JobKeeper Payment, part of the Stimulus Package
This is another HUGE stimulus piece of the package from the federal government.
On Monday night 30th March, the Prime Minister, Scott Morrison announced another huge 180 billion dollar stimulus payment named the JobKeeper payment. This announcement brings the Federal Government support total to a staggering $320bn, now at 16.4% of GDP.
These notes are as of Thursday April 2, 2020. Please note that the effective legislation has not yet been enacted. There are still many questions. We will publish further updates as soon as the information and legislation is available.
Here is a note of encouragement
Today Kate Carnell, Small Business Ombudsman, is quoted,
“What the government is trying to do here is pretty clear: they’re trying to help sole traders and businesses generally operate at some level. They’re taking the approach that they’re attempting to help people and include people rather than excluding people,”. (Smart Company e-mag 2.4.2020)
Summary of the announcement
The JobKeeper payment will provide eligible employers with a flat payment of $1,500 per fortnight per employee over the next six months regardless of the employee’s salary.
There will be a legal obligation for employers to pass on the payment to their employees.
Employers must elect to participate in the scheme. They will need to make an application to the Australian Taxation Office (ATO) and provide supporting information demonstrating a downturn in their business. In addition, employers must report the number of eligible employees employed by the business on a monthly basis. This will be done online through a specially designed ATO portal.
To qualify, the employer must:
1. Register their interest on the ATO website. Click here to access the page directly, and
2. Be signed-on to use Single Touch Payroll, and
3. Not-for-profits and self-employed people are also eligible, if they meet these requirements, and
4. The turnover of an organisation will need to have fallen by 30% or more, or in the case of a business with an annual turnover of more than $1 billion, by 50% or more.
How will the decrease in turnover be determined?
At this stage, we under stand that the initial comparison will be based on the the amounts reflected in the BASs. That is:
- March 2020 vs March 2019 for monthly BAS lodgers
- Jan-March 2020 vs Jan-March 2019 for Qtrly BAS lodgers
We do understand that we will also need to submit our turnover amounts month by month via the ATO Portal.
- Workers at least 16 years old and on the “payroll” as of 1st March 2020
- Full Time & Part time workers
- Sole traders
- Casual employees on the payroll for 12 months
- Employees stood down since March 1 ie the employer can bring them back to work with this payment.
- Not in receipt of a JobKeeper payment from another employer
- Must be an Australian citizen, the holder of a permanent visa, 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.
Note for/about eligible employees
Employees can only receive the JobKeeper payment from one employer – generally the one that they claim the Tax-free Threshold with, if they have multiple jobs
Obligations on Employers
To receive the JobKeeper Payment, employers must:
1.Register an intention to apply on the ATO website and assess that they have or will experience the required 30% turnover decline.
2. Identify and provide information to the ATO on eligible employees.
- the number of eligible employees engaged as at 1 March 2020 and
- those currently employed by the business, and
- including those stood-down or rehired.
3. The ATO will use Single Touch Payroll data to pre-populate or review the employee details for the business.
4. Ensure that each eligible employee receives at least $1,500 per fortnight (before tax).
- For employees that were already receiving this amount, or more, from the employer, it is expected that they will continue to receive their regular income according to their prevailing workplace arrangements.
- For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500 per fortnight, before tax.
5. These payments will incur PAYG Withholding Tax
6. There is no obligation to pay the superannuation guarantee on the $1500 amount
7. Notify all eligible employees that they are receiving the JobKeeper Payment.
8. Continue to provide information to the ATO on a monthly basis,
- the income of the organisation
- the number of eligible employees employed by the business
- Regular STP returns
- The payments will be made for 6 months initially
- Payments will flow from the first week in May and will be backdated to 30 March 2020.
The initial expression of interest form asks for the business name, ABN, and contact details. Later, there will be an online application form to complete.
Don’t call the ATO. More information will become available soon
At the time of this email. The ATO has not yet offered any details on what the application process will involve, saying it will provide more detail once the measures have passed parliament. The ATO is building the site as we speak. Subsequently, eligible employers will be able to apply for the scheme by means of an online application.
