$1,500 JobKeeper subsidy to keep staff employed - updated as of 1st April, 2020

Note: Although this is an excellent measure to assist businesses that are experiencing or expecting a large reduction of their revenue to keep staff employed, we would like to advise our clients not to make any  quick decisions on their staff arrangements without a detailed review on the eligibility and conditions of this measure.  Other issues such as Superannuation Guarantee, Workcover, Cashflow and other potential HR issues should all be reviewed carefully before proceeding with any changes to your current staff structure.  Once more detailed information is provided by the Treasury we will be in better position to provide advice on how this subsidy would apply in different circumstances.

Date
  • From 30 March 2020 for six months
  • For employees employed at and from 1 March 2020
  • First payments in first week of May 2020
Applies to Based on comparable periods:
  • Employers <$1 bn that have experienced a downturn of more than 30%
  • Employers >$1bn that have experienced a downturn of more than 50%

A subsidy of $1,500 per fortnight per employee, administered by the ATO, will be paid to businesses that have experienced a downturn of more than 30% (50% for businesses over $1bn).

To be a part of the subsidy, employers will need to ensure that their employees receive at least $1,500 per fortnight (before tax).

Eligibility (updated 1st April, 2020)

There are two levels of eligibility; for employers and employees.

Eligible employers are those with:

  • Turnover below $1bn that have experienced a reduction in turnover of more than 30% relative to a comparable period 12 months ago (of at least a month); or
  • Turnover of $1bn or more that have experienced a reduction in turnover of more than 50% relative to a comparable period 12 months ago (of at least a month); and
  • Are not subject to the Major Bank Levy.

Sole traders and the self-employed with an ABN, and not-for-profits (including charities) that meet the turnover tests are eligible for the JobKeeper payment.

To establish that a business has faced either a 30 (or 50) per cent fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier. Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.

Eligible employees are those who:

  • Were employed by the relevant employer at 1 March 2020; and
  • Are currently employed by the employer (including those who have been stood down or re-hired); and
  • Are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March); and
  • Are at least 16 years of age; and
  • Are an Australian citizen, hold a permanent visa, are a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
  • Are not in receipt of a JobKeeper Payment from another employer.

While it appears that businesses without employees can potentially qualify for JobKeeper Payments, it is not clear at this stage what conditions will need to be satisfied.

How the support is calculated

The ATO will administer this program and will make the $1,500 payments based on payroll information. The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria.

The business will continue to receive the payments for eligible employees while they are eligible for the payments. While the program is expected to run for 6 months, payments will stop if the employee is no longer employed by the relevant employer.

How the support is provided

To access the JobKeeper subsidy, you should talk to your accountant or adviser to assist you with the registration process and calculations.

If you want to manage the process yourself, you must:

  • Register
    • Applications are not yet open. However, you should register your intent to apply for the JobKeeper subsidy with the ATO (here). The ATO will provide you with regular updates and advise you when you can lodge your application
  • Assess turnover
    • Ensure you have an accurate record of your revenue for the 2018-19 income year and for the 2019-20 year to date
    • Ensure you keep an accurate record of revenue from March 2020 onwards
    • Compare your revenue for the whole of March 2019 with the whole of March 2020
    • Measure the % decline in your revenue and ensure it has declined by more than 30%
    • If you are not eligible in March, you may become eligible in another month
  • Identify eligible employees
    • Nominate the employees eligible for the JobKeeper payments – you will need to provide this information to the ATO and keep that information up to date each month. The ATO will use Single Touch Payroll to prepopulate the information in most cases.
    • Notify all eligible employees that they are receiving a JobKeeper payment. Employees can only be registered with one employer.
    • Pay eligible employees at least $1,500 per fortnight (before tax). If an employee normally receives $1,500 or more per fortnight before tax the employee should continue to receive their regular income. Note: It is unclear at this stage if the employer must continue to pay their employee the same salary if it was more than the subsidy amount.
    • Pay superannuation guarantee on normal salary and wages amounts paid to employees. If the employee normally receives less than $1,500 per fortnight before tax, the employer can decide whether to pay superannuation on the additional amount that is paid as a result of the JobKeeper program.

Sole traders and the self-employed can register their interest in applying for the JobKeeper payment with the ATO. These businesses will need to provide an ABN for the business, nominate an individual to receive the payment, provide the individual’s TFN and declare their continued eligibility for the payments. Payments will be monthly to the individual’s bank account.