the wage condition for receiving the JobKeeper payment, then the entire amount will be disregarded for superannuation guarantee purposes.
Where can I find out more?
Explanatory Statement: Coronavirus Economic Response Package (Payments & Benefits) Explanatory Statement 2020
Fact Sheet: JobKeeper Payment – Information for employers
Fact Sheet: JobKeeper Payment – Protecting Integrity
Frequently asked questions: FAQ
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*Only businesses with a turnover of less than $50m have been considered in this blog post. It does not cover not-for-profits, businesses turning over more than $50m, Government bodies or businesses where a liquidator or a trustee in bankruptcy has been appointed.
Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this summary Readers of this summary should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.