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31 March 2020

JobKeeper Subsidy Package

Introduced by the Federal Government on 31st March 2020, known as the ”JobKeeper Payment”,  to assist eligible employers and self-employed individuals impacted by the COVID-19 pandemic in an effort for them to continue to pay their workers.

What is it?

Eligible employers will be able to claim a subsidy of $1,500 per fortnight, per eligible employee, from 30 March 2020 (with payments commencing from the first week of May 2020), for a maximum period of six months.

This subsidy will be paid by the ATO monthly in arrears and will ensure that an eligible employee receives a gross payment (i.e., before tax) of at least $1,500 per fortnight.

Who is eligible for this?

Employers where:

  • for a business with a turnover of less than $1 billion – its turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month); or
  • for a business with a turnover of $1 billion or more – its turnover will be reduced by more than 50% relative to a comparable period a year ago (of at least a month); and
  • the business is not subject to the Major Bank Levy.

Self-employed individuals (who employ or do not employ workers) and not-for-profit entities including charities that meet the above criteria.

When Can the JobKeeper Payment be Claimed in respect of an Employee

Before an eligible employer can claim the JobKeeper payment in respect of an employee (‘eligible employee’), the employee must satisfy the following requirements:

• The employee is currently employed by the employer (which includes an employee who has been stood down or re-hired after they had already lost their job).
• The employee was employed by the employer as at 1 March 2020.
• The employee is a full-time or part-time employee, or a long-term casual employee who has been employed by the employer on a regular basis for longer than 12 months at 1 March 2020.
• The employee is at least 16 years of age.
• The employee is an Australian citizen, or 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.
• The employee is not in receipt of a JobKeeper Payment from another employer.

In summary, eligible employers will receive the JobKeeper Payment for each eligible employee who was on the employer’s books on 1 March 2020 and continues to be engaged by that employer (including full-time, part-time, long-term casuals and stood down employees).

Employees who have multiple employers will need to notify their primary employer to claim the JobKeeper Payment on their behalf, as only one employer will be eligible to receive the payment.

How does a business apply?

Employers must register their intent to claim the subsidy via ATO website link: https://www.ato.gov.au/general/gen/JobKeeper-payment/

Eligible employers that apply for the JobKeeper Payment will need to provide supporting information demonstrating a downturn in their business, and must report the number of eligible employees employed by the business on a monthly basis.

Businesses without employees (Includes self-employed individuals, Trusts & Companies) will need to provide an ABN for the business, nominate an individual to receive the JobKeeper payment and provide that individual’s Tax File Number, as well as provide a declaration on the recent business activity (to demonstrate the downturn in the business). These businesses will also need to provide a monthly update to the ATO in order to declare their continued eligibility for the JobKeeper Payment

How is the JobKeeper Payment Applied?

The purpose of the payment is to ensure that eligible employees/sole traders are paid a gross minimum amount of $1,500 per fortnight.

Examples:

  • If an employee receives at least $1,500 in gross salary per fortnight, they will continue to receive that amount and the JobKeeper payment effectively subsidises the employees wage in full.
  • If an employee receivers less than $1,500 in gross salary per fortnight then their employer must still pay them the full $1,500 subsidy amount received under the scheme
  • If an employee has been stood down, their employee must pay the employee a minimum gross fortnightly salary of $1,500
  • If an employee was employed on 1 March 2020, has subsequently ceased employment with their employer, and then has been re-engaged by the same employer, the employee will receive a minimum gross fortnightly salary of $1,500

EXAMPLE 1 – Employer affected by Covid-19 with multiple employees

Adam owns a business whose turnover has declined by more than 30% as a result of the downturn due to the Coronavirus. The business had the following three employees as at 1 March 2020:
• Anne, who is a permanent full-time employee and who continues to work in the business earning a gross salary of $3,000 per fortnight.
• Nick, who is a permanent part-time employee and who continues to work in the business earning a gross salary of $1,000 per fortnight.
• Fred, who was recently stood down from the business without pay.

Adam is eligible to receive the JobKeeper Payment for each employee of $1,500 per fortnight (before tax), for a maximum period of six months (which would be paid monthly in arrears). The JobKeeper Payment would provide the following benefits for the business and its employees:

(a) The business continues to pay Anne her full-time gross salary of $3,000 per fortnight, as well as superannuation guarantee support on this income. In this case, the $1,500 per fortnight JobKeeper Payment effectively partly subsidises the cost of Anne’s salary.

(b) The business continues to pay Nick his $1,000 gross fortnightly salary and an additional $500 gross amount per fortnight, resulting in a total gross fortnightly salary of $1,500. In this case, the JobKeeper Payment fully subsidises the cost of Nick’s salary. The business must continue to provide Nick with superannuation guarantee support on the $1,000 fortnightly salary amount, but has the option of choosing to pay superannuation on the additional $500 gross amount paid to Nick under the JobKeeper Payment scheme.

(c) The business must start paying Fred a gross salary of $1,500 per fortnight, which is fully subsidised by the JobKeeper Payment. The business has the option of choosing to pay superannuation on this amount paid to Fred under the JobKeeper Payment scheme. If Fred commenced receiving any Centrelink support (e.g., JobSeeker Payment), he will need to advise Centrelink of his JobKeeper

EXAMPLE 2 – Self-employed affected by Covid-19 with no employees

Melissa is a sole trader running a florist without any employees.

The economic downturn due to the Coronavirus has adversely affected Melissa’s business and she expects that her business turnover will fall by more than 30% compared to a typical month one year ago (i.e., in 2019).

On this basis, Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight (before tax), which will be paid to her on a monthly basis in arrears.

EXAMPLE 3 – Self-employed affected by Covid-19 with employees

Melissa is a sole trader running a florist with one employee.

The economic downturn due to the Coronavirus has adversely affected Melissa’s business and she expects that her business turnover will fall by more than 30% compared to a typical month one year ago (i.e., in 2019).

On this basis, Melissa will be able to apply for the JobKeeper Payment for herself and her employee and would receive $1,500 per fortnight (before tax) for herself and her employee, which will be paid to her on a monthly basis in arrears.

Please call our office should you have any queries or require assistance.

Further information can also be found at: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet_Info_for_Employers_3.pdf