JobKeeper Update

With the JobKeeper stimulus initiative passing through Parliament, The Treasurer has now set out The Rules to give effect to the scheme – these establish specific details around some key areas:

  • The start and end date of the scheme
  • When an employer or business is entitled to a payment
  • The amount and timing of a payment; and
  • Other matters relevant to the administration of the payment

By temporarily offsetting wage costs, the JobKeeper scheme supports your business by help you retain staff – and continue paying them – despite you suffering decreased turnover during this period of downturn.

The payment also designed to help you recommence operations or scale-up operations quickly without needing to rehire when the downturn is over.

If you decide to participate in the JobKeeper scheme there are a number of actions you must follow:

1. Before you enrol for the JobKeeper Payment
You need to complete this JobKeeper employee nomination notice:

n75294_JobKeeper_employee_nomination_notice

  • This will notify your eligible employees that you intend to participate in the scheme
  • And ask them if they agree to be nominated and receive payments from you as part of the scheme

Both you and the nominated employee need to complete the form. You do not need to send this notice to the ATO, however, you should keep a record to document that your employee has agreed for you claim the JobKeeper Payment for them.

Please Note: You must ensure that all eligible employees are covered by their participation in the scheme, including those whom are undertaking work for you and those who have been stood down.  This ‘one in all in’ rule is a key feature of the scheme.

2. Enrol for the JobKeeper payment prior to the end of the JobKeeper fortnight in which you meet the eligibility criteria
The only exception to this is for the month of April 2020. During that time, you may register prior to the end of April, and if you meet the eligibility rules, receive JobKeeper payments for eligible employees for JobKeeper fortnights in the two JobKeeper fortnights commencing from 30 March 2020.

You will be able to enrol in the JobKeeper scheme from 20 April 2020, using the Business Portal, or your Registered Tax Agent can enrol for you.  You or your Registered Tax Agent must do this before the end of April to claim JobKeeper payments for April.

Please notify us as soon as possible if you require Lucent to enrol you for the JobKeeper Payment.
Once you’ve enrolled, you will later need to submit information about your eligible employees (see point 5 below).
If you haven’t already, you can register your interest here https://www.ato.gov.au/Job-keeper-payment/

Please Note: Registering your interest is NOT registering for the JobKeeper Payment.

3. Meet the ‘Decline in Turnover Test’ before the end of the eligible ‘JobKeeper fortnight’
The Decline in Turnover Test needs to be satisfied before you can become eligible for the JobKeeper payment.

Once this occurs, there is no requirement to retest in later months. If you do not qualify for the month of April 2020, you can test again in later months. (see Decline in Turnover Test information below).

4. Pay your eligible employees an amount equal to or greater than the amount of the JobKeeper payment ($1,500 per fortnight, less PAYG withholding and salary packaging) that the employer will receive for the employee for the fortnight
You should pay your employees for each JobKeeper fortnight you plan to claim for. The first fortnight is from 30 March – 12 April and each JobKeeper fortnight follows after that.

For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept that the minimum $1,500 payment for each fortnight has been paid by you, even if it has been paid late, provided it is paid by you by the end of April.

This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.

If you usually pay your employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight. 

5. From 4 May 2020 onwards, you can apply for the JobKeeper payment for your eligible employees either via the Business Portal or your Registered Tax Agent
You will need to identify your eligible employees in the application form by:

  • Selecting employee details that are pre-filled from your STP pay reports, if you report payroll information through an STP enabled payroll solution

or

  • By manually entering employee details in ATO online services or the Business Portal if you do not use an STP enabled payroll solution

or

  • Use a Registered Tax Agent, who will submit a report on your behalf through Online services for agents

The ATO will pay you the JobKeeper payment for all eligible employees after receiving your application.

6. Each month, you will need to reconfirm that your reported eligible employees have not changed through ATO online services, the Business Portal or via your registered tax agent
This will ensure you will continue to receive the JobKeeper payments from the ATO. You do not need to retest your reported fall in turnover, but you will need to provide some information as to your current and projected turnover. This will be done in your monthly JobKeeper Declaration report.

If your eligible employees change or leave your employment, you will need to notify the ATO through your monthly JobKeeper Declaration report.

What is a ‘JobKeeper Fortnight’?
You will receive a JobKeeper payment in respect of each JobKeeper fortnight in which you are entitled to the payment.

Entitlement to a JobKeeper payment is assessed in relation to a fortnightly period known as a JobKeeper Fortnight. Each of the following is a JobKeeper fortnight:

  • The fortnight beginning on 30 March 2020
    and
  • Each subsequent fortnight, ending with the fortnight ending on 27 September 2020.

Which employees are not eligible?