The Payment Process
Eligible employers will be paid $1,500 per fortnight per eligible employee.
Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.
- If an employee earns less than the $1,500 a fortnight, the government will effectively be subsidising their entire wage
- If an employee earns over $1500 per fortnight, then the employer will get the $1,500 and then have to pay the rest. It is also the employer’s discretion whether they will continue to make superannuation payments.
- If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight, before tax
Superannuation entitlement and payment
- If employee is not working and in receipt of $1500 it is not OTE – super is discretionary.
- If employee is working and earns more than $1500 – all OTE and SGC is payable.
- If employee is working and earns less than $1500 (lets say $500), the $500 is OTE and SGC applies, and the top up to the $1500 ($1000), is not OTE and SGC is discretionary
Xero support in this process for your accounting system
- Xero (the company) and the ATO are currently discussing the reporting payroll process.
- There will be changes in Xero Payroll & STP to identify these payments to employees
Lots of questions
There are still a lot of questions with this stimulus package and the legislation is still being written. More will be revealed, and issues clarified over time.
One question on the lips of many church treasurers and NFP’s is, can this $1500 be salary sacrificed to superannuation or Fringe Benefits Tax free payments? At present this has not be addressed. Hopefully this will become clear when the legislation is tabled at parliament on Wednesday 8th April, 2020.
At present the ATO asking us to:
- Register our intention on the ATO site
- Make sure our organisations are set up, registered and submitting payroll information Via STP
- Keep processing payroll as normal. Do not reinstate people who have been stood down. This can be done later.
The story continues: (Updated 9th April 2020)
As you may have heard, the Job Keeper payment legislation was passed late last night Wednesday April 8th. It has just received Royal Assent, Thursday 9th. Now, it will be passed to Treasury and the ATO to develop and release the full details, develops the systems and the practicalities of how this will work. FYI the title: Coronavirus Economic Response Package (Payments and Benefits) Bill 2020.
The ATO will also need to set up a registration system, which, we believe, will involve eligible organisations advising of their turnover for the required period and the previous year’s corresponding period turnover, inputting eligible employees’/sole trader details, organisation’s bank account details, and more.
Please be aware that we are all expecting to receive more guidance after Easter.
3 things you can to do now:
- If you haven’t already done so, please register your interest per the link below. This is solely to receive updates regarding the payment. It is not the registration for the actual payment.
The ATO is asking each NFP/church employer, if they think they may meet the 15% income reduction criteria, to register their interest here –https://www.ato.gov.au/general/gen/JobKeeper-payment/.
- Be sure you are registered for, and are using, STP
- Proceed with your payroll as normal. Do not try to setup any “scheme” to try and gain applicability for the stimulus packages
JobKeeper: some additional points that employers need to be aware of:
- Organisations are expected to provide evidence, such as with BAS, of these revenue declines.
- Most organisations will be required to prove their turnover has fallen over the course of a month or quarter (depending on their BAS reporting period), relative to their turnover in a corresponding period a year earlier.
- Turnover will be calculated in the same way it is for GST, which is reported on BAS statements.
- Organisations which don’t meet the criteria will be relying on “Tax Commissioner’s discretion” to have their applications approved.
- Treasury says organisations which have not been in operation for 12 months, or which can show their turnover a year ago was “not representative” of their usual average turnover, will fall under this discretion category.
- “The Tax Commissioner will have discretion to consider additional information that the business or NFP can provide to establish that they have been significantly affected by the impacts of the Coronavirus,” Treasury said on Sunday.
- The previous turnover decline of 30% for NFPs has been reduced to 15%
- The ATO will also have discretion to set out alternative tests for organisations, with Treasury saying there will be “some tolerance” for organisations which, in good faith, estimate a 15% fall but experience a slightly smaller decline.
- This JobKeeper subsidy should not be used to pay people less or decrease the number of hours worked or the hourly rate of an employee.
Click here for more information
Click here for the ATO Factsheet for Employers
Click here for the ATO Factsheet for Employees
We are here to to support and help you and your finance team. So, please email any questions and comments because more calls simply creates congestion for the Team.