Jobkeeper Payment Australian Government COVID-19 Stimulus

In the last two weeks, we have seen governments around the world respond to the COVID-19 pandemic in a way that has never been seen before. If you're like many business owners, you've gone from running your business like it's any other day to fighting for survival on a daily basis

To help you through the crisis, here is our 4-minute guide to the Australian Government's JobKeeper Payment stimulus.

JobKeeper Payment

Businesses affected by COVID-19 crisis will have employee wages subsidised by the Australian Government. From 30 March 2020, employers of affected businesses will be able to claim a wage subsidy of $1,500 per fortnight for a period of up to 6 months.

An employer is eligible for the subsidy 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
The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.

Update - 2 April 2020

Self-employed persons are eligible to get a wage subsidy regardless of what business structure they use, where:

One partner in a partnership structure is nominated to receive the subsidy where the partners in a partnership only receive a share of profits (i.e. all other partners will miss out on the wage subsidy)
One director in a company structure is nominated to receive the subsidy where directors of a company only receive dividends (i.e. all other directors will miss out on the wage subsidy)
One beneficiary in a trust structure is nominated to receive the subsidy where beneficiaries of a trust only receive distributions – one individual beneficiary (i.e. not a corporate beneficiary) can be nominated to receive it and all other beneficiaries will miss out on the wage subsidy.

Note that the word “only” is used above. While we obviously still need to wait for the legislation to be passed and further details released, this could mean that if a partner, director or beneficiary also receives wages or Directors fees from their structure they may not be able to access the JobKeeper payment under this provision. If they were an eligible employee that were on the books of the entity on 1 March 2020 and paid properly (i.e. formal wages paid to a personal bank account, with tax withheld and ideally reported through Single Touch Payroll) and regularly like all other employees, then they may be able to be nominated as an eligible employee instead. It is also still unclear whether a self employed person will be eligible for the JobKeeper payment under the self employed provisions if they are also receiving other employment income from another job that has not been impacted by the Coronavirus situation. Once we have further details and clarification an update will be provided.

Payment process

Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.

Where employers participate in the scheme, their employees will receive this payment as follows.

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.

It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.

Payments will be made to the employer monthly in arrears by the ATO.

Timing

The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May. Businesses will be able to register their interest in participating in the Payment from 30 March 2020 on the ATO website.

How to apply

Businesses with employees

Initially, employers can register their interest in applying for the JobKeeper Payment via The Australian Taxation Office (ATO) from 30 March 2020.

Subsequently, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.

Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO.

Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.

It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.

Further details for businesses for employees will be provided on ato.gov.au. Businesses without employees

Businesses without employees

Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper Payment via The Australian Taxation Office (ATO) from 30 March 2020.

Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity.

People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.