JobKeeper Support Package Q&A
The economic impact of the pandemic has been felt widely across Australia with hundreds of thousands of individuals being made redundant, stood down or experiencing reduced work. To support affected businesses and their employees through the COVID-19 pandemic the Government recently announced the “JobKeeper” payment package to help support businesses .
Since the announcement, we know there has been confusion around who is and isn’t eligible, how you can apply, and when it comes into effect so we have pulled together some common questions and answers to help you navigate the JobKeeper package and what it means for your business and team.
If you are planning on making use of the JobKeeper payment and are wanting to end any “Stand Down” employees or have made staff redundant and now want to change this decision then please contact our office as we have some pro-forma templates that can be used.
To register your interest in receiving the JobKeeper payment please follow this ATO Link.
Overview& Key Point Summary
- Employer will receive $1,500 per fortnight per eligible employee.
- Employer must pay each individual employee for which they’re claiming the JobKeeper allowance at least $1,500 per fortnight during the period the employer is claiming the JobKeeper allowance even if the employee was earning less than that amount (eg casuals & part-timers who are eligible).
- Employees earning more than $1,500 will continue to receive their normal wage or salary entitlement. If the employer is paying more than $1,500 per fortnight, the JobKeeper payments are simply a part-subsidy of their normal wage bill.
- PAYG withholding taxes continue to apply (tax rates applicable to the gross amount paid even if it’s the minimum payment of $1,500)
- JobKeeper package is to apply for six months from 1 March 2020 to 31 August 2020 with payments to be commence first week of May 2020 to September 2020
Frequently Asked Questions and Answers
How is a business eligible for the JobKeeper Support?
Businesses with less than $1B in turnover who have lost or expect to lose at least 30% of turnover (of at least one month) are eligible to apply. The employer completes an application from 30 March 2020 with the ATO online which is subject to assessment. The Tax Commissioner will also consider other scenarios. For an updated fact sheet please refer to the attached link Treasury Website – JobKeeper Payment Fact Sheet.
What is the benefit for employers?
Employers will receive $1,500 gross per eligible employee per fortnight. Payments will only commence from the first week of May 2020.
What is an eligible employee?
The employer must have been in an employment relationship with eligible employees as at 1 March 2020. This includes full-time, part-time or long-term casual employees (casuals required to be employed for at least 12 months). Each eligible employee must continue to be engaged by the employer in order to receive JobKeeper payments. Please note only where the employee works for multiple employers only one employer can claim the JobKeeper allowance for the employee.
How much does an eligible employee get paid?
Employees earning more than $1,500 per fortnight should continue to receive their usual salary even if an employer is claiming the JobKeeper allowance. If an employee earns less than $1,500, the employer must pay them at least $1,500 per fortnight if they are claiming the JobKeeper allowance for that employee.
Can I reduce an Employee’s salary to $1,500 per fortnight?
Employment laws and regulations relating to changes of employment contracts still apply. There are options available to employers to reduce employee hours and salaries in certain circumstances however this is a complex area that can give rise to employer liabilities if not handled correctly. You should consult a specialist employment adviser if you are considering this.
Is the payment to employees taxable?
Yes. However the tax treatment of payments needs further clarification.
What do employers need to do?
Employers who believe they meet the revenue decline test or are likely to and have eligible employees should register their interest at www.ato.gov.au/Job-keeper-payment/.
When will employers receive these payments?
The government will start reimbursing employers from the first week of May 2020 backdating eligible payments to the first full eligible pay period of March 2020 and paying the employer on a monthly basis for up to six months or until the business doesn’t qualify.
When will employees receive these payments?
Employers are not required to pay employees the JobKeeper payments until they receive payments as an employer. Further employers shouldn’t make any payments until their eligibility is confirmed. When eligibility is confirmed for the employer they can elect to commence payments to eligible employees immediately.
Alternatively, if the employers want to support their employees and are confident that they will qualify and receive the JobKeeper payments then they can choose to do so however this will mean that the employer will have to carry the cash flow cost for the month of April and also the first few days into May until the first JobKeeper payment is received from the ATO. Should the employer subsequently not be eligible for the JobKeeper payment but has paid the employee then this cost will be at the employer’s expense (ie there is no avenue to recover these costs from the ATO or the employee)
Are employers required to pay superannuation on the $1,500 per fortnight?
No. Superannuation (SGC) is not required to be paid for the amount supplemented by the Government if the employee is not working for the . If it is supplementing a salary for work performed, super is payable.
Which employees will be eligible?
Full time, part time and casual employees (providing casuals have worked for the business on a regular basis for 12 months preceding 1 March 2020) as at 1 March 2020. New Zealand residents are also eligible. The ATO will be using Single Touch Payroll to assess employee eligibility.
Are employees eligible for JobKeeper payments if they commence in a business after 1 March?
No, these employees would need to apply for benefits separately through Centrelink.
Are employees required to do anything to receive the JobKeeper payments?
No, once the employer is deemed eligible, payments will be made in accordance with the benefit. Employees are only entitled to receive JobKeeper payments from one employer and they are not entitled to collect Job Seeker payments from Centrelink at the same time. Therefore employees should notify an employer if they are already receiving JobKeeper payments from another employer and must not collect Job Seeker payments once they are notified by an employer they are receiving a JobKeeper payment.
Will employees who receive this benefit still be eligible for the JobSeeker and/or Coronavirus Supplement?
No. For employees that have received either of these payments and then become eligible for the JobKeeper payment, they will need to advise Centrelink.
Please note: If an employee double-dips on JobSeeker and JobKeeper, they may be required to it pay back.
Will employees who are not Australian residents be eligible for the JobKeeper payment?
Only New Zealand citizens with Australian working rights. Other employees may be eligible for benefits through Centrelink
For more information on the JobKeeper payment visit the ATO website.
If you’re looking for more information on COVID-19 and what it means for your business please refer to our website www.mitchell.com.au where we have a number of resources to help you navigate this uncertain time. We are here to help you and support you through this so please do not hesitate to contact us if you need help and assistance through these difficult times.
ATO Fact Sheets
Cash Flow Assistance for Business
Delivering Support for Business
Supporting the Flow of Credit
Temporary relief for financially distressed businesses