The JobKeeper payment is intended to provide wage subsidies to businesses that are significantly affected by COVID-19.
Am I eligible for the coronavirus wage subsidy?
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;
- their business has a turnover greater than $1 billion and a turnover drop of 50 per cent or more;
- their business is not subject to the Major Bank Levy;
- the employer must have been in an employment relationship with eligible employees as at 1 March 2020;
- not-for-profit entities (including charities) and self-employed individuals that meet the turnover tests that apply for businesses are also eligible to apply.
What is an eligible employee?
Eligible employees are employees who:
- are currently employed by the eligible employer;
- 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;
- are not in receipt of a JobKeeper payment from another employer.
What do I need to do to register?
Business owners need to:
- register an intention to apply on the ATO website;
- provide information to the ATO on eligible employees;
- provide monthly updates to the ATO;
- notify all eligible employees they will receive the payment.
What if I am a sole trader?
Sole traders need to:
- register their interest with the ATO;
- provide an ABN for their business;
- nominate an individual to receive the payment;
- provide the nominees’ Tax File Number;
- provide a declaration as to recent business activity;
- provide a monthly update to the ATO to declare their continued eligibility for the payments.
How will the ATO check eligibility?
The ATO will use the Single Touch Payroll to administer the funds, requiring businesses to keep the employees employed in order to be eligible for the payment.
Also, following an update the Commissioner of Taxation has been given the power to determine eligibility where the reduction in turnover test doesn’t apply. In this case, the tax commissioner will be allowed to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the coronavirus.
The tax commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances.
How will it be paid?
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.
Payments will be made to the employer monthly in arrears by the ATO.
When will the cash start flowing?
While the program commenced on Monday, businesses will not receive cash until the first week of May.
The ATO will reimburse companies for missed payments — for the last two days of March and the whole of April.
What about superannuation?
Employers are expected to continue to pay the superannuation guarantee on regular wages.
However, it will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper payment.
How long will the scheme last?
The scheme will last six months.
Example provided by the government
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 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.
- The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper payment.
Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees. In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.