Last Updated 1pm Wednesday 22/4/20
Many businesses are potentially eligible for the JobKeeper payment and do not know it. Substantial amounts of funding may be available, and you may not realise that you could qualify.
Applications for the JobKeeper payment scheme are now open. If you believe your business is eligible for the payment, you must comply with strict timing and eligibility rules by 30 April 2020 to receive the full entitlement.
For example, you must:
- Have been in business at 1 March 2020
- Determine whether your “GST Turnover” has reduced by 30% from a comparable month or quarter last year (a 15% or 50% threshold may also apply in certain circumstances). It doesn’t matter if you are registered for GST or not. There some adjustments and options available as well.
- Make sure all other eligibility requirements are met.
- Apply via the business portal by 30 April 2020, or we can apply on your behalf.
- Have all eligible employees complete a declaration by 30 April 2020.
- Pay all eligible employees a minimum of $1,500 per fortnight. Special rules apply for the first two fortnights – these can be paid by 30 April 2020.
- Comply with monthly reporting obligations, including current and projected monthly turnovers within 7 days of the end of the month. Those employers not currently using STP will also be required to report other information so the ATO can determine the required amount.
Similar steps are required for businesses owners (such as sole traders, partnerships, adult trust beneficiaries, company shareholders or directors) that are not receiving a wage from that business.
- There is a limit of one entitlement using this method, and the business owner/director must have been actively engaged in the business at 1 March and during each fortnight you claim.
- You cannot be currently employed by another entity (other than on as a casual), or have agreed to receive a JobKeeper Payment from another entity.
- You won’t need to pay out $1,500 per fortnight for these individual business participants.
- You will need to have lodged the relevant 2019 Income Tax Return or Activity Statement showing certain indications of a business before 12 March 2020. There are indications that an extended Tax Agent due date of May could be applied, however this has not yet been confirmed.
- Sole Traders will need to nominate online via the ATO Portal.
- Other entities will need to complete this nomination notice form before enrolling for the JobKeeper Payment.
More information can be found at ato.gov.au/jobkeeper under the Sole Traders and Other Entities heading.
The ato.gov.au/jobkeeper website contains more information. Our more detailed blog post may also provide you with some useful information, as well as an update on what we posted a week ago. You can also see the actual rules here, and the explanatory statement here. An earlier blog post about myGovID (so you can access the business portal) might also help you.
A key feature of this measure is that this payment only occurs in a fortnight where you have already paid the money to your employee. The business will then be reimbursed for the amounts you have already paid. This is done in fortnightly blocks.
The first fortnight block began on Monday 30 March and ended on Sunday April 12. The second fortnight began Monday April 13 and ends on Sunday April 26.
The ATO will allow a late payment for the first two fortnights, so long as it is paid by the end of April.
You first need to be sure your business is eligible, especially with the Decline in Turnover Test.
A business will generally satisfy this test where the GST turnover in the turnover test period falls short of the actual GST turnover in the corresponding period last year by 30 per cent or more (for most businesses). The test period compares the GST turnover of any of the months from March 2020 to September 2020 or the quarters that starts on 1 April 2020 or 1 July 2020 with the corresponding period in 2019.
To work out your fall in turnover for the first fortnight block, you can compare either:
- GST turnover for March 2020 with GST turnover for March 2019
- projected GST turnover for April 2020 with GST turnover for April 2019
- projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.
How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier.
The ATO has indicated that an Accruals basis (recognising debtors and creditors) is the most appropriate method, however they are willing to accept a Cash basis for those entities registered for GST using the Cash basis.
Once your business has met the test, you won’t need to look at it again. Once you’re in, you’re in until the measure ceases in September 2020. However you need to have met the test by the end of a fortnightly block in order to qualify for that fortnight. If your business does not yet meet the test, it may do so in a later month or quarter in which case you’ll be eligible from that point onwards.
There is an alternative test for those businesses that do not have a comparable period last year. Details of that alternative test are yet to be released by the ATO, although the explanatory statement does includes some suggestions including if a business was affected by drought in the prior year. A business started after 1 March 2020 will however not be eligible.
Your business also needs to elect to participate. This must be done online using the ATO Business Portal (or BBC can lodge an election on your behalf). If you have nominated an intention to register on the ato.gov.au/jobkeeper website, please be aware that was only an intention and you will still be required to actually register using the ATO Portal.
A special rule gives you until 30 April to register and still qualify for the first two fortnights that will have already passed.
Other tests and integrity measures apply. There are tests within the Rules that must have been satisfied on 1 March 2020, and other tests that must be satisfied during the fortnight in respect of which a JobKeeper payment is to be made.
The measure is on a one-in, all-in basis. If an employee wants to participate in the scheme, all eligible employees must be covered by the scheme. You are not able to choose which employees will participate.
A terminated employee is not eligible unless you rehire them. A stood down employee will however be eligible.
To be eligible, they must of been employed on 1 March. Employees younger than 16 years of age on 1 March are excluded. Casual employees are also excluded unless they are long-term casual employees (over a 12 month period).
Employees need to agree in writing to be nominated by the employer for the purposes of the JobKeeper scheme. The employee must also specify in the notice that they have not agreed to be so nominated by any other employer or business. Once an employer is nominated, that employee cannot be an eligible employee for any other employer. The ATO form to make this nomination is available now at ato.gov.au/jobkeeper.
Parental leave paid under the Paid Parental Leave Act 2010 disqualifies that employee for that fortnight.
Your business can also make an election to cease using the scheme at any time.
See the ato.gov.au/jobkeeper site for more information.
Information for Employees
If your employer is eligible and chooses to participate in the scheme, you will only receive the amount in relation to a single employer. You will need to agree to be nominated by your employer. You may not actually receive an additional amount as the payment is designed to support business to continue your employment, however those earning less than $1,500 in a fortnight must receive a minimum of $1,500 for that fortnight. This amount is before any tax is deducted. Anyone already earning $1,500 or more in a fortnight will not receive any additional amount.
See the ato.gov.au/jobkeeper website for steps you should take to help your employer claim the JobKeeper payment on your behalf.
This is a quick summary only. We encourage you to read the links throughout this message for more detail and to confirm your eligibility. Please contact us should you wish to discuss any of these issues further.