The Australian Government passed legislation on 8 April 2020 making the JobKeeper subsidy a reality for struggling businesses.
Here’s everything you need to know to qualify and apply for this subsidy, and your obligations to ensure compliance.
During the COVID-19 outbreak, the team at Liston Newton can work with you remotely. Contact us to organise a free strategy session, conducted entirely online. From there, we can create a customised plan to protect your assets, develop tax minimisation strategies, and mitigate potential risks to your business.
What is the JobKeeper subsidy?
JobKeeper is a subsidy administered by the ATO and paid to businesses that have experienced a downturn of 30% or more due to COVID-19. Businesses are eligible to receive $1,500 per fortnight per employee.
For ACNC-registered charities the downturn threshold is 15%.
How do I calculate a 30% downturn?
Demonstrating a 30% decline is based on a ‘turnover test period’.
A turnover test period can be:
- any month from March to September 2020, or
- either financial quarter commencing 1 April or 1 July 2020.
If this test period enables you to demonstrate a 30% decline in turnover, then you’re eligible to apply for JobKeeper.
If you can’t reasonably apply the above turnover test but think you still qualify, the ATO commissioner can make a discretionary decision on a case-by-case basis. For example, this may occur in instances where a business acquisition was made during the last 12 months.
After you pass the turnover test and qualify for JobKeeper, there’s no need to re-test, regardless of your future financial situation.
When can I register for the scheme?
The JobKeeper scheme is now open for enrolment.
You can enrol at any time, and you’re still able to enrol at a later date if your financial situation changes.
Your claim will commence from your date of registration and is tested against fortnightly reporting periods. Claims are not eligible to be back-dated, other than for April 2020.
Employees are considered eligible if they meet all the following criteria:
- They were employed by their relevant employer at 1 March 2020.
- They are currently employed by their relevant employer (this includes those who have been stood down, or re-hired).
- They work on a full-time, part-time, or long-term casual basis (that is, a casual employee who at 1 March 2020 has been employed on a regular basis for 12 months or more).
- Are at least 16 years old.
- Are an Australian citizen, hold a permanent visa, are a Protected Special Category Visa Holder, are a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or are a Special Category (Subclass 444) Visa Holder
- Don’t receive a JobKeeper payment from another employer.
Employees who considered ineligible for JobKeeper
There are strict rules around the JobKeeper scheme. The following criteria makes an employee ineligible for the scheme:
- Employees under 16 years of age.
- Employed on a casual basis with less than 12 months of regular service, or were a permanent employee of another employer.
- Employed as a contractor (these employees they may be eligible themselves as a sole trader).
- Employees on non-prescribed visas.
- Foreign employees (other than New Zealand citizens on a Subclass 444 visa).
- They have been nominated for JobKeeper by another employer.
- They’re paid less than $1,500 per fortnight gross once JobKeeper is implemented.
- Weren’t employed by you at 1 March 2020.
- Employees on parental leave by Services Australia.
What the ‘one in, all in’ rule means for your business
The ATO has now clarified that if an employer registers for JobKeeper, then they’re required to nominate all employees they’re entitled to claim the scheme for. This is because the scheme works on a ‘one in, all in’ rule—if one employee is nominated, all must be.
This means that all employees on your payroll must receive a minimum of $1,500 per fortnight for your business to be eligible for the JobKeeper subsidy.
Calculating the superannuation guarantee
You’re still required to pay a superannuation guarantee for your employees if:
- They’re actively working and receiving the full JobKeeper payment
- They’re actively working, yet receiving less that $1,500 a fortnight, and utilise the JobKeeper payment to top up their income to $1,500 a fortnight. In this case, their super guarantee is only payable on the income attributed to their working hours.
If they’re not working, but still receiving JobKeeper, you’re not required to pay superannuation.
However, as the employer, you have the option to continue to pay their super guarantee regardless of their JobKeeper situation.
I’m a business owner — can I claim JobKeeper?
The JobKeeper scheme is designed to help working Australians continue to receive an income. It extends to those actively engaged in running a business.
- Sole trader. A sole trader can receive JobKeeper, provided they’re actively engaged in their business
- Partnership. JobKeeper is limited to one partner only.
- Trust. A Trust is limited to claim JobKeeper for one beneficiary only (not a corporate trustee)
- Company. A Company structure is limited to one JobKeeper claim, to either an active shareholder or director
How to register for JobKeeper
Registrations opened on 20 April 2020 and are available for online application through the ATO’s website.
You need to provide all your employees with a JobKeeper Employee Nomination Notice, which must be completed and returned to you by the end of April.
You can then apply for the JobKeeper scheme through the ATO Business Portal from 4 May 2020. Here you will confirm all employees that are eligible.
Note: To receive a May JobKeeper payment you must complete your registration by 26 April. If applicable, this payment will be back-dated to 30 March.
How to register
- Log in to the ATO Business Portal using your myGovID
- Select ‘Manage Employees’, then the link for the JobKeeper payment
- Fill in the JobKeeper enrolment form with all the necessary employee and business information
- Notify your employees that they’ve been nominated. This must be done in writing, no later than seven days after enrolment
Your ongoing employee reporting obligations
As a business owner, you’re required to submit a monthly report on which of your employees are still eligible for JobKeeper. You can do this by:
- Selecting eligible employees from a pre-filled single-touch payroll report
- Manually entering the details online with the ATO
- Through your registered tax accountant
Requirements for Employer Reporting
As an employer you’re required to complete a monthly JobKeeper Declaration Report to continue to receive payments. This report is also where you re-confirm that your employees are eligible to receive payment.
This report includes:
- GST turnover for the reporting month
- Projected GST turnover for the following month.
Be aware of the harsh non-compliance penalties.
JobKeeper is designed to deliver more working Australians an income, so the ATO and the Government have made it clear that substantial penalties apply for non-compliance.
To date, the following penalties have been outlined:
- Administrative penalties: up to 75% of the JobKeeper payment amount
- Failure to comply with tax law: up to 12-months imprisonment
- Breach of the Criminal Code, and obtaining financial advantage by deception: up to 10 years imprisonment
As an employer receiving the JobKeeper subsidy, to ensure you remain compliant you’re obligated to:
- Certify all information
- Assess your employee eligibility initially, and monthly
- Advise the ATO of any change in circumstances
The final word
There are four key requirements you need to satisfy in order to qualify for, or remain compliant with, the JobKeeper subsidy:
- Initial eligibility assessment
- Documentation & registration
- Monthly reporting
- Ongoing employee eligibility