The Australian government has introduced a supporting payment package for businesses called the JobKeeper payment
Hundreds of enterprises struggle to preserve as many workplaces as possible, but they are forced to let go of some of their team members amid the global shutdown caused by the COVID-19 pandemic. The Australian government has introduced a supporting payment package for businesses called the JobKeeper payment.
Eligibility for JobKeeper Payment
This financial support doesn’t go to employees directly. Funds are distributed via the companies’ management instead.
Only those businesses with a turnover of less than $1 billion that has reduced by 30%, or a turnover of more than $1 billion that has reduced by 50%, will be eligible for payment. Others will have to cope on their own.
Under the GST law, only Australian based sales are included and therefore, only Australian based turnover is relevant. A decline in overseas operations will not be counted in the turnover test. Exports are generally GST free supplies, connected with Australia and included in GST turnover.
The new legal initiative provides temporary financial support to SMEs and non-profit organizations that employ staff and have been affected by the economic downturn associated with the novel coronavirus. Self-employed entrepreneurs are also eligible to receive the JobKeeper payment.
As for the workers, money can be given to full-time, part-time, long-term casual, and stood-down employees. Casual employees must have been engaged with the company for at least a year prior to the start of the JobKeeper program.
An eligible employee has to be an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder on 1 March 2020 and a resident for Australian tax purposes on this same date.
Employees will not be eligible for the JobKeeper Payment if they are fully incapacitated, unable to work, and being supported by a workers’ compensation scheme or fully compensated under the workcover insurance.
According to the government’s estimations, around 6 million workers will receive a fortnightly payment of $1,500 (before tax) through their employer.
The following entities will not be eligible:
- Australian Government and its agencies,
- State and Territory governments and their agencies,
- Foreign governments and their agencies;
- Local council governments;
- Wholly-owned corporations of any of the above;
- A business subject to the Major Bank Levy;
- Companies that are in liquidation, or a partnership, trust or sole trader in bankruptcy;
- Some businesses that are separately provided with support from the Government that explicitly requires them to forgo access to the JobKeeper Payment.
How JobKeeper Payment works
The government is ready to support every employee the company hired before March 1, 2020 (including those who are stood down or re-hired). If the employee generally earns over $1500 per fortnight (before taxation), this payment will be a subsidy to retain the usual level of remuneration.
If a person has lower wages or was stood down, the employer uses the JobKeeper scheme to pay them a minimum of $1500 per fortnight. If an employee was stood down or dismissed amid the crisis, employers can re-hire or re-engage them under the JobKeeper program. However, they must double-check that the person hasn’t already claimed the payment for this period with another employer.
If an employee is receiving or in the process of applying for a Services Australia income support payment, like JobSeeker payment, they should contact Services Australia and let them know that their employer has applied for the JobKeeper payment.
Some employees have multiple employers, so they can usually choose which employer they want to nominate through. If your employees are long-term casuals and have other permanent employment, they cannot nominate you. They cannot be nominated for the JobKeeper payment by more than one employer. Hence, they will usually register with the permanent workplace.
The payments will cover the period between March 30 and September 27, 2020.
The whole payment scheme will be administered by the Australian Taxation Office (ATO). In order to participate, businesses have to enroll at their official website. Registered tax or BAS agents can also enroll, identify, and declare for JobKeeper on your behalf using Online service for agents.
Each eligible employee has to complete the JobKeeper employee nomination notice before the enrollment. This document needs to be kept as proof of the employee’s agreement to be nominated and receive payments from this particular employer as a part of the scheme.
The Commissioner has extended the time to enroll for the initial JobKeeper periods, from 30 April 2020 until 31 May 2020. Employers will be able to get subsidies for the previous fortnights as long as they paid due wages by the 8th of May.
If a business does not meet the turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment later (up to 27 September 2020) once the turnover test has been met. In this case, the JobKeeper Payment is not backdated to the commencement of the scheme.
Every month, registered employers or their tax or BAS agent should identify each eligible employee they claim the JobKeeper Payment for and maintain their details. It can be done via STP enabled payroll software or Business Portal Transfer file function.
If the eligible employees change or leave their employment, businesses will need to notify the ATO through the business monthly declaration report.
How and when JobKeeper payments reach the final recipients
Different employers might either make two fortnightly payments of at least $1,500 per fortnight by 8 May, or a combined payment of at least $3,000 for the first two fortnights (30 March – 12 April, 13 April – 26 April).
Those who usually pay employees less frequently than fortnightly can allocate the payment in a reasonable manner. For example, employees on a monthly pay cycle must have received the monthly equivalent of $1,500 per fortnight.
The first payments by the ATO will be received by employers from the first week of May. If the employer registers later, the subsidy will also take more time to arrive.
You cannot claim the JobKeeper payment in advance. The JobKeeper payment is a reimbursement to an employer in arrears, and cannot be paid in advance in any circumstances. In case businesses face money problems and can’t make timely payouts, they may want to speak to their bank to discuss their options.
Numerous banks have said businesses may be able to use the upcoming JobKeeper payment as a basis to seek credit for paying their employees until the scheme is making its first payments.
In many cases, payments and obligations to eligible employees will not change. Only those who received less than $1500 per fortnight will see an increase in wages. Those who were stood down without any payments in March will also have the chance to receive minimal wages for that period.