JobKeeper explained: Are you eligible?
COVID-19 | LOCAL PROFESSIONAL ADVICE
Scott Morrison has now released the 3rd and most substantial phase of the economic stimulus package. A phase that finally see’s relief for self-employed individuals and NZ citizens living in Australia . The $130b package will provide $1,500 per fortnight (before tax), per employee/per self-employed individual for 6 months commencing from 30 March 2020.
For the Employer to be eligible to receive and subsequently pass the payments onto employees, their turnover must be less than $1b per annum but more importantly, their turnover must have dropped by 30% relative to a comparable period from the prior year. E.g. Turnover for the month of March 2020 must be more than 30% lower than March 2019. The same concept applies to the self-employed. Further, the employer must register for the payments direct with the ATO (process to be opened in coming days) and must report to the ATO on a monthly basis.
The payments will be effective from 30 March 2020 however the ATO will not be providing payments back to the employer until the first week of May 2020. So businesses will need to fund the scheme from their own cash reserves for the month of April.
For an Employee to be eligible to receive the payments from an employer, they must have met the following criteria:
- are currently employed by the eligible employer (including those stood down or re-hired);
- were employed by the employer at 1 March 2020;
- are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- are at least 16 years of age;
- are 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; and
- are not in receipt of a JobKeeper Payment from another employer.
Ensure that each eligible employee receives at least $1,500 per fortnight (before tax):
- For employees that were already receiving this amount from the employer then their income will not change;
- For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax;
- For those employees earning more than this amount, the employer is able to provide them with a top-up; and
- Once receiving the JobKeeper payment, the JobSeeker payment becomes redundant.
Where the tax free threshold is claimed and before tax amount is kept to $1,500, the after tax amount equates to $1,308. The government have left it up to the employer if they would like to pay superannuation on the JobKeeper component of an employee’s fortnightly pay.
For the self-employed which includes sole traders, partners in a partnership and beneficiaries of a trust who take their income as drawings (as opposed to wages), the process looks to be quite straightforward:
- An active ABN and TFN must be provided;
- An individual must be nominated to receive the payment
- A declaration provided to the ATO confirming recent business activity
I have adapted two working examples direct from Treasury to put the above into action:
Example 1 – Employees on Different Wages
Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The
- Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
- Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
- Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
- The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;
- The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.
Example 2 - Employer with employees who have been stood down without pay
Gary runs a restaurant in Port Douglas. Ordinarily, he employs three permanent part-time chefs, but the government directive that restaurants can no longer operate has required him to shut the business. As such he has been forced to stand down his three chef’s without pay. Garys turnover will decline by more than 30 per cent, so he is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of his three chefs for up to six months. Gary will maintain the connection to his employees, and be in a position to quickly resume his operations.
Gary is required to advise his employees that he has nominated them as eligible employees to receive the payment. It is up to Gary whether he wants to pay superannuation on the additional income paid because of the JobKeeper Payment. If Gary’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.
Newsport Community Service Support:
Business support line:
business.gov.au | 13 28 46
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