COVID-19 JOBKEEPER PAYMENTS Time To Act

As we know, the Federal government has announced further measures to support businesses and their employees through the JobKeeper payment. We have summarised some key information below focusing on small business entities in the event that you need to take advantage of this support.

Please contact your MNH Advisory Services team member if you would like any advice or assistance to submit and enrol in the JobKeeper Payment Scheme. We are able to submit and enrol on our client’s behalf through our ATO Online Services for Tax Agents.

What is the JobKeeper Payment?  

  • A subsidy to the employers with employees
  • A subsidy to the active business owners without employees, such as sole traders, partnerships or trading trusts
  • It is a fortnightly payment of $1,500 per eligible employee or per eligible business

Employers are eligible for the JobKeeper Payment if all of the following apply:

  • On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
  • You employed at least one eligible employee on 1 March 2020.
  • Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).
  • Your business has faced either a  
    • 30% fall in turnover (for an aggregated turnover of $1 billion or less)
    • 50% fall in turnover (for an aggregated turnover of more than $1 billion)
    • 15% fall in turnover (for ACNC-registered charities other than universities and schools).

Calculating Turnover


The turnover calculation is based on GST turnover. This applies even if an entity is not registered for GST. There are some modifications, including disregarding GST grouping where two or more associated business entities operate as a single GST group.

You can apply the basic test even if you are not registered for GST.

Generally businesses will use the basic test, which is based on GST turnover. Where appropriate turnover comparison periods are not available (for example, where your business has been operating for less than a year) we may make an alternative test available.

You only need to satisfy the fall in turnover test once – you don’t need to test your turnover in the following months or quarters.

However, there are ongoing monthly turnover reporting requirements.


Alternative Test

The ATO may determine an alternative test for fall in turnover for a class of entities where there is not an appropriate relevant comparison period. This test is exercised where the ATO is satisfied that there is not an appropriate relevant comparison period.

For example, an entity being subject to a severe drought from 2018 until September 2019 that reduced the amount of its crop that it could grow.

My turnover has not decreased by 30% this month, but I believe it will in the coming month. Am I eligible?

You can apply for the payment if you reasonably expect that your GST turnover will fall by 30 per cent or more (or 50 per cent or more for businesses with an aggregated turnover of $1 billion or more) relative to your GST turnover in a corresponding period a year earlier. The ATO will provide guidance about self-assessment of actual and anticipated falls in turnover.

Which Employees are Eligible?

Your employees are eligible if they are employed by you:Is currently employed by the eligible employer (including those stood down or re-hired)

  • Is a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020
  • Is a permanent employee of the employer, or if a casual employee, not a permanent employee of any other employer
  • Was aged 16 years or older at 1 March 2020
  • Was an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
  • Was a resident for Australian tax purposes on 1 March 2020
  • Is not in receipt of a JobKeeper Payment from another employer.

You cannot claim for any employees who:

  • were first employed by you after 1 March 2020, or
  • left your employment before 1 March 2020, or
  • have been, or have agreed to be, nominated by another employer.

What about the Directors who work in the Business?

If more than one director wants to access JobKeeper payments, they need to meet the eligibility criteria of an employee. To be an employee, a director would have received salary/wages and this has been reported as salary/wages on activity statements, payment summaries, tax returns etc. If a Director merely receives a distribution from the business, then they are unlikely to be an employee.

If one director/business participant is eligible they will need to fill a nomination form – click here

Self Employed and Other Eligible Businesses

Business owners are those:

  • sole traders and the self-employed with an ABN, and
  • one partner in a partnership, beneficiary of a trust, director or shareholder who works in the business (i.e. only one person in a partnership, one beneficiary of a trust, or one director / shareholder are eligible).

Conditions to be met for business owners:

  • The entity carried on a business and had an ABN on 12 March 2020; and
  • Had some business income in the 2018-19 income year included in a tax return that was lodged by 12 March 2020; or made some supplies connected with Australia in a tax period that started on or after 1 July 2018 and ended before 12 March 2020 and recorded this on an activity statement lodged with the ATO by 12 March 2020. 
  • Passed the decline in turnover test; and
  • The individual was not
    • a permanent employee of another entity at the time the individual gives the nomination notice (i.e. they do not hold a full time or part time role with another employer); or
    • a nominated JobKeeper employee of any other business; or
    • entitled to parental leave pay or dad and partner pay from Centrelink or workers’ compensation payments for being totally incapacitated for work.

