I am self-employed or my business has employees
What is the JobKeeper Payment and when does it start?
The JobKeeper Payment is designed to support businesses impacted by coronavirus. Under the scheme, businesses impacted by COVID-19 will be able to claim a fortnightly payment of $1500 per eligible employee from 30 March 2020, for a six month period.
Eligible employers can apply for the scheme via an online application. The first payment will be received by employers from the ATO in the first week of May.
STEP ONE: Assess whether your business is eligible
Is your business eligible? The answer to this is “yes” if:
- Your business has a turnover of less than $1 billion, and this turnover is down by more than 30% relative to a comparable period one year ago.
- Your business has a turnover of more than $1 billion and turnover is down by more than 50% relative to a comparable period one year ago.
- Your business is not subject to a Major Bank Levy
- You have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each is engaged to receive JobKeeper Payments
- You are a not-for-profit or charity or a self-employed individual who meets the turnover tests
STEP TWO: Assess whether your employees are eligible
To be eligible for the JobKeeper Payment, your employees must be:
- Currently employed by the eligible employer (including those stood down or re-hired)
- Employed by the employer as at 1 March 2020
- Full time, part time or long term casuals (employed on a regular basis for more than 12 months as at 1 March 2020)
- At least 16 years of age
- An Australian citizen, 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.
- Must not be in receipt of a JobKeeper Payment from another employer
STEP THREE: Apply for the JobKeeper Payment online
- Assess your turnover decline. Register an intention to apply for the JobKeeper Payment on the ATO website if your business meets the criteria.
- Ensure eligible employees receive at least $1500 fortnight (before tax). 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, before tax. And for those earning more than this amount, the employer provides them with a top-up.
- Notify your employees. Let them know they are receiving the JobKeeper Payment.
- Report to the ATO monthly. This reporting will include the number of eligible employees employed by the business.
JobKeeper or JobSeeker Payment? Important considerations for employers
Under the JobKeeper Payment scheme eligible employees receive a minimum fortnightly income of $1500, paid through their employer. By comparison, under the JobSeeker Payment scheme, eligible employees (single, no children) receive a fortnightly payment of approx. $1115 (this includes the Coronavirus supplement).
The JobKeeper Payment clearly has advantages for employees, but it is important for employers to consider the following potential consequences of the JobKeeper scheme:
- Whether JobKeeper payments made to an employer will be assessable to the employer. In the absence of any specific exemption, such payments could be assessable to an employer under S.6-5 or S.15-10 of the ITAA 1997.
- Whether PAYG withholding will apply to JobKeeper payments. In the absence of any specific withholding exemption/variation, JobKeeper subsidies paid to an employer which are then used to ‘top-up’ an employee’s existing salary may be subject to the normal PAYG withholding rules.
- Whether Superannuation Guarantee contributions are required in respect of JobKeeper payments. The Government has indicated that an employer will have the option of choosing whether or not to make SG contributions in respect of any additional salary income paid to an employee (to the extent it relates to the JobKeeper Payment).
- Whether potential Payroll tax obligations may arise. This will ultimately depend on the relevant legislation of each State and Territory. In light of the Coronavirus pandemic generally, most States and Territories have indicated that they will waive or defer liabilities for Payroll tax for the 2020 (and possibly for the 2021) financial years. However, employers who re-hire staff may end up breaching Payroll tax relief thresholds.
- Whether a potential liability for WorkCover premiums will arise. This will also ultimately depend on the relevant legislation of each State and Territory.
- Whether leave entitlements (e.g., annual leave, sick leave and long service leave) can accrue in respect of employees who receive the JobKeeper Payment from their employer (potentially resulting in additional liabilities for employers).
Do I have to pay superannuation on additional wages?
It will be up to each individual employer if they choose to pay superannuation on any additional wage paid because of the JobKeeper Payment.
NOTE: Your accountant can also help you to register for the JobKeeper Payment. They might be your best first step if you’d like to make the most of all of the recent stimulus measures and incentives that have been announced over the last few weeks.
I am self-employed. How does this apply to me?
Self-employed people can also register their interest in applying for the JobKeeper Payment. You’ll need to provide an ABN number for your business, nominate an individual to receive the payment, supply their Tax File Number and provide a declaration as to recent business activity.
