Jobkeeper Rules Released

Treasury and the Australian Taxation Office have now released the rules governing the jobkeeper scheme and the process for ensuring your payments to employees are eligible.
The rules set out the eligibility and obligations for a 26 week period running from 30 March to 27 September. Guidance from the ATO also sets out the steps that need to be undertaken to ensure businesses, employees and those payments to employees qualify for the jobkeeper payment. Below we have gone over some of the important points to come from the announcements. If you require any further information, please contact your Elliott Webb tax advisor.

Business Eligibility

  • On 1 March 2020 an eligible entity must have been carrying on a business in Australia or were a not for profit organisation that operated in Australia.
  • On 1 March 2020 that entity must have had at least one eligible employee (separate rules for the self employed to follow shortly).
  • Those eligible employees must be currently employed for the fortnights the business intends to claim for.

Turnover Test

The basic test will compare the GST turnover of any of the months from March 2020 to September 2020, or the quarters beginning 1 April 2020 or 1 July 2020, with the corresponding period in 2019. Where turnover has dropped by 30% or more (50% or more for large businesses), the test will be satisfied and the business will be eligible for the jobkeeper payments.

An alternative test will apply where there is not an appropriate comparison period in 2019. This alternative test will be determined by the Commissioner of Taxation.

Once an entity has satisfied the turnover test, it will not be required to retest its turnover in later months however it will have to report its current monthly GST turnover, and projected monthly GST turnover to the ATO on a monthly basis.

One in all in

This rule states that once an employer decides to participate in the jobkeeper scheme, all eligible employees must be covered by the scheme.

Employee Eligibility

Employees will be eligible for the jobkeeper payment if they:

  • Are currently employed by an eligible employer;
  • Are either permanent full time or part time employees who were employed as at 1 March 2020, or were casually employed on a regular basis for at least 12 months as at 1 March 2020;
  • Are at least 16 years old as at 1 March 2020;
  • Are an Australian Resident;
  • Were not in receipt of either parental leave or workers compensation during a jobkeeper payment fortnight;
  • Complete the jobkeeper employee nomination notice

It is worth noting that employees will only be eligible for jobkeeper payments from one eligible employer and as such can only nominate one eligible employer when completing the jobkeeper employee nomination notice.

Applying/Enrolling for Jobkeeper

Eligible employers can enrol for jobkeeper through the business portal, or Elliott Webb can enrol on your behalf through the tax agent portal.

Please note, for those that have already registered their interest in jobkeeper, this is a separate process that must be completed by 20 April 2020.

As part of this process businesses will be required to 'nominate' employees for jobkeeper payments and then notify those employees that they have been nominated.

Once those employees have been paid, the ATO must then be notified, through the portal, which employee payments are eligible for jobkeeper in any given fortnight, and they will then pay the equivalent jobkeeper allowance directly to the business.

Paying Your Employees Correctly

Eligible employers should:

  • Pay the minimum $1,500 before tax to each eligible employee each fortnight in order to claim teh $1,500 jobkeeper payment for that fortnight. For the first two fortnights, the ATO will accept that late payments have been made, given that these may have already passed.
  • Continue to pay those employees each subsequent fortnight until 27 September 2020, or the employee opts out.
  • If an employee earns less than $1,500 per fortnight, the employer must pay them the full $1,500 per fortnight to ensure they remain eligible.
  • Employers cannot pay their employees less than $1,500 per fortnight and keep the difference.
  • If a business's ordinary pay schedule occurs less frequently than fortnightly (i.e. monthly) the payment can be allocated between fortnights in a reasonable manner.

There are a number of complexities and inequities in the operation of the JobKeeper rules.  Unfortunately this is an inevitable consequence of implementing Australia’s largest ever stimulus package in the space of a couple of weeks.   Elliott Webb can assist in assessing eligibility and applying for the JobKeeper Payments on behalf of your business to ensure the process is managed smoothly. 

COVID-19 is having an extensive impact on all businesses in Australia.   To assist our clients during these unprecedented times, we are, as usual, available for a no-obligation phone call/video meeting for any inquiries. If you or your business is facing similar challenges, please do not hesitate to contact us.

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