As at 1 March 2020, the individual satisfied all of the following:

  • Aged 16 years or over; and
  • Actively engaged in the business; and
  • An Australian citizen, or the holder of a permanent visa, or a Australian tax resident who holds a special category visa (Subclass 444).

If the criteria have been met, the individual is eligible if they were actively engaged in the business in the fortnight of the JobKeeper payment, and they agreed to be nominated for JobKeeper payments and confirmed they pass the eligibility criteria.

Please note that Sole traders eligibility have a question which states that the tax return is required to be lodged by 12 March. We are expecting more information on this from the ATO as many sole traders will be affected by this eligibility requirement with the actual due date for lodgement of tax return is 15 May 2020.

Monthly Reporting Obligations

Once the application is completed, you will need to re-confirm each month that your reported eligible employees have not changed. This will ensure you will continue to receive the JobKeeper payments from the ATO. You do not need to retest your reported fall in turnover, but you will need to provide some information as to your current and projected turnover. This will be done in your monthly JobKeeper Declaration report.

When and how are Payments made by the ATO?

The first payments by the ATO will be received by employers from the first week of May. The payments will be made by the ATO monthly in arrears. Payments will be made monthly by the ATO within 14 days after the end of the calendar month in which the fortnight ends. Payments are for the payroll periods from 30 March to 27 September 2020.


Am I required to pay PAYGW and Superannuation on the JobKeeper Payments?

You must pay a minimum of $1,500 per fortnight to your eligible employees, withholding income tax as appropriate. The $1,500 per fortnight per employee is a before tax amount. Where an employee is paid more than $1,500 per fortnight, the employer’s superannuation obligations will not change. Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper Payment, it will be up to the employer if they want to pay superannuation on any additional wages paid by the JobKeeper Payment.

For example, if the work actually done by an employee over a period entitled them to be paid $1,100, but the employer paid them $1,500 to satisfy the wage condition for a JobKeeper fortnight, then the employer will only be required to make superannuation contributions in relation to $1,100. Employers can choose to pay superannuation guarantee on the full amount.

What Happens if I get it wrong?

This program will be subject to ATO compliance and audit activities. There will be a positive obligation on employers to establish their eligibility and that of their employees. In addition, the ATO will cross-check payments with Services Australia data, and data from other government agencies, and undertake activities designed to identify multiple or ineligible payments to individuals. If you claim the JobKeeper subsidy and whether you or the employee was not eligible, the Tax Commissioner can claw back any ineligible payments made. In addition, general interest charges apply.

Lodgement of Application

You will need to ensure you have completed the registration process between 20 April and 30 April and hold on files the JobKeeper Employee Nomination for eligible employees if you are employers.

How do Employers Make a Claim?

  • Click here to apply and register intention.
  •  Click here to check if you and your employees meet the eligibility requirements.
  • From 20 April 2020, you can enrol with the ATO for the JobKeeper payment using the Business Portal and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April.
  • Obtain a notification from each employee, confirming the employee’s consent to being included in the employer’s JobKeeper application. Click here to download form.
  • Notify the ATO that it wants to participate by 26 April 2020 if it wants to participate from the commencement of the scheme on 30 March 2020. Otherwise businesses must notify its participation before the end of the first JobKeeper fortnight for which it wants to participate.
  • Provide details of eligible employees for each fortnight to the ATO in the approved form. The ATO will use Single Touch Payroll data.
  • Notify eligible employees within 7 days of each fortnightly claim for the subsidy.
  • Report monthly to the ATO by the 7th of each month on its GST turnover for the previous month, and its projected GST turnover for the coming month.

We are able to submit and enrol on our client’s behalf through the ATO Online Services for Tax Agents.

Please contact your MNH Advisory Services team member if you would like any advice or assistance to submit and enrol in the JobKeeper Payment Scheme. We are able to submit and enrol on our client’s behalf through our ATO Online Services for Tax Agents.


Resources
https://www.ato.gov.au/General/JobKeeper-Payment/
https://treasury.gov.au/sites/default/files/2020-04/JobKeeper_frequently_asked_questions_2.pdf
https://www.ato.gov.au/General/JobKeeper-Payment/JobKeeper-guides/
  If you have any concerns or would like more information or assistance on the grant above, please speak to your MNH Advisory Services team member.

The information (including taxation) contained within this document is of a general nature only and neither represents nor is intended to be advice on any particular matter.

Posted in Accounting, Business Advisory, COVID-19, Taxation Advice

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