As the Australian governments at both federal and state level imposed stricter mitigation measures to slow the spread of the coronavirus (COVID-19) in recent weeks, most businesses particularly those in the tourism, hospitality and retail industries have been hard hit resulting in substantial job losses and retrenched workers across the country.

To strengthen the Australian economy’s ability to withstand the significant economic impacts of COVID-19, on 30 March 2020, the Australian federal government announced its third set of stimulus measure, namely the $130 billion JobKeeper (Wage Subsidy) Payment which brings the total stimulus packages announced to date to $320 billion (i.e. 16.4% of annual GDP).

The Coronavirus Economic Response Package (Payments and Benefits) Bill 2020  was swiftly passed by both Houses of Parliament and received royal assent on 9 April 2020. The Act establishes a framework for the Treasury to make rules by legislative instrument for JobKeeper Payment to be administered by the Commissioner which would allow flexibility in payment arrangements and necessary changes be made quickly to respond appropriately to the economic impacts of COVID-19.

According to the Treasury’s Rules (“Rules”), the key eligibility requirements and administration processes are as follows: 

JobKeeper Payment

• From 30 March to 27 September 2020, affected employers (including non-for-profits) will be able to claim $1,500 (before tax) per fortnight per eligible employee for a maximum of 6 months, with the first payment due to be received in the first week of May 2020.

This means that for eligible employees who earn below $1,500 per fortnight, they will now receive $1,500 per fortnight (including part of the wage subsidy their employer will receive from the Australian Taxation Office (“ATO”)). Please note that their employer can choose whether to pay superannuation on any additional wage in excess of the employee’s normal wage.

For those who earn more than $1,500 per fortnight, they will continue to receive their normal wage but their employer will receive $1,500 from the ATO to subsidise its costs of employment and the pressure of that on its business).

• JobKeeper Payment scheme operates on a “one in, all in” basis such that an eligible employer cannot choose which eligible employees will participate in the scheme.

• To be an eligible employer (including self-employed businesses):
  

  • On 1 March 2020, it:

    • (i) carried on a business in Australia with an Australian business Number (“ABN”), or was a non-profit body pursuing its objectives principally in Australia; and

    • (ii) employed eligible employee(s) (or had an eligible business participant where the business owner is not an employee);

  • At the end of the relevant fortnight, it satisfies the basic decline in turnover test which requires its projected GST turnover (including supplies already made and likely to be made) to fall by:

    • at least 30% for businesses with prior year actual (or current year projected) aggregated (annul) turnover of less than $1 billion;

      1. at least 50% for businesses with prior year actual (or current year projected) aggregated (annual) turnover of $1 billion or more; or

      2. at least 15% for charities registered with the Australian Charities and Not-for-profits Commission (ACNC) (excluding universities and schools);

         Note: once it satisfies the basic test, it does not need to retest its turnover in later months.

• The period in which projected turnover decline is assessed (i.e. turnover test period) can be 1 month (in any months from March to September 2020) or 1 quarter (starting on 1 April 2020 or 1 July 2020) relative to the corresponding period 1 year ago;

  1. Where it does not have an appropriate comparison period in 2019 to satisfy the basic decline in turnover test, it may apply an alternative test instead if it falls into 1 of the 7 classes of entities (for which the Commissioner has determined alternative tests);Please refer our FAQ for more information

• It must not be in liquidation or bankruptcy; and

• It must not be in receipt of separate government support that requires it to forego JobKeeper Payment.

• To be an eligible employee they:

  • On 1 March 2020, they:

    • (i) were a permanent full time or part time, or a long term casual (on a regular and systematic basis for more than 12 months) employee of the eligible employer;

    • (ii) were:

      • (a) an Australian resident for social security purposes (i.e. Australian citizen, Australian permanent resident or holder of a protected special category visa, whose usual place of residence was in Australia); or

      • (b) an Australian resident for tax purposes while on a special category (subclass 444) visa (generally New Zealand citizens living in Australia); and

    • (iii) were at least 16 years old; (and if less than 18, were independent or not studying full time).

• At any time during the relevant fortnight, they:

  • (iv) are employed by that eligible employer (including those stood down or re-hired);

  • (v) do not receive parental leave pay, and dad and partner pay. JobKeeper Payment from another employer;

  • (vi) do not receive Australian workers compensation where they are totally incapacitated to work

  • (vii) do not receive JobKeeper payment from another employer;

  1. They have completed and provided an employee nomination notice to that eligible employer agreeing to be nominated as en eligible employee (such that the employer can confirm their eligibility where the employee has more than 1 job and has not nominated another qualifying employer to receive JobKeeper payment); and

  2. They must notify Services Australia of their JobKeeper Payment if currently receiving an income support payment (e.g. Jobseeker payment).
     

