On 8 April 2020, the Government passed legislation to establish the framework for implementing the JobKeeper payment stimulus measure which will provide eligible businesses with a payment of $1,500 per fortnight per eligible employee of the business. On 9 April 2020, a separate Legislative Instrument was released by the Treasurer, Mr Josh Frydenberg, which outlines further specific details of the measure.
The mechanism of using a Legislative Instrument to outline details of the JobKeeper program means that it is possible that some aspects of the program may subsequently be clarified within the next several days. This may well occur as the current rules are not clear in relation to certain aspects of the scheme.
Based on the Legislative Instrument as currently released, this is what we now know in relation to the JobKeeper program introduced:
Which entities can apply to obtain the JobKeeper payment?
To be eligible to apply for JobKeeper payments, the entity must have carried on a business as at 1 March 2020.
In order to be eligible to receive JobKeeper payments, the business must satisfy the following alternative reduction of turnover tests:
- If the business has turnover of over $1 billion, the entity must demonstrate that its turnover has reduced by at least 50% as compared to a comparable period 12 months ago.
- If the business has turnover of less than $1 billion, the entity must demonstrate that its turnover has reduced by at least 30% as compared to a comparable period 12 months ago.
- If the business is a Not-For-Profit registered charity, the entity must demonstrate that its turnover has reduced by at least 15% as compared to a comparable period 12 months ago.
To be eligible to receive JobKeeper payments from the commencement of the program (i.e. from 30 March 2020), the business must register for the JobKeeper program by 26 April 2020.
When will the first JobKeeper payment be made?
The first JobKeeper payment will be made at the start of May 2020 for the period of April 2020. To receive the JobKeeper payment, employers will be required to pay the wages of their employees for the month of April and subsequently receive the JobKeeper subsidy in May 2020. This may present cash flow difficulties to some employers as they will need to pay wages to their employees in anticipation of subsequently receiving JobKeeper payments.
How long does the JobKeeper payment program last for?
The JobKeeper program starts from 30 March 2020 and lasts for 6 months from April 2020 to September 2020. As JobKeeper payments are paid for fortnightly periods, the JobKeeper program lasts 26 fortnightly periods until 27 September 2020.
How is the reduction in turnover test of the business calculated?
The reduction in turnover test is determined based on projected GST turnover for a period (which can be either monthly or quarterly) as compared to a comparable period 12 months ago.
Reduction in turnover testing commences from March 2020. For example:
- If the business’s turnover has reduced by 30% or more in the month of March 2020 (as compared to March 2019), the business would be eligible to commence receiving JobKeeper payments from the start of the program from 30 March 2020.
- If the business’s turnover did not reduce by 30% or more in March 2020 (i.e. as compared to March 2019) but the business anticipates (i.e. projects) that its turnover will fall by 30% or more in April 2020 (i.e. as compared to its turnover in April 2019), the business will equally be eligible to commence receiving JobKeeper payments from the start of the program from 30 March 2020.
- If the turnover of the business did not reduce by 30% or more in the month of March 2020 (i.e. as compared to turnover in March 2019) or the month of April 2020 (i.e. as compared to turnover in the month of April 2019) but the business nevertheless anticipates that its turnover will fall for the quarter of June 2020 (i.e. as compared to the June quarter of 2019), the business would still be eligible to commence receiving JobKeeper payments from the start of the program from 30 March 2020.
There are modified tests for businesses that have only commenced within the past year or whose turnover last year were affected by events such as drought.
Importantly, if a business becomes eligible to receive JobKeeper payments at some point in time during the program (i.e. due to a reduction in its turnover), the business will continue to be eligible to receive JobKeeper payments for eligible employees for the remainder of the JobKeeper program without further turnover testing required.
Who are eligible employees of the business?
If a business is eligible to participate in the JobKeeper program, it will receive a $1,500 subsidy for each eligible employee it has. Eligible employees are employees that were employed in the business as at 1 March 2020 and are either full-time employees, part-time employees or long-term casuals that have worked in the business for at least 12 months.
In order to be eligible to receive JobKeeper payments for an employee, the employee must either be an Australian citizen, an Australian permanent resident, or a New Zealander on a sub-category 444 visa. This means that most temporary resident visa holders will not be eligible to receive JobKeeper payments.
An employer is required to notify each eligible employee for which they will be claiming JobKeeper payments for. Employees will need to confirm to their employer that they are not receiving JobKeeper payments from another employer.
If a business is eligible to apply for JobKeeper payments, all eligible employees must be included in the program. This means that (i) stood down employees would need to be reinstated and paid at least $1,500 per fortnight; and (ii) employees earning less than $1,500 per fortnight would need to commence to be paid at least $1,500 per fortnight.
Extension of the JobKeeper payment program for “eligible business participants”
The JobKeeper program has been designed to provide the $1,500 wage subsidy to more than just employees of the business.
The program specifically applies to the following categories of non-employee business participants as well:
- For sole trader businesses, the sole trader themselves;
- For businesses operating via a partnership, one nominated individual partner of the partnership;
- For businesses operating via a trust, one nominated adult beneficiary of the trust;
- For businesses operating via a company, one nominated director or shareholder of the company.
Businesses will be required to report monthly information to the ATO in terms of its projected turnover, its actual turnover for the prior period, and its continuing employees which it is employing.
Further ATO guidance
As the administrator of the JobKeeper payment scheme, the ATO will be subsequently issuing further guidance in relation to the process of claiming payments. It is also anticipated that the ATO will issue further integrity rules to prevent businesses from manipulating turnover to access the scheme.
To date this information has not been released but we will provide further information once it is released.
If you have any further questions, please contact your client service partner or contact accountant at Banks Group on (03) 9810 0700.