The Australian Government has finally released the much anticipated Legislative Instrument and accompanying Explanatory Statement for the JobKeeper Payment. The ATO have also released further information on their website.
This is the “nitty-gritty” detail we have been waiting for. Employers can now commence the process of implementing the JobKeeper payment as follows:
To be eligible to receive JobKeeper an employer must meet the following tests:
Business owners actively engaged in the operation of their business are also eligible to claim the JobKeeper payment (i.e. an individual shareholder, director, adult beneficiary or partner). Criteria (b) above does not apply in this instance.
30% DECLINE IN TURNOVER TEST
This test works by comparing the projected (i.e. estimated) GST turnover of the employer for a month or quarter (the test period) with the actual GST turnover of the comparable month/quarter of 2019 (the comparison period).
To begin with employers should make comparisons using the following periods:
If any ONE of these comparisons meets the 30% decline test, then the employer will be eligible from the beginning of the scheme (30 March 2020). Once the business qualifies there is no need to retest your qualification for the rest of the life of the scheme (from 30 March 2020 to 27 September 2020). That is, once you are in, you stay in, even if your turnover improves in following months above the 30% decline threshold.
In limited circumstances the ATO can apply an alternate test where the prior year period is not representative of normal turnover (e.g. there was a drought, or natural disaster affecting the turnover of that period in the prior year), or if the business was not in existence 12 months ago..
If an employer does not qualify at the beginning of the scheme they are able to continually assess their eligibility using the projected turnover for any of the following periods:
For these periods, an employer will be eligible to receive the JobKeeper Payment commencing from the fortnight that the business self-assesses that it qualifies for the scheme (and notifies the ATO accordingly). That is, there is no back payment to the start of the scheme once you qualify; you are only paid from that fortnight onwards.
The current fact sheet on the Treasury website states there will be some tolerance where employers, in good faith, estimate a 30% or more fall in turnover but actually experience a slightly smaller fall. We would expect the ATO to recover payments where these estimates were not reasonable we advise that documentation be retained showing how these estimates were calculated and the assumptions involved.
If the employer qualifies for the JobKeeper scheme, the next step is to assess which of the business’ employees are eligible to receive the payment.
Your employee is eligible if they:
If an employee is assessed as eligible you are required to notify them that you intend nominating them as an eligible employee under the scheme. This is done by providing them with a JobKeeper Employee Nomination Notice (see attached). Employers should complete Section A, with Section B, C and D to be completed by the employee. This Notice should be issued ASAP and returned to the employer by 30 April, 2020.By completing the form, an employee notifies that they are eligible and are accepting nomination to receive the JobKeeper payment via that employer. An employee can only nominate one employer if they have multiple jobs.
Employees should note that once they nominate an employer, they CANNOT change their nomination to another employer. Even if their employment ends due to termination, redundancy or the employer going bust, they CANNOT nominate another employer. Employees should therefore carefully consider the longevity of their proposed nominated employer.
As previously mentioned, business owners actively engaged in the operation of their business, and who do not receive a wage, are eligible to claim the JobKeeper payment (i.e. an individual shareholder, adult beneficiary or partner). Please note that only ONE active business participant is eligible to receive the JobKeeper payment, regardless of the number of actual partners, beneficiaries, directors, shareholders.
There appears to be a 2 step process for employers to sign up with the ATO for the JobKeeper program (3 steps if you count the already-completed registration to receive information updates!) enrolment then applying. We can only envisage that this convoluted process is intended to give the ATO sufficient time to get its systems and processes in place, and to enable expedited payments to employers for the first two JobKeeper fortnights.
Enrolment will commence from 20 April, 2020. Employers can complete this via the ATO Business Portal if you have access; otherwise your accountant can complete this on your behalf via the Tax Agent Portal (once you supply us with the relevant information). Enrolment must be completed by 30 April 2020 in order to receive the first two JobKeeper payments.
In order to enrol you will need to notify the ATO of:
Eligible employees must receive GROSS pay of at least $1,500 per fortnight, in accordance with your normal pay cycle, comprising:
PAYG Withholding is required to be deducted from the total payments, including any JobKeeper top up. SGC is not required to be paid on any JobKeeper top up.
For the first two JobKeeper fortnights ending 12 April 2020 and 26 April 2020 an employer will need to ensure any back-payments required to reach the $1,500/fortnight threshold are made to employees prior to 30 April, 2020 to be eligible to receive the payment.
For all subsequent JobKeeper fortnights, the employer should ensure each eligible employee receives the minimum of $1,500 PRIOR to the end of the relevant fortnight.
Please note that the ATO will be able to verify that the $1,500 threshold is being met via Single Touch Payroll reporting data. Action will be taken where an employer does not meet this requirement.
This is the final step of signing up with the ATO. Application will commence from 4 May 2020. Again, employers can complete this via the ATO Business Portal if you have access, otherwise your accountant can also complete this on your behalf via the Tax Agent Portal (once you supply us with the relevant information). Application must be completed by 31 May 2020 in order to receive the first two JobKeeper payments.
This step involves notifying the ATO of the eligible employees who are going to receive the JobKeeper Payment. If you are a Single Touch Payroll employer, the employee details will already be prefilled in the application form, you will just need to select the relevant employees. Otherwise you will need to manually complete the employee details.
Once the application has been submitted the employer will need to notify eligible employees within 7 days that they have been formally nominated as eligible employees.
Once the employer registers, the ATO will make payment of the JobKeeper subsidy to the employer’s bank account, monthly in arrears. Processing of the first reimbursement ($3,000 per eligible employee) is expected to occur in the first week of May 2020 (although the Rules allow the ATO discretion to make an earlier payment for the month of April 2020). The ATO will make payment for following months within 14 days of the end of the month.
Each month, employers will need to complete a JobKeeper Declaration report. This report will be used by the employer to notify the ATO if any eligible employees change or leave employment. This will enable calculation of the JobKeeper reimbursement for the relevant month. You will also need to report your current month’s and projected month’s turnover. You do not need to retest your reported fall in turnover using this data, but it will be used for statistical purposes by the Government to monitor the economic effects of the Covid-19 pandemic.
The monthly report will be available for lodgment through the ATO Business Portal or via the Tax Agent Portal
All information has been sourced here.
Ume Loans is an Australian owned & operated company. We are a fully licensed lending company and are regulated by ASIC.