• For self-employed businesses, business owners who are not employees can also receive JobKeeper Payment subject to satisfaction of the following additional conditions (under Division 3 of the Rules):

  • Only 1 individual as a (self-employed) owner of a business can receive JobKeeper Payment (where other business owners are employees, they may qualify as eligible employees if the requisite conditions above are satisfied);

  • That individual must be an eligible participant of that business (and not be entitled to JobKeeper payment from another business either as an owner or an employee);

  • To be an eligible business participant, the individual:

    • (i) On 1 March 2020 and at any time in the relevant fortnight, must be actively engaged and have a particular role in the business as follows (i.e. business participation requirements):
      
      - If the business entity is a sole trader, the individual must be that entity;
      - If partnership, the individual must be a partner in the partnership;
      - If trust, the individual must be an adult beneficiary of the trust; or
      - If company, either a director or shareholder of the company;
      

    • (ii) On 1 March 2020, must be at least 16 years old and satisfy the Australian residency requirement (as applicable to an eligible employee above) (i.e. 1 March 2020 requirements); and

    • (iii) Must provide a notice in an approved form to the business agreeing to be nominated as en eligible business participant (and not be nominated by another business) (i.e. nomination requirements); and
      

  • The business had an ABN on 12 March 2020 and either:

    • (i) had an amount included in its assessable income for the 2019 income year and it was included in the individual’s income tax return lodged as at 12 March 2020 (or such later time as allowed by the Commissioner); or

    • (ii) made a supply during the period 1 July 2018 to 12 March 2020 and provided this information to the Commissioner as at 12 March 2020 (or such later time as allowed by the Commissioner).

• To apply, the eligible employer must:
  

  • Notify the ATO of its election to participate in the JobKeeper scheme and provide certain information (such as eligible employees’ details) in an approved form before the end of the relevant fortnight. For the fortnights ending on 12 April and 26 April 2020, transitional rules allow election be made by 26 April 2020 and the ATO has further extended it to 31 May 2020;.

    From 20 April 2020, the ATO has made available an online enrolment form for completion by any eligible employers who elect to claim JobKeeper payment for the above first 2 fortnights in April 2020 (to provide their bank details and estimated number of eligible employees).

    Subsequently, they will need to complete an application form (available from 4 May 2020) to confirm and provide specific details of their eligible employees (which can be prefilled from Single Touch Payroll reports).

  • Notify each eligible employee in writing within 7 days that they have been nominated to receive JobKeeper Payment, and receive a completed employee nomination notice from that employee before you claim JobKeeper payment for them;

  • Pay each eligible employee at least $1,500 (before tax) per fortnight before the end of each relevant period (except for the first 2 fortnights ending on 12 April and 26 April 2020 which can be paid by 8 May 2020) using your payroll system (for employees who are on monthly payroll, the ATO will re-allocate wages between fortnightly periods);

         Note: JobKeeper Payment will be subject to PAYG thus the net cash receivable by the employee may be less than $1,500 per  fortnight.

  • Report these payroll information to the ATO through Single Touch Payroll;

  • Prepare and lodge monthly JobKeeper Declaration report within 7 days of the end of each month to:

    • (i) re-confirm eligible employees have not changed; and

      1. (ii) report current GST turnover for the month (in which fortnightly JobKeeper Payment is sought) and projected GST turnover for the following month (for purposes of monitoring the economic impact of the coronavirus).

  • Report current GST turnover for each reporting month (in which fortnightly JobKeeper Payment is sought) and projected GST turnover for the following month, within 7 days of the end of reporting month (for purposes of monitoring the economic impact of the coronavirus); and

• For self-employed businesses, they must also provide their ABN, nominate an individual as an eligible business participant to receive JobKeeper payment, provide that individual’s Tax File Number and a declaration of recent business activity.

  In addition, before a business enrols for JobKeeper payment, that individual will need to complete a business participant nomination notice which will be kept by the business in its records.

  Sole traders will need to log into the Business Portal using myGovID to register instead.

In the meantime, if you have any questions, please do not hesitate to contact one of our partners (Mark, Greg and Justin) or our tax director (Melanie).