JobKeeper Payment: Additional Information Released from Treasury

Additional information has been released overnight in relation to the JobKeeper program.

Please note that the program has not yet been made law and there is still limited information on how the payment will be administered. We will provide additional updates as information is released.

We encourage all clients who think they may be eligible to register with the ATO by completing the form in the following link: CLICK HERE

Eligibility – Businesses with Employees

Employers (including non-for-profits) will be eligible for the subsidy if their business has a turnover of less than $1 billion and their turnover has fallen by more than 30 per cent.

To establish that a business has had a 30 per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the activity statement reporting period of that business) relative to their turnover a year earlier.

Where a business was not in operation a year earlier the Taxation 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 COVID-19.

The Taxation Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business ceases or significantly curtails its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 per cent fall in turnover but actually experience a slightly smaller fall.

Eligibility – Businesses without Employees

Self-employed individuals will be eligible to receive the JobKeeper Payment where they expect to suffer a 30 per cent decline in turnover relative to a comparable a period a year ago (of at least a month).

Eligible Employees

Eligible employers will receive the payment for each eligible employee that was on their books on 1 March 2020 and continues to be engaged by that employer – including full-time, part-time, long-term casuals and stood down employees. Casual employees eligible for the JobKeeper Payment are those employees who have been with their employer for at least the previous 12 months as at 1 March 2020.

To be eligible, an employee must be 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.

Eligible employers who have stood down their employees before the commencement of this scheme will be able to participate. Employees that are re-engaged by a business that was their employer on 1 March 2020 will also be eligible. In circumstances where an employee is accessing support though Services Australia because they have been stood down or had their hours reduced and the employer will be eligible for the JobKeeper Payment, the employee should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.

Where employees have multiple employers – only one employer will be eligible to receive the payment. The employee will need to notify their primary employer to claim the JobKeeper Payment on their behalf. The claiming of the tax free threshold will in most cases be sufficient notification that an employer is the employee’s primary employer.

Payment Process

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.

Where employers participate in the scheme, their employees will receive this payment as follows.

• If an employee ordinarily receives $1,500 or more in income per fortnight before tax and they continue to work their normal hours, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s).
• If an employee ordinarily receives less than $1,500 in income per fortnight before tax and they continue to work their normal hours, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
• If an employee has been stood down and is not currently working, their employer must pay their employee, at a minimum, $1,500 per fortnight before tax.
• If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight before tax.

It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment. Payments will be made to the employer monthly in arrears by the ATO.

Worked Examples

Treasury has provided the following examples:

• Self-employed:

Melissa is a sole trader running a florist. She does not have employees. Melissa’s business has been in operation for several years. The economic downturn due to the COVID-19 has adversely affected Melissa’s business and she expects that her business turnover will fall by more than 30 per cent compared to a typical month in 2019.

Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.

• Worker with multiple jobs:

Michelle currently works two permanent part-time jobs, at an art gallery during weekdays, and at the local café on the weekend. Due to the impact of the COVID-19, the gallery has closed and Michelle has been stood down without pay under the Fair Work Act. Michelle continues to work at the café delivering take-away orders.

Michelle can only receive the JobKeeper Payment once, from the employer from whom she nominates as her primary employer. As Michelle only claims the tax free threshold from her job at the art gallery, this will be treated as her nomination of the art gallery as her primary employer.

The art gallery is eligible for the JobKeeper Payment. The art gallery will pass the JobKeeper Payment on to Michelle, so she will receive $1,500 per fortnight before tax. During the application process, the art gallery will notify the ATO that Michelle receives the payment from them. The art gallery is also required to advise Michelle that she has been nominated to the ATO as an eligible employee to receive the payment.

The café is not eligible to receive the JobKeeper Payment for Michelle. The income that Michelle receives from her job at the café does not change her entitlement to the JobKeeper Payment she receives from the art gallery.

• Employee made redundant after 1 March:

Miles worked as a permanent part-time personal trainer at a gym for six months and was made redundant on 20 March 2020 in response to the Government directive that gyms close. Miles was not entitled to redundancy pay due to his length of service.

In response to the announcement of the JobKeeper Payment, the gym decides they want to re-engage Miles so they are well placed to resume their operations once the COVID-19 restrictions are lifted.

After being made redundant, Miles had registered an intent to claim with Services Australia for access to the JobSeeker Payment and the COVID-19 Supplement. Miles is single, with no children and in total he would be eligible to receive $1,124.50 before tax per fortnight.

If Miles chooses to be re-hired by the gym, under the JobKeeper Payment he will receive $1,500 a fortnight before tax while he is stood down. Miles will need to advise Services Australia of his income. He is no longer eligible for the JobSeeker Payment and the COVID-19 Supplement from Services Australia as a result of receiving the JobKeeper Payment.

• Employer with 5 employees who all currently get paid more than $1,500 per fortnight:

Sara runs a landscaping company, and employs five full-time gardeners. Sara is paying her employees $1,700 per fortnight before tax. She expects that her turnover will decline by more than 30 per cent over the coming months and that she will either need to lay staff off, or reduce their wages significantly.

As a result of the JobKeeper Payment, Sara will be able to keep employing every gardener, and only needs to pay the $200 wage cost per fortnight before tax per employee above the $1,500 per fortnight (before tax) JobKeeper Payment.