03 Apr JobKeeper Payment
You may have seen the announcement, read about it or overheard it. Here’s our recap. No clickbait headlines. Just facts.
On Monday, 30 March 2020, the Federal Government announced the introduction of the JobKeeper Payment. The payment is a wage subsidy paid by the Government to businesses significantly impacted by the Coronavirus. This will allow employers to continue paying their employees whether they are able to work or not. The Government will provide $1,500 per fortnight per employee for up to six months to eligible businesses. The business must pass on the payment to eligible employees.
The first payments will be paid to eligible businesses in the first week of May. Self-employed persons can also be eligible for the payments.
You, or someone you know, may have had a change in circumstances and may need support.
We have put together a quick Q&A below this information to help you navigate this initiative.
What is JobKeeper?
The JobKeeper payment is a $1,500 (gross) fortnightly payment per eligible employee of a business. The amount will be paid to the employer and is designed to assist employers to continue paying their employees. Eligible employers will receive payments from the beginning of May and payments will be backdated to 30 March 2020. The payments will be available for a maximum of six months.
Who is an eligible employer?
An employer is eligible if the business has turnover of:
- less than $1 billion which has reduced by more than 30% relative to a comparable period a year ago (of at least a month), or
- more than $1 billion which has reduced by more than 50% relative to a comparable period a year ago (of at least a month), and
- is not subject to the Major Bank levy.
Therefore, a broad range of businesses will be eligible including not-for-profit organisations
If you are self-employed you can apply for the JobKeeper Payment if:
- you do not have any employees
- your business meets the turnover tests.
To apply, you can register your interest to receive the JobKeeper Payment as self-employed via http://www.ato.gov.au from 30 March 2020.
Who is an eligible employee?
If you are an employee, you are eligible for the JobKeeper Payment if:
- your employer is eligible for the JobKeeper Payment wage subsidy.
- you are currently employed (including if you are stood down or rehired)
- you were employed by the employer as at 1 March 2020
- you are employed full-time, part-time, or a long-term casual, that is, a casual employed on a regular basis for longer than 12 months at 1 March 2020
- you are aged 16 years or older
- you are an Australian citizen, 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
- you are not in receipt of the JobKeeper Payment from another employer.
How does an eligible employer apply?
To qualify for JobKeeper Payment the employer must:
- self-assess whether it will have, or will experience, the required decline in turnover
- register their intention to apply for the JobKeeper Payment with the Australian Taxation Office (ATO) via this link
- provide the following information to the ATO:
- the number of eligible employees employed as at 1 March 2020
- the number of eligible employees currently employed, including those stood down or re-engaged
- ensure eligible employees are paid wages of at least $1,500 pf (before tax) – this means those who were receiving less than $1,500 pf will be paid increased wages
- notify eligible employees that they are receiving the JobKeeper Payment
- continue to provide monthly updates to the ATO, who will assess eligibility.
What does a business without employees (eg self-employed) need to do?
If you are self-employed without any employees, you will need to:
- provide an ABN for your business
- nominate an individual to receive the payment
- provide the individual’s Tax File Number
- provide a declaration as to your recent business activity
- provide a monthly update to the ATO to declare continued eligibility for the payments.
The ATO may assess eligibility using information provided in business activity statements, instalment activity statements, tax returns and single touch payroll systems.
What payments will eligible employees receive?
If you’re an eligible employee, you will receive a minimum of $1,500 per fortnight, before tax.
Depending on your circumstances, you may receive $1,500 per fortnight in a number of different ways.
- If you ordinarily receive $1,500 per fortnight of income before tax, you will continue to receive your regular income according to your workplace arrangements. The JobKeeper Payments will subsidise part, or all of, your income.
- If you ordinarily receive less than $1,500 in income per fortnight before tax, your employer must pay you $1,500 per fortnight, before tax.
- If you have been stood down, that is, you can’t be usefully employed and your employer is not required to pay your wages, your employer must pay you $1,500 per fortnight, before tax.
- If you were employed on 1 March 2020, subsequently ceased employment and then were re-employed by the same eligible employer, you will receive $1,500 per fortnight, before tax.
The following examples illustrate how the wage subsidies apply to payments to eligible employees, assuming the business qualifies for the JobKeeper Payment:
Example 1: Eligible employee who earns more than $1,500 per fortnight
Arthur is an eligible permanent full-time employee receiving a salary of $3,000 pf before tax and continues to be employed. Arthur will receive the same salary, however, the employer will receive $1,500 per fortnight JobKeeper Payment to partially subsidise Arthur’s salary as long as the business remains eligible. The business will continue to pay Superannuation Guarantee (SG) on Arthur’s income.
Example 2: Eligible employee who earns $1,500 or less per fortnight
Nora is a permanent part-time employee earning $1,000 pf before tax and continues to be employed. The business will increase her wages to $1,500 pf and will receive $1,500 pf which fully subsidises Nora’s salary. The business must pay SG on at least $1,000 of Nora’s income. It may choose to pay SG on the additional $500 pf Nora receives.
Is super guarantee (SG) payable on JobKeeper payments?
Your employer still needs to pay your compulsory super contributions known as the Superannuation Guarantee. However, your employer is not required to pay Superannuation Guarantee on any JobKeeper Payment that exceeds your original fortnightly pay.
For example, if your original fortnightly pay was $1,000 and you now receive the $1,500 fortnightly JobKeeper Payment, your employer is only required to pay Superannuation Guarantee on $1,000.
How is the payment treated for social security and tax purposes?
JobKeeper payment is treated as income for social security purposes and may impact eligibility for income support. It is expected that this payment is taxable income of the employee, however, this has not been clarified.
Can an employee be receiving both JobKeeper and the JobSeeker Payment from Centrelink?
Because the JobKeeper payment is assessable for social security purposes, individuals who start to receive JobKeeper will need to report any change in their income to Services Australia (formally Department of Human Services) within 14 days.
The current income test cut off point for JobSeeker payment is $1,086.50 pf for a single person with no dependants. This means that a single person receiving JobKeeper is effectively ineligible for JobSeeker payment due to the income test.
How do you know if your employer is eligible?
If your employer is eligible, they will notify you and all other employees who will receive the JobKeeper Payment.
What about eligible employees with multiple employers?
If you have multiple employers, only one employer will be eligible to receive the payment. You will need to notify your primary employer to claim the JobKeeper Payment on your behalf. If you claim the tax-free threshold with an employer, this will, in most cases be sufficient notification that that employer is your primary employer.
If your primary employer is eligible, you will receive the minimum JobKeeper Payment of $1,500 per fortnight from that employer.
Example – Michelle works multiple jobs
Michelle currently works two permanent part-time jobs, one at an art gallery during weekdays, and the other at the local café on the weekend. Due to the impact of the Coronavirus, 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. Assuming 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 that she receives from the art gallery.
We’re here to help
If you, or someone you know, has any of your any further questions, please feel free to reach out us.