It is hard to keep up with the ongoing stimulus measures put in place by the Federal Government to help support small businesses and the Australian economy. You may have heard on the news or through a business associate, further support in the way of the ‘JobKeeper’ payment. We have summarised some of the key points from relevant government sources which will hopefully assist your business in preparing for the JobKeeper payment.
Please note that it is not possible to cover the entire scope of the JobKeeper payment in this post, for example how business owners should claim JobKeeper for themselves. We encourage you to speak to us or your bookkeeper regarding your individual business circumstances prior to acting upon any of the information contained herein.
What is the JobKeeper Payment?
First announced late last month, the JobKeeper payment is government assistance for businesses affected by the coronavirus to help businesses continue to pay their employees. Businesses that are eligible will receive $1500 (pre-tax) per eligible employee per JobKeeper fortnight until the 27 September 2020. It’s important to note that businesses will not automatically be enrolled in this scheme and will need to apply and meet certain eligibility requirements in order to receive the payments. The payment is also not subject to GST and the normal rules for deductibility will apply in respect of the amounts your business pays to its employees where those amounts are subsidised by the JobKeeper payment.
Be aware of the key dates:
- From 20 April: enrol for JobKeeper payment.
- By 30 April: enrol and pay your employees to claim JobKeeper payments for April.
- 4 May onwards: identify your employees.
- Each month until October: reconfirm eligibility by reporting monthly turnover with 7 days after end of each month.
How to Prepare for the JobKeeper Payment
Determine if your Business is Eligible?
To be eligible your business has to have faced:
- 30% fall in turnover (for an aggregated turnover of $1 billion or less)
- 50% fall in turnover (for an aggregated turnover of more than $1 billion)
- 15% fall in turnover (for ACNC-registered charities other than universities and schools).
- Not be in an illegible category.
- Sole traders can be eligible if their business has experienced a turnover downturn.
How is this fall in turnover calculated?
Fall in turnover will be based on ''GST turnover'', which will still apply even if the business entity is not registered for GST and a test will be available in one of two ways. Considerations may be made for businesses without available comparison periods (such as businesses who have been operating for less than a year).
It’s worth noting that a business will only need to satisfy the test one time, but there will be ongoing monthly turnover reporting requirements.
The basic test is satisfied when your projected GST turnover for the turnover test period falls short of your current GST turnover for the relevant comparison period, by the specified percentage.
To determine eligibility for the basic test, follow these steps:
- Identify the turnover test period – Choose whether you are comparing monthly, or quarterly turnover. Note that you will only be eligible for JobKeeper payments for JobKeeper fortnights that end on or after your turnover test period starts.
- Identify the relevant comparison period – This must be the same period in 2019 that corresponds to the test turnover period. In a situation that the period in 2019 does not provide an appropriate relevant comparison, the alternative test must be used instead.
- Work out the relevant GST Turnover – Determine the turnover for the test period and the relevant comparison period.
- Determine the shortfall percentage – The shortfall will generally need to be 30% or more.
- Determine if GST turnover has fallen by the specified percentage – If the percentage is equal to or higher than the required percentage your business satisfies the test.
The alternative test is used for businesses where the appropriate comparison period is not available. This may be due to out of the ordinary relevant comparison period in 2019 for example businesses affected by drought or fire, recently commenced new businesses, or businesses with major structural changes. In these basic examples the basic test may not accurately reflect the downturn in activity that the business has suffered. The Commissioner must be satisfied that there is not an appropriate relevant comparison period in order to use this test. This test will be available soon.
Which test should my business use?
Generally speaking, businesses will use the basic test based on GST turnover where relevant comparison periods are available. If relevant comparison periods are not available, the alternative test should be used.
Determine if your employees meet the eligibility requirements
For employees to be eligible for the JobKeeper Payment scheme they must:
- Be employed by your business (including those stood down or re-hired)
- Were either a permanent full-time or part-time employee at 1 March 2020
- Long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employee.
- Were at least 16 years of age on 1 March 2020
- Were an Australia resident as at 1 March 2020 within the meaning of the Social Security Act 1991, or an Australian tax resident in Special Category (Subclass 444).
