The Australian Government has announced a new wage subsidy measure to be known as the “JobKeeper” payment. This payment will benefit millions of Australian employees – Full-time, Part-time, sole traders & casuals (who have been at their company for at least 1 year).
Links to detail in this article:
Below are some questions answered and some details of the administrative nightmare already stressed employers will need to undertake.
The government has passed the burden of getting stimulus cash to struggling employees onto Employers, many of whom are already at breaking point. Either this or being faced with engaging their accountant or adviser to guide them through this process.
Lets take a look at the relevant factors:
- The business as an employer will need to register an intent to apply on the ATO website – part of this process will be an assessment of experiencing the required turnover decline;
- Provide information to the ATO on eligible employees. For most businesses this will be pre-filled from information available from Single Touch Payroll (STP). For those not registered for STP this will need to be a manual process.
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax).
- Notify all eligible employees that they are receiving the JobKeeper payment; and
- Continue to provide information to the ATO on a monthly basis.
- For businesses with revenue of less than $1 billion — sales need to drop by at least 30 per cent relative to a comparable period a year ago (of atleast a month);
- For businesses that have turnover above $1 billion — revenue needs to plunge by half relative to a comparable period a year ago (of atleast a month);
- The business is not subject to the Major Bank Levy;
- Must have been in an employment relationship with eligible employees as at 1 March 2020; and
- Self-employed individuals (businesses without employees) must meet the relevant turnover tests.
- Currently employed by eligible employer (incl those stood-down or re-hired);
- Were employed as at 1 March 2020;
- Full-time, Part-time, or Long term casual employees;
- At least 16 years of age;
- Australian citizen or holder of a permanent visa; and
- Not in receipt of a JobKeeper payment from another employer.
NB: If an employee is in receipt of a JobKeeper payment this may affect their entitlement for other payments from Centrelink as this payment must be reported as income.
The application process:
Businesses with employees
Initially, employers can register their interest in applying for the JobKeeper Payment via ato.gov.au from 30 March 2020.
Subsequently, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.
Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO.
Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Businesses without employees
Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper Payment via ato.gov.au from 30 March 2020.
Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity.
People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.
How does the money get to me? Do I need to do anything to receive the JobKeeper payment?
Many will think of the JobKeeper as a payment directly to you as an employee, but the JobKeeper program is really for employers, who are then required to pass the money on to employees.
The employer will deal with the Government, fill in the paperwork, receive the wage subsidies and be responsible for subsequent ongoing administration requirements.
Employees who are kept on the books (even if the business goes into hibernation for a while) will keep receiving pay in their bank accounts.
Whether you qualify for the payment depends on the size of the business you work for:
1) For businesses with revenue of less than $1 billion — sales need to drop by at least 30 per cent
2) For businesses that have turnover above $1 billion — revenue needs to plunge by half
Employers that receive the payment will be required by law to pass it on to their staff.
When will the cash start flowing?
The program (technically) commenced on Monday 30 May 2020, but money won’t flow until the first of May. You should be reminded that these measures will still need to be passed by a sitting of the government.
The Australian Tax Office will reimburse businesses for the last couple of days of March — and the whole month of April — from the start of May.
What if I lost my job before this announcement?
People who have already been sacked, stood down, or let go are eligible if their (previous) employer signs up for the program and puts them back on the books.
For people who’ve lost their job and whose employer doesn’t sign up, they will need to apply for a Centrelink payment.
The Government has made it easier for more people to get the JobSeeker payment.
Before the most recent announcement, people were ineligible if their partner earned more than about $48,000 per year.
That’s now been increased to nearly $80,000.
What happens if I normally receive more than $1,500 a fortnight?
The Government is hoping that people will keep receiving their current wage.
Let’s take this example:
Person A works for Company A, which currently pays Person A $2,000 a fortnight. A JobKeeper payment should not mean Person A takes a $500 pay cut.
Person A’s fortnightly pay remains $2,000, with most of it subsidised by the Government to make sure Company A can keep paying its employees and ideally stay afloat and resume normal service on the other side of the coronavirus.
A fact sheet on the Treasury website describes the $1,500 in this instance as “a top-up”, but the Prime Minister explained it better in his press conference.
“They will have the first $1,500 of their wages each fortnight met by this payment,” Mr Morrison said.
Why has the Government settled on $1,500 a fortnight?
The Government said this amount represented about 70 per cent of the median wage in Australia.
For industries hit hard — such as hospitality, retail and tourism — the Government said it’s the same as the median wage.
Employer with employees on different wages
Adam owns a business whose turnover has declined by more than 30% as a result of the downturn due to the Coronavirus. The business had the following three employees as at 1 March 2020:
- Anne, who is a permanent full-time employee and who continues to work in the business earning a gross salary of $3,000 per fortnight.
- Nick, who is a permanent part-time employee and who continues to work in the business earning a gross salary of $1,000 per fortnight.
- Fred, who was recently stood down from the business without pay.
Adam is eligible to receive the JobKeeper Payment for each employee of $1,500 per fortnight (before tax), for a maximum period of six months (which would be paid monthly in arrears). The JobKeeper Payment would provide the following benefits for the business and its employees:
(a) The business continues to pay Anne her full-time gross salary of $3,000 per fortnight, as well as superannuation guarantee support on this income. In this case, the $1,500 per fortnight JobKeeper Payment effectively partly subsidises the cost of Anne’s salary.
(b) The business continues to pay Nick his $1,000 gross fortnightly salary and an additional $500 gross amount per fortnight, resulting in a total gross fortnightly salary of $1,500. In this case, the JobKeeper Payment fully subsidises the cost of Nick’s salary. The business must continue to provide Nick with superannuation guarantee support on the $1,000 fortnightly salary amount, but has the option of choosing to pay superannuation on the additional $500 gross amount paid to Nick under the JobKeeper Payment scheme.
(c) The business must start paying Fred a gross salary of $1,500 per fortnight, which is fully subsidised by the JobKeeper Payment. The business has the option of choosing to pay superannuation on this amount paid to Fred under the JobKeeper Payment scheme. If Fred commenced receiving any Centrelink support (e.g., JobSeeker Payment), he will need to advise Centrelink of his JobKeeper payment.
Self-employed affected by Covid-19 with no employees
Melissa is a sole trader running a florist without any employees.
The economic downturn due to the Coronavirus has adversely affected Melissa’s business and she expects that her business turnover will fall by more than 30% compared to a typical month one year ago (i.e., in 2019).
On this basis, Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight (before tax), which will be paid to her on a monthly basis in arrears.
Published : 31 Mar 2020