The Federal Government announced a subsidy program known as the JobKeeper Payment to support businesses affected by the Coronavirus to meet the cost of employee wages.
 
The JobKeeper Payment will be available to eligible businesses and self-employed individuals for up to 6 months from 30 March 2020 and will provide $1,500 per fortnight for each eligible employee, regardless of their actual earnings.
 
Legislation is not expected until next week so the exact details of the scheme will not be known until legislation has been passed. There are still some areas of the scheme that will need to be clarified as detailed below.
 
The information below has been sourced from the fact sheet released by the Federal Government on 31 March 2020.
 
Which businesses are eligible?
Businesses (including not for profits) will be eligible if:

  • their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
  • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
  • the business is not subject to the Major Bank Levy.

Self-employed individuals will also be eligible to receive the JobKeeper Payment where they have suffered or expect to suffer a 30 per cent decline in turnover relative to a comparable prior period (of at least a month).

What's unclear?
At the moment, it is unclear for how long a business must satisfy the turnover decline criteria in order to continue receiving the payments. For example, if a business experiences the required turnover decline for a one month period do they receive the JobKeeper payment for employees for the entire six months or just for the one month period of decline?
 
The eligibility criteria appears to present several situations where businesses may not qualify even though they may have been severely affected by the Coronavirus. For example:

  • New businesses that were not established until after September 2019; or
  • Businesses that have derived revenue growth since the comparable period a year ago due to, for example, acquisition of another business.

Which employees are covered?
Eligible businesses will receive the payment for each eligible employee they employed on 1 March 2020 and who continues to be engaged by that employer.  Full-time, part-time, casuals (who have been employed for more than 12 months as at 1 March 2020) and stood down employees are eligible employees. The employee must be an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder.
 
Employees who were stood down prior to commencement of the scheme will be considered eligible employees. Employees that are re-engaged by a business that was their employer on 1 March 2020 will also be eligible.
 
It does not appear that business owners, other than self-employed individuals, who do not receive a wage will be eligible. For example:

  • Partners in partnerships;
  • Trust beneficiaries who receive trust distributions rather than wages; or
  • Shareholders in companies who receive dividends rather than wages.

These individuals will need to apply for alternate support such as the JobSeeker payment.
 
Anti-avoidance
We expect that the legislation will contain anti-avoidance provisions to discourage back-dating of employment arrangements to 1 March 2020 to falsely enable businesses to access the payment.
 
How do I apply?
Employers must elect to participate in the scheme via an application to the Australian Taxation Office (ATO) and provide supporting information demonstrating a downturn in their business. In addition, employers must report the number of eligible employees employed by the business on a monthly basis. Whilst the application process is not yet available employers can register their interest for the scheme here. We encourage clients who believe they will be eligible to register their interest.

What are the rules for paying the $1,500 to my employees? 

  • If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s).
  • If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax
  • If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
  • If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight, before tax.

The employer will need to continue to pay superannuation on wages for employees who remain working as normal. If an employee receives an additional wage as a result of the JobKeeper Payment the employer is not required to pay superannuation on the additional wages component.
 
How do employers receive the payment?
The subsidy started on 30 March 2020 with payments to employers to commence in the first week of May 2020. Payments will be made by the ATO to the employer monthly in arrears.
 
What if an employee is receiving other government support?
Employees who are receiving other government support who become eligible for the JobKeeper payment will need to notify Services Australia. This includes, for example employees who have been stood down in rent weeks and have applied for the JobSeeker Payment and Coronavirus Supplement.
 
Further information
If you would like to discuss how the scheme applies to you or your employees please contact us on (03) 5222 4522.
We will advise you of further details once the legislation has been passed. 

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Last updated 31/03/2020