1. Is my business eligible to receive the JobKeeper Payment?
To be an eligible employer, the employer must:
• Register an intention to apply on the ATO website;
• Not be subject to the Major Bank Levy and have turnover of:
o less than $1 billion per year and their turnover has reduced by more than 30% relative to a comparable period a year ago;
o $1 billion or more per year and their turnover has reduced by more than 50% relative to a comparable period a year ago;
• Ensure that each employee receives at least $1500 pre-tax per fortnight;
• Notify all eligible employees that they are receiving the JobKeeper Payment.
2. What employees are eligible?
To be an eligible employee, the individual must:
• Be currently employed by the eligible employer (including those stood down or re-hire
• Have been employed by the employer as at 1 March 2020;
• Be full time part time or long term casuals;
• Be at least 16;
• Be an Australian citizen, the holder of a certain visa class;
• Not be receiving the JobKeeper payment from another employer.
3. How do I demonstrate a reduction in turnover?
The specific statutory mechanics of demonstrating a reduction in turnover is yet to be announced, but it is clear there will be some sort of verification required to show turnover decline.
The obvious example is a comparison of accounting records, such as a Profit and Loss statement, showing the comparison of the relevant month (e.g. March, April, May, June 2020 etc.) with the prior year. Businesses that have had their trade limited or completely shut down, for example bars, cafes and restaurants should find this condition easily satisfied.
There will be many examples of businesses who may not be able to fit into a specific year on year comparison. For example, seasonal businesses or new businesses that are in significant growth phase. We understand from ATO communication that the Commissioner will be given broad discretion in relation to the turnover decline test and will work with taxpayers in the most pragmatic way possible.
Without doubt employers will need to keep good records of the basis for their calculation.
4. How does the ATO determine the eligible employees?
The business will need to provide information to the ATO on your eligible employees and continue to provide information to the ATO on a monthly basis as to the number of eligible employees employed by the business.
This will be done through a combination of Single Touch Payroll reporting and direct communication with the ATO. There will be a number of examples where eligible employees may not be reported through Single Touch Payroll, for example casual employees still employed but not receiving any working hours.
5. When do the payments start and end?
Payments are expected to commjoence in May 2020, backdated to 31 March 2020, and continue until 31 October 2020.
6. Will the JobKeeker payment apply to trusts and companies which have structured their arrangements such that they don’t pay salaries to an employee but instead make trust distributions, dividend payments or loans (perhaps covered by Division 7A)?
No, at this stage we do not believe it will apply to businesses in this situation.
7. If an employee was stood down 2 weeks ago specifically because of COVID-19 and are now re-hired does the employer get the JobKeeper Payment?
Yes, provided they were employed by their employer for at least 12 months as at 1 March 2020.
8. What if business did not exist a year ago or their turnover a year ago was not representative of their usual or average turnover (e.g. a large interim acquisition occurred during the year)?
According to one released document, the Commissioner it seems will be given very large discretions to seek additional materials and even to set out alternative tests for eligibility in specific circumstances.
Treasury have noted that “there will be some tolerance where employers, in good faith, estimate a greater than 30 per cent fall in turnover but actually experience a slightly smaller fall”.
9. Will foreign employees working in Australia qualify?
That will depend on the nature of their visa. Anyone holding a permanent visa or a protected special category visa, including Subclass 444 Visa Holder, even if a non-citizen will still be eligible. Working holiday visa holders won’t be.
10. Is the payment taxable to the employer on receipt?
Yes, we expect it will be considered taxable, however a deduction will be claimed for the payment to the employee. To the extent it is not fully paid out to the employee, the employer may have a tax impact.
11. Is the payment to the employee taxable?
Yes, it is clear that the $1,500 per fortnight payment to the employee is before tax. PAYG will need to be deducted by the employer and remitted to the ATO through the standard Activity Statement process.
12. If that last point is right, does the employer get a Cash Boost based on the tax paid to the Federal Government out of funds which the Federal Government provided to the employer in the first place?
This is unclear, however possibly yes, subject to the maximum caps and other conditions.
13. Is superannuation payable on the $1,500 per fortnight payment?
If the employee performs no services (e.g. has had hours reduced to nil) for the business but still receives the $1,500 per fortnight, no superannuation is applicable.
However, superannuation is still payable in respect of salary and wages earned by the employee.
For example, if a casual employee is paid $1,000 for a particular fortnight for work done but receives $1,500 as a result of the JobKeeper payment, $1,000 will be subject to superannuation and $500 will not.
14. What about not-for-profits and charities?
Yes, they are specifically eligible as they are for the Employer Cash Boost.
15. What about self-employed individuals?
Businesses without employees can register their intent in applying from 30 March. They need to provide an ABN, nominate an individual to receive the payment and his/her TFN, a declaration as to recent business activity and a monthly update to the ATO. Payment will be made monthly to their nominated bank account.
16. Does a JobKeeper Payment affect other entitlements?
Yes, the payment is income so wherever income is relevant, it can and often will have consequences.
The specific details of the JobKeeper Payment will ultimately be subject to legislation. We will continue to monitor the development of this important measure and provide updates as and when they become available.
Please don’t hesitate to contact us if you require any further information specifically targeted to your circumstances.