Extension time to apply for JobKeeper
Extension of time to enrol for the JobKeeper scheme
The Commissioner has extended the time to enrol for the initial JobKeeper periods, from 30 April 2020 until 31 May 2020.
If you enrol by 31 May you can still claim for the fortnights in April and May, provided you meet all the eligibility requirements for each of those fortnights. This includes having paid your employees by the appropriate date for each fortnight.
For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will expect the minimum $1,500 payment for each fortnight has been paid by you to staff, provided it is paid by 8 May 2020. If you do not pay your staff by this date, you will not be able to claim JobKeeper for the first two fortnights.
You can enrol and claim for JobKeeper earlier if you choose. For example, you can enrol by the end of April to claim JobKeeper payments for the two fortnights in April.
The $130 billion JobKeeper wage subsidy package passed through Parliament on 8 April following which the ATO and Treasury are defining details and the required infrastructure for processing and payment. This is the largest single piece of fiscal policy in Australian history.
The subsidy aims to help keep the Australian economy afloat over the next six months, putting it in a position to bounce back when health officials deem it safe to reopen parts of the economy for business.
JobKeeper has three key features.
- Businesses get $1,500 per fortnight per eligible worker. It’s only for those workers who were employed on March 1. Short-term casuals (<12 months employment) with the business and some visa holders are excluded.
- The employer has to keep those workers on the books and pay them at least $1,500 per fortnight.
- It only applies to businesses whose revenue has reduced by at least 30% (15% for charities and not-for-profits, 50% for the largest businesses, with banks excluded).
For JobKeeper to be successful it needs to be utilised by businesses in order to:
- support workers’ incomes through the crisis.
- keep workers attached to firms, contributing to the business success where possible and preserving as many job-specific skills and as much know-how as possible.
- prevent wide-scale business failures which could turn a short and sharp recession into a long and painful depression.
- support the income of a sole trader or business owner via a trust, partnership or company who may not usually be paid wages in the ordinary sense.
Importantly, this means if it’s working well, both workers and employers will get something out of the deal.
Cashflow may be a challenge for some eligible recipients. Payment must be made to employees and then a reimbursement is later paid by the ATO. Cashflow forecasting and support from your bank may be essential.
With the legislation passed so rapidly through Parliament, many of the 730,000 potentially eligible businesses question whether they will be accepted into the scheme. For an eligible business, the Jobkeeper subsidy will provide $1,500 fortnightly payments for each eligible employee on their books.
JobKeeper payments extend to firms that could show a 30% reduction in turnover on a comparable period a year ago, meaning this updated guidance is more flexible. There remain a number of open questions regarding measurement and the issue of historic figures which may not have dropped and forecast figures where a decline is highly likely.
The program is expected to cover about six million workers. As the Australian Taxation Office (ATO) prepares to begin accepting formal applications, many businesses have concerns about their business viability and financial prospects. The ATO are building out their website and application details in real time at https://www.ato.gov.au/General/JobKeeper-Payment/.
How to Apply and Your Responsibilities as an Employer
The ATO’s website has a dedicated spot to enrol and apply for the JobKeeper payment from 20th April onwards. The website has details of the steps you (or your registered tax professional) can take to enrol for the JobKeeper payment.
Please be aware, you are required to continue paying at least $1500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April) even if they were not previously paid that much.
You also have to ensure you meet eligibility requirements and notify your eligible employees. Your employees will have a notice to complete and return to you by the end of April (if you want to claim from April).
Note: you cannot pay your employees less than $1500 per fortnight and keep the difference.
There’s an 8-step process you need to complete, which you can find here. Please get in touch with us if you would like to chat through this.
It’s worthwhile checking your bank account details in the MyGov portal for your business and update them if necessary.
Temporary new powers to business owners
A set of principles in the new law clarify the intent of the legislation, providing the ATO with a basis on which to determine employer eligibility for the scheme.
Under the new laws employers who qualify for the scheme will be able to present workers with written stand down directions, including reducing hours of work.
- Employers will be allowed to direct employees to perform new duties not strictly outlined in their job descriptions, within reason.
- Businesses may direct workers to change the location of their work, in measures which the Morrison government say formalise work from home arrangements under the Fair Work Act.
The legislation gives JobKeeper recipient firms flexibility where an employee “cannot usefully be employed for the employee’s normal days”. Such determining powers given to the employer are a temporary measure tied to the subsidy scheme, which will last six months.
Employers will be allowed to reduce their employees’ hours until their earnings equal the $1,500 fortnightly JobKeeper payments, opening the door for firms to limit their wage bills where employees maintain salaries higher than the payments. This is premised on the hours of work being reduced to below $1,500 in value.
- JobKeeper directions, including stand down notices, cannot reduce an employee’s base hourly rate of pay. That means no pay cuts, even if firms direct employees to change their duties. These protections apply to salaried workers.
- Employees must be consulted before JobKeeper businesses utilise these new powers.
- Directions are supposed to be reasonable in the spirit of the continued employment of one or more workers.
- The new laws will also allow employers to come to arrangements for workers to use to take paid annual leave during the pandemic, including at half pay, provided employers don’t push remaining leave entitlements below two weeks per worker.
- JobKeeper payments must be made fortnightly. This includes additional wage payments on top of the subsidy. The ATO will use Single Touch Payroll (STP) functionality to keep an eye on this activity.
- All new powers relating to the JobKeeper scheme only apply where an employer has been accepted to pass on payments for that employee.
- Only those employees receiving JobKeeper subsidies can be subject to these new stand down orders.