  • If, under the Paid Parental Leave Act 2010, parental leave pay is payable to a person, and the person’s paid parental leave (PPL) period overlaps with or includes a fortnight in respect of which a JobKeeper payment may be paid, the person cannot be an eligible employee for JobKeeper for that fortnight
  • The same applies for a person who is paid dad and partner pay under the Paid Parental Leave Act 2010at any time during the fortnight
  • Similarly, specified recipients of workers’ compensation are excluded from being an eligible employee for a particular fortnight
  • Casuals whom have been working for the employer for less than 12 months as at 1 March 2020
  • Employees who were first employed by you after 1 March 2020 or left your employment before 1 March 2020
  • Employees who have been, or have agreed to be, nominated by another employer
  • Employees whom were under the age of 16 on 1 March 2020
  • Were not an Australian resident as at 1 March 2020

How do I self-assess that my revenue has declined by 30% or more?
The ‘Decline in Turnover Test’ needs to be satisfied before you can become eligible for the JobKeeper payment. Once this occurs there is no requirement to retest in later months.

If you do not qualify for the month of April 2020, because your turnover has not been sufficiently affected, you can test again in later months.

This means, if your business is only becomes affected part way through the six-month period of operation of the JobKeeper scheme, you can continue to monitor for any decline in turnover until you qualify for the scheme in a later period.

The Rules specify two ways in which a business can satisfy the Decline in Turnover Test; the Basic Test and the Alternative Test.

The ‘Basic Test’:

  • Compares your projected ‘GST turnover’ for a period (the turnover test period) with the corresponding period in 2019
  • The projected GST turnover includes the value of all the supplies that you have made or are likely to make in the period
  • The periods for the ‘Turnover Test Period’ being compared, can be periods of one month, or three months
    • If a one-month turnover test period is being used, it must be one of the months between March 2020 and September 2020
    • If a three-month period is being used, it must be one of either the quarter starting 1 April 2020, or the quarter starting 1 July 2020
  • These periods align with the reporting periods for which GST registered businesses submit GST returns on their business activity statement and allow the Commissioner to examine changes in GST turnover that is reported

Please Note: How you choose to project your fall in turnover is not dependant on whether you report GST on a monthly or quarterly BAS.

  • A business will generally satisfy the test where the GST turnover in the turnover test period falls short of the comparison turnover and the shortfall is 30% or more.

Please Note: An entity that is an ACNC-registered charity only needs to demonstrate a shortfall of 15 per cent.

An example of the Basic Test has been outlined in The Rules as follows:

Example 1: Satisfying the Basic Decline in Turnover Test
Burke Industries assesses its eligibility for JobKeeper payments on 11 May 2020, based on a projected GST turnover for May 2020 of $10 million from its business activities.

The corresponding period is the month of May 2019, for which it had a current GST turnover of $20 million. The Alternative Turnover Test does not apply, as the month of May 2019 is an appropriate relevant comparison period.

The May 2020 turnover falls short of the May 2019 turnover by $10 million, which is 50% of the April 2019 turnover. This exceeds the specified percentage of 30% that applies to business entities with less than $1 billion aggregated annual turnover, so the Decline in Turnover Test is satisfied.

What if my businesses turnover is ‘lumpy’, i.e. project-based industries?
Assuming 2019 is an appropriate relevant comparison period, then using a three-month turnover test period might be more appropriate for these businesses.  Otherwise, an Alternative Test might apply.

What if my business hasn’t been in operation for a whole year, or has had an uplift in revenue in the past 12 months due to a business acquisition or other once-off event?

  • The Alternative Decline in Turnover Test applies if there is not an appropriate relevant comparison period in 2019
  • This might be the case for a new business, started, for example, in January 2020, or a business that made a major business acquisition in 2020
  • In both examples, the Basic Test may not accurately reflect the downturn in activity that the business has suffered
  • Where the Commissioner is satisfied that there is no such period in 2019, or it is not an appropriate relevant comparison period, the Commissioner may, by legislative instrument, determine an alternative Decline in Turnover Test applies to a class of entities
  • Where such an alternative test applies to a business or non-profit body, the entity can meet the decline in turnover test by satisfying the alternative test determined by the Commissioner
  • It will be necessary for the affected entity to provide appropriate evidence to the Commissioner that it satisfies the alternative test

Some examples of this have been outlined in The Rules as follows:

Example 3: Satisfying the Alternative Decline in Turnover Test
Camille’s Farms carries on a farming business and retail flower sales in Australia. It was subject to a severe drought from 2018 until September 2019 that reduced the amount of flowers it could grow. It returned to normal crop output in January 2020. Its retail flower sales became significantly affected in March 2020.

It assesses its eligibility for JobKeeper payments on 3 July 2020 based on a projected GST turnover from its farming activities for the quarter beginning on 1 July 2020 of $2,000,000. The corresponding period is the quarter beginning on 1 July 2019 – a period in which Camille’s Farms was severely affected by drought. Because of the effects of the drought, Camille’s Farms had a much lower than usual current (2019) GST turnover of $2,500,000. The July 2020 quarter turnover falls short of the July 2019 quarter turnover by $500,000, which is 25% of the July 2019 quarter turnover. This does not exceed the specified percentage of 30%, so the decline in turnover test is not satisfied.

However, because of the effects of the drought on farming businesses, the Commissioner is satisfied that there is not an appropriate relevant comparison period for an entity that carried on a farming business. Instead, for these entities, the Commissioner determines an alternative test for which the relevant comparison period is the corresponding quarter in 2017. The Commissioner determines that the alternative test will be satisfied in these circumstances where the entity can show a 30% shortfall in turnover (for entities with less than $1 billion aggregated annual turnover) when compared to one of these alternative periods.