- We’re not in receipt of any of these payments during the JobKeeper fortnight
- Government parental leave or Dad and partner pay
- A payment in accordance with Australian worker compensation law for an individual’s total incapacity to work
- Employees must agree to be nominated by you as they can only receive JobKeeper payments from one employer.
Rehire or Reengage employees
All employees that you let go or stood down must be rehired if you want to claim the JobKeeper payment for them.
Continue to pay the $1,500 minimum
You must continue to pay at least $1,500 pre-tax to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight was the period from 30 March to 12 April). If an employee receives more than the $1,500 minimum, then no further payments to the employee are required but an employer can optionally choose to provide further payment to the employees.
However, should an employee be receiving less than the $1,500 JobKeeper payment, you are required to top up their payment to the $1,500 minimum. The JobKeeper payment will be given to support eligible businesses in both cases regardless.
Notify eligible employees
You must notify all your eligible employees that you are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming the JobKeeper payment through another employer or have been nominated through another business.
Send the JobKeeper employee nomination notice to eligible employees
Send the JobKeeper employee nomination notice to all your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April. Keep it on file and provide a copy to your registered tax or BAS agent if you are using one. If you are participating in the JobKeeper payment scheme you must enrol all eligible employees, however, individual employees can choose not to participate.
How to Enrol for JobKeeper Payments
Step 1 - Enrol in the JobKeeper Payment Scheme
Your business can either log into the Business Portal using myGovID, select ‘manage employees’ then the link for the JobKeeper payment. Fill in the JobKeeper enrolment form and provide your eligibility information, expected number of eligible employees and contact and banking details. Alternatively, as a registered Tax Agent, Discovery Accountants can register your business on your behalf.
Once enrolled, you will need to notify all eligible employees you have nominated them. To ensure you receive your JobKeeper payments as early as possible, you should enrol by the end of April.
Enrolments are open until the end of May if you need more time.
Step 2 - Identify and maintain your eligible employees
- You or your registered tax or BAS agent can identify each eligible employee that you will claim the JobKeeper Payment for and maintain their details each month.
- If you have STP enabled payroll software, you can identify your employees in one of the following ways:
- Directly into your STP enabled payroll software if it is updated with JobKeeper functionality.
- In the Business Portal if your STP payroll software is not updated with JobKeeper functionality:
- If you have 200 employees or less, log in to the Business Portal and select employee details that are prefilled from your STP pay reports.
- If you have more than 200 employees, you can manually create a pay report, ask the ATO for a prefilled JobKeeper report, or use the JobKeeper Payment Guide sample payload files to produce your own JobKeeper report and provide it back to the ATO by uploading via the Business Portal Transfer file function.
- If you don't have STP enabled payroll software, you can identify your employees in one of the following ways:
- In the Business Portal
- If you have 40 employees or less, manually enter your eligible employees' details
- If you have more than 40 employees, you can use the JobKeeper Payment Guide sample payload files to produce your own JobKeeper report and provide it back to the ATO by uploading via the Business Portal Transfer file function or consider moving to an STP enabled payroll solution.
- In the Business Portal
Step 3 – Make a business monthly declaration
- Each month, you must reconfirm your reported eligible employees. This can be done through the Business Portal or via your registered tax or BAS agent.
- If your eligible employees change or leave your employment, you will need to notify us through the business monthly declaration report.
- You must also provide information as to your current and projected GST turnover. This is not a retest of your eligibility, but rather an indication of how your business is progressing under the JobKeeper Payment scheme.
What a Business Can’t Do with the JobKeeper Payment
- A business cannot claim the JobKeeper payment on behalf of employees who were not paid at least $1,500 (before tax) during each JobKeeper payment period.
- The JobKeeper payment cannot be claimed in advance. The JobKeeper payment is a reimbursement from the Tax Office to an employer in arrears and cannot be paid in advance in any circumstances.
We hope our JobKeeper summary is helpful in assisting your business apply for the JobKeeper payment. If you need any further information or for assistance with applying on your behalf, please get in touch with our office by via our Contact Page.
Thank you for your continuing support. Let’s work together through these turbulent times and come out stronger on the other side.
The Team from Discovery Accountants
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required with either your decision to enrol your business in JobKeeper or how to comply with JobKeeper reporting requirements, professional advice should be obtained.