You’ll need to provide a monthly update to the ATO to declare your continued eligibility for payments, and these will be deposited monthly into your bank account.
EXAMPLE 1: You have employees on different wages
Michelle owns an interior design business that has two employees. They are still operating, but many clients have cancelled and their turnover will decline by more than 30% over the coming months.
The employees are:
1. Angela, who is permanent full time employee on a salary of $3000 per fortnight before tax
2. Nicole, who is a permanent part time employee on a salary of $1000 per fortnight before tax
Both employees are eligible for the JobKeeper Payment. The business continues to pay Angela her full time salary of $3000 while receiving a $1500 subsidy in the form of the JobKeeper Payment. The business continues to pay Nicole her part time salary of $1000 and an additional $500 per fortnight. The JobKeeper Payment of $1500 per fortnight will be paid for Nicole, giving her an extra $500 of wages. It is up to Michelle whether she pays superannuation on the additional $500.
EXAMPLE 2: You have employees who have been stood down on no pay
Mick runs a tattoo parlour. He normally employs four permanent part time staff but has had to stand them down without pay because of new restrictions. The business turnover will decline by more than 30% so he is eligible to apply for the JobKeeper Payment.
This means he can receive payments of $1500 per fortnight before tax, and pass these on to the stood down employees for up to six months.
I am an employee who has been affected by the crisis
Under the JobKeeper Payment, businesses impacted by the coronavirus will be able to access a wage subsidy from the government to continue paying their employees - even if you have already been stood down. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of 6 months.
STEP ONE: Assess whether you are eligible
Full time and part time employees, including stood down employees, would be eligible for the JobKeeper Payment. Where a casual employee has been with their employer for at least the previous 12 months they will also be eligible for the Payment.
Eligible employees include:
- Australian citizens
- Holders of a permanent visa
- Holders of 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
- Special Category (Subclass 444) Visa Holders
STEP TWO: Report any of the below circumstances to your employer
- Employees that have multiple employers must notify the employer that is their primary employer.
- Employees that are not Australian citizens must notify their employer of their visa status, to allow their employer to determine if they are an eligible employee.
- Employees that are currently in receipt of an income support payment must notify Services Australia of their new income.
STEP THREE: Wait for a notification from your employer
Your employer will notify you if they are claiming the JobKeeper Payment on your behalf. The majority of employees will need to do nothing further.
I’ve already been stood down from my job. What happens now?
If you have been stood down, your employer must pay you, at a minimum, $1,500 per fortnight, before tax. If you were employed on 1 March 2020, subsequently ceased employment and then were re-engaged by the same eligible employer, you will receive, at a minimum, $1,500 per fortnight, before tax.
I earn more than $1500 per fortnight. How much money will I receive?
If you ordinarily receive $1,500 or more in income per fortnight before tax, you will continue to receive your regular income according to the prevailing workplace arrangements. The JobKeeper Payments will subsidise part or all of your income.
I earn less than $1500 per fortnight. How much money will I receive?
If you ordinarily receive less than $1,500 in income per fortnight before tax, your employer must pay you, at a minimum, $1,500 per fortnight, before tax.
Will I receive superannuation on any additional wages?
It will be up to each individual employer if they elect to pay superannuation on any additional wage paid because of the JobKeeper Payment.
EXAMPLE: Employee has been stood down and needs income support
Alex works in administration as a permanent full time employee and has been stood down. He registered for the JobSeeker Payment and the Coronavirus Supplement, and would have been eligible for $1124.50 before tax per fortnight.
Instead, Alex’s employer decided to apply for the JobKeeper Payment. This entitles Alex to $1500 per fortnight before tax, for up to six months.
Still have more questions? Your accountant has the answers.
These are unprecedented times, and with everything changing so rapidly it’s easy to feel overwhelmed by all the new information. We strongly recommend that people talk to their accountant if they need more clarity around all of the recent changes, and in order to take full advantage of all the recent stimulus measures that have been announced.
This article opens with information for businesses and self-employed people, but if you’re an employee who is concerned about the impact of coronavirus - or have already been stood down - scroll down to the section titled “I am an employee who has been affected by the crisis”