Employers who fail to pass on government payments to workers could be fined up to $126,000 and could also face civil penalties up to $126,000 if they “knowingly misuse” new powers granted to them under the JobKeeper legislation.
Treasurer and tax commissioner have broad powers
The making of these rules can be delegated to tax commissioner Chris Jordan by the Treasurer, enabling officials from the ATO and Treasury to maintain a large degree of flexibility about which businesses and workers will and won’t be eligible for JobKeeper payments throughout the life of the scheme.
Eligibility in detail
The eligibility requirement for employers and sole traders, updated by Treasury on a regular basis, involves:
- Businesses estimating their turnover has, or will likely, fall by 30% or more (where turnover is under $1 billion);
- Businesses estimating their turnover has, or will likely, fall by 50% or more (where turnover is over $1 billion).
Businesses are expected to provide evidence, such as with business activity statements (BAS), of these revenue declines.
Turnover is likely to align with reporting for GST on BAS statements, however there may be changes where turnover is to be measured on an accrual rather than a cash basis.
Exceptions to the rule
- Firms that don’t meet the strict criteria may apply for “tax commissioner discretion” to have their applications approved where to do so aligns with the intent of the rules.
- Firms that have not been in operation for 12 months, or can show their turnover a year ago was “not representative” of their usual average turnover, will fall under the discretion category.
- Firms which have undertaken acquisitions or have typically highly variable turnover have been singled out by Treasury as candidates for eligibility discretion.
The Tax Commissioner has discretion to consider additional information that the business can provide to establish whether they have been significantly affected by the impacts of the Coronavirus.
The ATO will also have discretion to set out alternative tests for firms, with Treasury saying there will be “some tolerance” for businesses which, in good faith, estimate a 30% fall but experience a slightly smaller decline.
Which employees are eligible?
Under the laws passed Wednesday, the Treasurer and tax commissioner have broad powers to change eligibility rules for workers.
As it stands, the following workers are eligible for JobKeeper payments:
- Full-time and part-time staff
- Casuals employed on a regular and systemic basis for longer than 12 months as of March 1, 2020.
There are additional requirements staff need to meet as well:
- Staff must be currently employed by an eligible employer (including those stood down or re-hired)
- Eligible staff must have been employed on March 1, 2020
- Staff must be at least 16 years of age as on March 1, 2020
- Staff must be Australian citizens, the holder of a permanent visa or a 444 visa holder as of March 1, 2020
- Staff must be residents for Australian tax purposes as on March 1, 2020
- Staff must not already be receiving JobKeeper payments from another employer, JobSeeker from Centrelink (although a person can elect to cease JobSeeker and transition to JobKeeper) or support for apprentices and trainees announced as part of previous stimulus measures
- Employees cannot be receiving parental leave pay from Services Australia
- Employees on workers compensation will only be eligible if they’re working (even on reduced hours)
Some workers will get paid more
The $1,500 payment will give employees more than the possible JobSeeker payment if a worker is laid off.
As the legislation currently stands, for the one-third of workers who previously would have earned less than $1,500 per fortnight, the JobKeeper payment will be a pay rise. If the subsidy keeps their firm afloat, they’ll keep their job and be paid even more than before for the next six months.
It is also possible those earning more than $1,500 per fortnight will earn less than they did before in pay and benefits, depending on what the government does with the Fair Work Act. This is a support measure and not an income replacement.
Employers can adjust each employee’s hours accordingly to meet the $1500 payment (without reducing the employees hourly rate). The intention is to keep more Australians in jobs.
They’ll get to keep their jobs
Regardless of whether an employee’s pay is reduced, their situation will be much better whilst in employment rather than under the renamed Newstart.
Employers will also benefit. If a business stays open, it will get the benefit of a financial contribution towards its workers’ labour.
A key objective of the scheme is to plug the hole in firms’ revenues to prevent them going under. Allowing them to fail would mean a pointless destruction of valuable resources.
The wage subsidy is somewhat crude and inevitably there will be some waste. Some firms will be given more money than they need, some workers will be given more, some less.
I’m a sole trader or business owner, what about me?
Sole traders are eligible to apply for JobKeeper payments and can register alongside all other businesses.
Firms without employees must provide their ABN and then nominate an ’employee’ (that’s the sole trader in most instances) to receive the payment alongside that person’s Tax File Number (TFN).
Sole traders must also include assessable income from their business in their 2018-19 tax return and lodged taxable supplies between July 1, 2018 and March 12, 2020. This is basically a test to ensure an applicant has been operating their business.
Sole traders must have had an ABN on or before March 12, 2020, and have been “actively engaged” in their business.
Eligible sole traders must also meet the same age, citizenship and visa status requirements as employees (explained above).
Sole trader payments will be made monthly to a nominated bank account.
Other than this, the same eligibility criteria apply to sole traders as other businesses regarding turnover decline and ATO discretion.
Businesses operating through partnership structures, trusts or companies can only nominate one individual who was not previously on payroll to receive the JobKeeper payment. Eligible employees on payroll receive JobKeeper like any other business.
Want more information on how JobKeeper will work for employers Read explainer here.
Workers who suspect their bosses haven’t followed the JobKeeper rules — including passing on all government payments in full to staff — will be able to take their case to the Fair Work Commission through binding arbitration.
Once the new law has been ratified, the ATO will be empowered to begin administering the scheme and will be in a position to provide more information about what an eligible business looks like. There is a challenge with this policy having commenced despite the rules continuing to be refined.
More information can be found here:
- JobKeeper Payment Fact Sheet for Employers.
- JobKeeper Payment Fact Sheet for Employees.