♥ IMPORTANT! This information has now been UPDATED and this post is out of date ♥
Please go to the latest Jobkeeper post updated for Sole Traders, Trusts, Partnerships and Other Entities (updated 17 Apr 20)
NB: This information has been sourced from Government websites and our industry association (ICB). This is not financial or accounting advice. This is an unprecedented, fast-changing situation and there are always further updates and uncertainty around some of the details. Please talk to your advisor, bookkeeper or accountant for clarity on your own situation.
The ATO has released further detail on the JobKeeper Payment scheme. (14 Apr 2020). This information has now been UPDATED and this post is out of date. Please go to the latest Jobkeeper post updated for Sole Traders, Trusts, Partnerships and Other Entities. (updated 17 Apr 20)
The JobKeeper Payment scheme is to support businesses significantly affected by the coronavirus to help keep more employees in jobs.
The JobKeeper payment is open to eligible employers to enable them to pay their eligible employee’s salary or wages of at least $1,500 (before tax) per fortnight.
Eligible employers will be reimbursed a fixed amount of $1,500 per fortnight for each eligible employee.
If employers do not continue to pay their employees for each pay period, they will cease to qualify for the JobKeeper payment.
- If considering applying, you need to register your interest and subscribe for JobKeeper payment updates on the ATO website here. This is not the application, just allowing you to be notified of next steps.
- Eligible employers using the Business Portal, or their BAS/Tax Agents using Online Services will be able to enrol in JobKeeper from 20 April 2020. You must do this by the end of April to claim JobKeeper payments for April.
- Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April. You keep a copy of this for your records and do not send it to the ATO.
- Start paying eligible employees the $1,500 per fortnight (see below)
- Then after the 4th May, the employer will notify the ATO of the eligible employees either via STP for employers already paying wages in the STP system or via an alternative system for sole traders or other business owners actively involved in the business. This alternative system hasn’t yet been announced by the ATO. The details of the notification of eligible employees is not fully detailed yet.
Eligibility and Criteria:
A. Decline in turnover.
At the time you enrol in the JobKeeper payment scheme, you need to confirm that your business in a relevant period has had, or is likely to have, a:
- 30% fall in turnover (for an aggregated turnover of $1 billion or less)
- 50% fall in turnover (for an aggregated turnover of more than $1 billion), or
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
- Note: GST Grouping has not been detailed yet.
You can determine the decline in turnover by comparing one of:
- GST turnover for March 2020 with March 2019
- Projected GST turnover for April 2020 with April 2019
- Projected GST turnover for quarter starting April 2020 with same quarter in 2019
There are alternative tests for decline in GST turnover, however these have not been released by the ATO yet.
B. Eligible employees.
You cannot claim for employees who:
- Were first employed by you after 1 March 2020
- Left your employment before 1 March 2020
- Have been, or have agreed to be, nominated by another employer
- can only receive JobKeeper payments or support through one employer.
- must agree to be nominated by you. The form is here.
How does it work?
If you meet the eligibility criteria and want to start claiming the JobKeeper payment on behalf of your employees, you need to start paying them at least $1,500 per fortnight (before tax) and continue to pay them for as long as you keep claiming.
An employer will usually get $3,000 a month per eligible employee for the two fortnightly periods in that month. (September has three fortnights, so $4,500 per eligible employee for that month).
You need to pay first. JobKeeper is a reimbursement.
- You cannot claim the JobKeeper payment on behalf of employees who were not paid at least $1,500 before tax during each JobKeeper payment period.
- You cannot claim the JobKeeper payment in advance. The JobKeeper payment is a reimbursement from the ATO to an employer in arrears, and will not be paid in advance in any circumstances.
- For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you by the end of April. This means that you can make two fortnightly payments of at least $1,500 per eligible employee per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.
How much do you pay?
There are some nuances, but the general gist is:
- You must pay the minimum $1,500 before tax to each eligible employee per fortnight to claim the JobKeeper payment for that fortnight.
- If your eligible employees earn less than $1,500 per fortnight before tax, you must pay them at least $1,500 for each fortnight to claim the JobKeeper payment. This is a ‘top up’ of their salary or wages and will ensure they remain eligible.
- You cannot pay your employees less than $1,500 per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 before tax per fortnight.
- If your eligible employees earn more than $1,500 per fortnight, you should continue to pay them their regular salary or wages. However, you will only receive $1,500 for each eligible employee. Any amount you pay above $1,500 per fortnight is not subsidised by the JobKeeper payment.
- There are examples on the ATO website
- If you usually pay your employees monthly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a four-week pay cycle, your employees must have received at least $3,000 for every four-week period.
- JobKeeper is normal assessable income and you need to withhold PAYG the same way you do ordinary wages
- You still need to pay SGC (super) on the ordinary wages. Any “top up” of JobKeeper does not attract super. New rules are being introduced by the government with the intention to not require super guarantee to be paid on additional payments that are made to employees as a result of JobKeeper payments.
Employees who were stood down or on long term leave
- Employees who have been stood down from work under the Fair Work Act without pay may still be eligible employees as long as they were in your employment and met the eligibility criteria on 1 March 2020.
- You will need to have paid them at least the minimum amount of $1,500 for each fortnight you claim for, to receive the JobKeeper payment.
Employees who have been terminated
If you terminated an employee after 1 March 2020, you can re-engage them and they will be eligible if they met the eligibility criteria on 1 March 2020.
If you want to claim the JobKeeper payment for employees you have re-engaged, you will need to:
- confirm they want to be re-hired and participate in the JobKeeper scheme with you
- re-engage the employees you want to claim for.
- ask them to complete the JobKeeper employee nomination notice and return it to you. You are required to keep this form as part of your records keeping obligations under the law.
- start paying them a minimum of $1,500 (before tax) for each fortnight they are employed and you claim for.
You will only be paid a JobKeeper payment for employees from the fortnight they were re-engaged. You cannot claim retrospectively for employees you re-engage.
Need more information?
If you feel lost and don’t know where to start or need help getting your accounts quickly up to date to take advantage of any financial or stimulus packages, please feel free to contact us or book in for a free 15 minute call with Elizabeth and we can talk to you about the best way forward.