The Federal Government’s “JobKeeper” package was introduced to parliament and the legislation was passed on the 8 April 2020. Under the JobKeeper payment package, eligible employers will receive a subsidy of $1,500 for each eligible employee for up to six months.
The “Coronavirus Economic Response Package (Payments & Benefits) Bill 2020” provides for the making of rules by the Treasurer by instrument (not legislation) for the JobKeeper payment program. Having the package set out in rules rather than legislation allows for flexibility in the arrangements, enables the program to be quickly introduced and also allows for the rules to be revised as needed on an ongoing basis as appropriate to respond to the changing nature of the impact of COVID-19.
Eligibility Summary for Employers
1. An entity is eligible to participate in the program if at 1 March 2020
The entity carried on its business in Australia or was a non-profit entity that pursued its objectives principally in Australia
2. Turnover Reduction Test
The entity’s turnover has reduced by the relevant percentage
- 15% – where the entity is a registered charity
- 30% – where the employer’s aggregated turnover is less than $1 billion
- 50% – where the employer’s aggregated turnover is $1 billion or greater
The relevant reduction in turnover may be established by comparing the entity’s GST turnover with the corresponding month or three-month period in the prior financial year.
Alternatively, where there is no appropriate relevant comparison period (eg. not in operation or not GST registered), the Commissioner will have discretion to allow referral to alternative information to establish the relevant reduction in turnover.
GST turnover is the sum of taxable & GST free supplies (but not input taxed supplies) in the relevant period connected with Australia (ie overseas operations are excluded)
Eligibility is to be assessed on an on-going basis with ongoing notifications to be made by employers to the ATO.
3. Employer’s Eligibility to Receive the JobKeeper Payment
To be eligible to receive the JobKeeper payment an employer must pay an “eligible employee” a total of $1,500 (pre-tax) in each fortnight for which the employee is claiming the entitlement.
For employers that pay their employees monthly, the ATO will be able to allocate the payments between periods however the employee must have received an equivalent of $1,500 per fortnight.
The JobKeeper payment will be available from the 30 March 2020 to the 27 September 2020 with the first fortnightly pay period being 30 March 2020 to 12 April 2020. The ATO payments will be made monthly in arrears with the first payment due in May.
4. Eligibility Criteria for Eligible Employees
To be eligible for JobKeeper payments the individual as at the 1 March 2020 must be;
- currently employed by the eligible employer (including those stood down or re-hired)
- full time or part time employee or if casual employed for greater than 12 months
- permanent employee of employer and if a part time or casual not be a permanent employee of any other employer
- at least 16 years of age
- an Australian citizen, hold a permanent visa or subclass 444 visa
- a resident for Australian tax purposes
- not in receipt of a JobKeeper payment from another employer
You can only claim JobKeeper payments for eligible employees if you pay at least $1,500 per fortnight (pre-tax) to each eligible employee. This includes employees that were stood down after 1 March 2020. Payroll payments should be made via your payroll system and reported to the ATO via Single Touch Payroll which will support the online claim process when it is available (automatic payment). If you do not report through Single Touch Payroll you can still claim the JobKeeper payment however this will be a manual claim process.
Employers are required to advise employees whether they have nominated them as an eligible employee for the purposes of the JobKeeper payment.
Turnover Reduction Test
As stated above the turnover test is measured at the “Group” level and is the sum of taxable & GST free supplies (but not input taxed supplies) in the relevant period connected with Australia. (ie overseas operations are excluded). Within the group each entity is assessed separately for the Reduction in Turnover test and individual businesses may be eligible while others may not be eligible.
According to Treasury documents turnover will be calculated using the BAS return periods (either monthly or quarterly) however the documents then proceed to outline that the turnover test will be conducted on an ongoing monthly basis. Therefore it is still not clear how this will work for the majority of businesses that lodge their BAS returns on a quarterly basis. Further clarity on this matter is expected from the ATO.
To establish that a business has faced or is likely to face a 30% (or 15% or 50%) or more fall in turnover, most businesses are expected to establish that their turnover has fallen in the relevant month or quarter (depending on the BAS reporting period) relative to the corresponding period a year earlier.
Where a business was not in operation a year earlier or where their turnover a year earlier was not representative of their usual or average turnover (eg large interim acquisition, are newly established, were scaling up or turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus (eg accounting financial information from internal accounting system, budgets and also comparison of accrual v cash financial data).
We note that the ATO fact sheet suggests you need to satisfy the 30% (or 15% or 50%) reduction in turnover test for the “relevant month” to be eligible. Further, the Treasury FAQ states that businesses can start receiving JobKeeper payments at a later time once the turnover reduction test has been met. It would therefore appear that this is an ongoing test that is month by month. Further details to come here.