In the quarter beginning on 1 July 2017, Camille’s Farms had a current GST turnover of $4,000,000. This represents a shortfall of 50% when compared to its projected GST turnover for the quarter beginning on 1 July 2020. This exceeds the specified percentage of 30%, so the alternative decline in turnover test is satisfied.

Example 4: Satisfying the Alternative Decline in Turnover Test
Seb Tech is a start-up technology company that began carrying on a business on 1 October 2019 selling its product to a range of businesses including cafes and restaurants. Despite strong initial sales, its sales declined substantially from March 2020. It assesses its eligibility for JobKeeper payments on 15 April 2020 based on a projected GST turnover for April 2020 of $15,000 from its technology business. However, because Seb Tech did not begin to carry on a business until 1 October 2019, there is no corresponding period in 2019 that applies.

As there is no corresponding comparison period in 2019, the Commissioner determines an alternative test under which the relevant comparison period is the average of the actual GST turnover in all of the months in which the business was being carried on prior to the turnover test period.

In October 2019 to March 2020, Seb Tech had an average monthly current GST turnover of $30,000. This represents a shortfall of 50% when compared to its projected GST turnover for April 2020 of $15,000. This exceeds the specified percentage of 30%, so the alternative decline in turnover test is satisfied.

What if the business owner is not being paid via a payroll:
The business participation requirements are that, at any time in the fortnight, the individual is actively engaged in the business carried on by the entity. The individual must be actively engaged in the operations and activities of the body. Further, depending on the type of entity the business is, the individual must have a particular role within the business. In the case of an entity that is a:

  • Sole trader—the individual must be the entity
  • Partnership—the individual must be a partner in the partnership
  • trust—the individual must be an adult beneficiary of the trust
    and
  • Company—either a director or shareholder in the company

Please Note: Only one of the above individuals may be nominated at any given time to receive the JobKeeper payments.  In the instance where there is more than one Partner or Director or Beneficiary or Shareholder, the entity must decide which individual it will nominate for the payment.

What if I have already stood my employees down but want to claim the Job Keeper payments for them; when do I need to pay them the $1,500? You should pay your employees for each JobKeeper fortnight you plan to claim for. The first fortnight is from 30 March – 12 April and each JobKeeper fortnight follows after that.

For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you by the end of April. This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.

If you usually pay your employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight.

Are there any ongoing reporting requirements?
Under section 16, your participation in the JobKeeper scheme requires monthly reporting. If you are entitled to a JobKeeper payment for a fortnight must notify the Commissioner of:

  • Your current GST turnover for the reporting month
    and
  • Your projected GST turnover for the following month

The reporting month is a month in which there is a fortnight for which you are entitled to a JobKeeper payment. The report must be made to the Commissioner in the approved form, and must be made within 7 days of the end of the reporting month.

The information provided as part of this report does not affect your eligibility, including in respect of the Decline in Turnover Test (which only needs to be satisfied once).

It is also not intended to verify whether the projection given as part of the Decline in Turnover Test was accurate. Rather, it is intended to ensure that there is good information on which to assess the economic impact of the Coronavirus on a monthly basis across Australia.

How will the Job Keeper payments be treated for GST purposes?
Goods and services tax does not apply in relation to JobKeeper payments you receive because the payments are not consideration for supplies made by employers to the Government.

How will the Job Keeper payments be treated for tax purposes?
All JobKeeper payments are assessable income of your business if it is eligible to receive the payments.  The normal rules for deductibility apply in respect of the amounts your business pays to its employees where those amounts are subsidised by the JobKeeper payment.

What if I get it wrong?
If you’ve been overpaid by the ATO, you must repay the overpaid amount. This can arise where you are not entitled to the whole or part of a payment that is made, or you’ve been paid more than the correct amount.

Where there has been an overpayment, you are liable to general interest charges for the overpaid amounts.  However, the requirement to pay overpayments does not apply if the Commissioner makes a written determination. This will help ensure that the ATO has flexibility to address issues that might arise if you have made an honest mistake and not retained for any personal benefit from the amounts received.

If you make a careless or deliberately false statement and receive a direct benefit, this allows recovery of the payment.

WARNING: CONTRIVED SCHEMES
Businesses, individuals and entities that deliberately enter into contrived arrangements with the sole or dominant purpose of reducing their turnover in order to gain access to JobKeeper payments or increase the amount of JobKeeper payments they receive will not be entitled to the payment or the increased payment and the general interest charge will apply on the overpayment under section 19 of the Act. In addition, significant administrative as well as criminal penalties are also likely to apply to the parties involved in such schemes.

https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_Protecting_integrity.pdf

For more information the JobKeeper Payment – Frequently Asked Questions has been updated as follows:

https://treasury.gov.au/sites/default/files/2020-04/JobKeeper_frequently_asked_questions_2.pdf

Also, a new fact sheet has been added as follows:

https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_supporting_businesses_2.pdf