Prime Minister Scott Morrison yesterday announced a $130 billion economic stimulus package to help keep Australians in jobs – the third and largest economic stimulus package yet.
With the JobKeeper payment, businesses will receive a fortnightly wage subsidy of $1,500 per employee for up to 6 months. The payment is designed to keep people in work and support employers to maintain their connection to their employees.
These connections will enable your business to reactivate your operations quickly without having to rehire staff when the crisis is over.
* The JobKeeper payment is still subject to legislation
Who Is an Eligible Employer?
- 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)
- 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)
- Business who is not subject to the Major Bank Levy.
Are Sole Traders Eligible?
- Soletraders and the self-employed with an ABN and Not For Profits (including charities) that meet the turnover tests are eligble for the JobKeeper payment.
- They will need to provide an ABN for their business and nominate an individual to receive the payment together with their Tax File Number.
- They will also have to make a declaration as to their recent business activity.
- It is still unclear at this stage what conditions will need to be satisfied.
- Payments will be made to the individuals bank account.
Who Is an Eligible Employee?
- A person employed by the relevent employer at 1 March 2020
- Are currently still employed by the employer (including those who have been stood down or re-hired)
- Are full-time, part-time or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March 2020)
- Are at least 16 years of age
- 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
How is the Payment Calculated?
- The ATO will administer this program and will make the $1,500 payments based on payroll information that is submitted via Single Touch Payroll.
- 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 first payment will be made in the first week of May.
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 is the Payment Provided?
- Eligible employers will receive $1,500 per fortnight per employee and pay this to the employee before tax.
- The employer must pay superannuation at 9.5% ( SGC ) on this amount unless the employee was earning less than the $1,500 per fortnight. In that case you are only required to pay SGC on the employees actual pay that you were paying them.
How Do You Register for JobKeeper?
In order to make a claim you must elect to be in the scheme by registering with the ATO and currently you can register your interest here https://www.ato.gov.au/general/gen/JobKeeper-payment/
You will need to elect to participate in the scheme by demonstrating the downturn in your business and report the number of eligible employees on a monthly basis.
Example | Employer with Stood Down Employees
- Zoe runs a beauty salon in Sydney.
- She employs 3 permanent part-time beauticians.
- She has been forced to stand down her 3 beauticians without pay.
- Zoe’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee and pass on $1,500 per fortnight before tax to each of her 3 beauticians for up to six months.
- Zoe will maintain the connection to her employees and be in a position to quickly resume her operations.
- Zoe is required to advise her employees that she has nominated them as eligible employees to receive the payment.
- It is up to Zoe whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.
- If Zoe’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.
Example | Employer with Employees Still Working
- Andrew owns a real estate business with 2 employees.
- The business is still operating at this stage but Andrew expects that turnover will decline by more than 30 per cent in in the coming months.
- The employees are:
- Anne – permanent full-time salary of $3,000 per fortnight before tax and continues working for the business
- Nick – permanent part-time salary of $1,000 per fortnight before tax and continues working for the business.
- Andrew is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
- The business continues to pay Anne her full-time salary of $3,000 per fortnight and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;
- The business continues to pay Nick his $1,000 per fortnight and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax.
- The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary.
- The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning.
- The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.
- Andrew can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees.
- In addition, Andrew is required to advise his employees that he has nominated them as eligible employees to receive the payment.
- Andrew will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
The below links are issued by Treasury:
We Are Here to Help You
Whilst there are still many unknowns how this stimulus will work we are making sure that we are contstantly kept up to date with all changes. If you have any queries or would like to book some time to discuss the impact on your business please use the Booking Appointment button and select JobKeeper 30 min appointment.