An application can be made if a business reasonably expects that its GST turnover will fall by 30% (or 15% or 50%) relative to the GST turnover in a corresponding period a year earlier. The ATO will be providing further guidance about self-assessment of actual and anticipated falls in turnover.
There will be some tolerance where employers, in good faith estimate a 30% (or 15% or 50%) fall in turnover but actually experience a slightly smaller fall in turnover.
Please note, if a business does not meet the Turnover Reduction Test as at 30 March 2020, the business can review its situation on a monthly basis thereafter and if it at a later date (month) the entity meets the Turnover Reduction Test and other eligibility requirements, it can then lodge an application for JobKeeper Payment program and start receiving JobKeeper Payments effective from the eligibility date. Businesses can receive the JobKeeper payments for as long as it remains eligible and as long as the JobKeeper program is operational for which at this stage has been set as 30 March 2020 to 27 September 2020.
Other Amendments (Fair Work Act)
The Coronavirus Economic Response Package Omnibus (Measures No 2) Bill 2020 contains amendments to a number of Acts and Commonwealth support programs. In particular, the Bill amends the Fair Work Act to impose what is referred to as a wage condition on eligible employers and modify the obligations under that Act to assist eligible employers to deal with the economic impact of COVID-19.
The wage condition requires each eligible employer to pass on the full amount of the JobKeeper payments it receives onto the eligible employees. Other amendments to the Fair Work Act authorise an eligible employer to give to the employee;
- a JobKeeper enabling stand down direction to an employee (including to reduce hours of work).
- a direction about the duties to be performed by the employee; and
- a direction about the location of the employee’s work.
The amendments also authorise an eligible employer and employee to come to an agreement in relation to the days or times of work and taking paid (including at half pay) annual leave.
This area of employment law is a complex area and if you need assistance with such a matter then you should seek appropriate employment advice from an employment lawyer or Fair Work. Attached is a link to Employsure – Fair Work Helpline 24/7 for Employers who can provide online assistance in this area or the Fair Work Ombudsman at Fair Work Victoria direct who can also provide advice in this area.
The Payments and Benefits Bill contains a number of provisions intended to ensure the integrity of the JobKeeper program.
- Where a scheme was entered into or carried out for the sole or dominant purpose of obtaining a JobKeeper payment or an increased amount thereof, the amount that inappropriately obtained as a result of the scheme is repayable and the employer is liable to general interest charge calculated from the date of receipt of the JobKeeper payment.
- Where the overpayment occurred because the employer relied on a statement made by a third party that was false or misleading or due to the fraudulent activity of a third party, the employer and the third party are jointly and severally liable to pay the excess and a general interest charge.
- The explanatory material accompanying the Bill also notes that there is an extensive existing framework of penalties in the Criminal Code and the Taxation Administration Act that can apply where false, misleading or reckless statements are made or arrangements or assistance is provided for the purpose of defrauding the Commonwealth.
Record Keeping Obligations
Eligible employers are required to create and retain for five years records substantiating information provided to the Commissioner in relation to their eligibility for and ongoing entitlement to JobKeeper payments. An entity that fails to comply with these rules will be denied eligibility for JobKeeper payments.
What Do I Need To Do To Participate?
The JobKeeper Payment will be administered by the ATO and Eligible employers will need to elect into the scheme. An application process will be issued by the ATO in due course.
In the interim you can register your interest on the ATO website to keep updated on the JobKeeper Payment program and you will receive updates and information from the ATO about how and when to claim the JobKeeper Payment.
How the Support is Calculated
The ATO will administer this program and will make the $1,500 payments based on payroll information to the employer. The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria.
If you are registered for Single Touch Payroll you will automatically receive JobKeeper payments based on the payroll data lodged direct to the ATO from your accounting software each time you process payroll transactions. If you are not registered for Single Touch Payroll the JobKeeper payment claim will be a manual process for each payment.
It is critical that you understand your entitlements and obligations under the JobKeeper Payment scheme and that you consider your position and how these rules apply to your circumstances.
We are currently reviewing all of the Government’s packages with respect to your business and we will be in touch with you shortly (if not already done) to review your business situation and walk through with you what needs to be done to access the various Government benefits that are available to you.
In the interim if there are pressing matters or you need urgent assistance then please contact direct your Client Account Manager who will be able to help and guide you through this process.
USEFUL LINKS AND FACT SHEETS – GOVERNMENT & ATO
Australian Government Treasury – Link to JobKeeper Home Page & Fact Sheets
ATO Fact Sheet – Frequently Asked Questions – 11 April 2020
ATO Fact Sheet – JobKeeper Payment – Supporting Business to Retain Jobs – 11 April 2020
ATO Fact Sheet – JobKeeper Payment – Protecting Integrity – 11 April 2020