On 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 (pf) 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. If you are self-employed, you may also be eligible for the payments.
Who is eligible for the JobKeeper Payment?
If you are an employer, you are eligible for the JobKeeper Payment if your business:
- has a turnover of less than $1 billion and you estimate turnover has or will likely reduce by 30% or more relative to a comparable period a year ago (of at least a month), or
- has a turnover of $1 billion or more and you estimate turnover has or will likely reduce by 50% or more relative to a comparable period a year ago (of at least a month), and
- is not subject to the Major Bank levy.
The ATO has discretion to consider additional information if your business was not in operation a year earlier or turnover a year earlier was not representative of usual or average turnover, to establish that your business has been significantly affected by Coronavirus. In addition, the ATO has discretion to set alternative tests to establish eligibility in specific circumstances (for example, as soon as a business ceases or significantly curtails operations).
There will be some tolerance where employers, in good faith, estimate a 30% or 50% reduction in turnover but actually experience a slightly smaller reduction.
Registered charities which estimate their turnover has or will likely reduce by 15% or more relative to a comparable period, are eligible to apply for the JobKeeper Payment.
Employers that are not eligible
The following employers are not eligible for JobKeeper Payment:
- Federal or State/Territory governments and their agencies, local governments and wholly-owned corporations of these bodies.
- A company in liquidation, or a partnership, trust or sole trader in bankruptcy.
To qualify for the JobKeeper Payment as an employer, you must:
- self-assess whether your business will have, or will experience, the required decline in turnover
- register your 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.
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 www.ato.gov.au from 30 March 2020. 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.
Only one partner can be nominated to receive the JobKeeper Payment along with any other eligible employees, noting that a partner cannot be an employee.
Businesses run via a trust can receive the JobKeeper Payment for eligible employees of the trust. If beneficiaries receive distributions, rather than salary and wages for work done, only one individual beneficiary can be nominated to receive the JobKeeper Payment.
Only one director can be nominated to receive the JobKeeper Payment along with any other eligible employees of the company. The nominated director cannot receive the payment as an employee.
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
Example 2: Eligible employee who earns $1,500 or less per fortnight
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 at 1 March 2020
- you are an Australian citizen, holder of a permanent visa or a Special Category (Subclass 444) Visa Holder at 1 March 2020
- you are a resident of Australia for tax purposes on 1 March 2020
- you are not in receipt of the JobKeeper Payment from another employer.
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 will you receive?
If you’re an eligible employee, you will receive a minimum of $1,500 per fortnight, before tax. Your employer must withhold income tax as appropriate.
Depending on your circumstances, you may receive $1,500 per fortnight before tax 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.
Will my employer still pay compulsory super contributions?
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
What are your obligations?
If you are an employee with one employer, you will not have any further obligations. However, you will have additional obligations if:
- you have multiple employers, in which case, you must notify the employer that is your primary employer
- you are not an Australian citizen, in which case, you must notify your employer of your visa status to allow your employer to determine if you are an eligible employee
- you are currently in receipt of, or have applied for, an income support payment, then you should advise Services Australia of a change in your circumstances online at my.gov.au or by phone.
Will I receive the JobKeeper Payment if I have multiple employers and I continue to be paid by one employer?
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 the employer is your primary employer.
If your primary employer is eligible, you will receive the minimum JobKeeper Payment of $1,500 per fortnight before tax from that employer.
Example – Michelle works multiple jobs
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.
For further information about the JobKeeper Payment, employees should contact their employer or, if you’re self-employed or an employer, the ATO.