The JobKeeper Payment

The Australian Government has just announced that they intend to spend a further $130 Billion to fund a “JobKeeper Payment” aiming to help Australians maintain their jobs and to support business effected by the economic impact of the Coronavirus.

The JobKeeper payment will allow eligible employees to receive at least $1,500 (before-tax) per fortnight through their employers for up to 6 months.

We at Yield believe this payment will create a safety net for millions of employees across Australia whose job security has been jeopardised by the Coronavirus (COVID-19) pandemic fall out and provides a welcome break for businesses struggling to maintain their workforce.

It’s important to remember that the following is subject to legislative change.

Who is an eligible employer?

The JobKeeper payment will enable employers’ access to a subsidy from the Government allowing them to continue paying their employees. Eligible employers will be entitled to claim $1,500 per fortnight per eligible employee from the 30th March 2020 onwards, for up to 6 months.

You are an eligible employer if:

• Your business has a turnover of less than $1 billion and your turnover will be reduced by more than 30% relative to a comparable period a year ago; or

• Your business has a turnover of $1 billion or more and your turnover will be reduced by more than 50% relative to a comparable period a year ago; and

• Your business is not subject to the Major Bank Levy.

Criteria source: Australian Government (Treasury) Economic Response to the Coronavirus.

In addition, you must have been in an employment relationship with the eligible employee as at the 1^st March 2020.

What if I’m a Not-for-profit or Self-employed?

If you are a Not-for-profit entity or self-employed with no employees, if you meet the turnover tests above you will be eligible to apply for JobKeeper Payments.

Who is an Eligible Employee?

As we’ve stated before, as an employer you will be eligible to claim $1,500 per fortnight per “Eligible employee”.

To be considered an eligible employee, the employee needs to be:

• Currently employed by the eligible employer, which includes those stood down or re-hired;
• Were employed by the eligible employer at 1^st March 2020;
• Are employed full-time, part-time or long-term casuals, where a long-term casual is someone whose employed on a regular basis for longer than 12 months as at 1^st March 2020;
• Are at least 16 years of age;
• Are 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; and
• Are not in receipt of a JobKeeper Payment from Another Employer.

Criteria source: Australian Government (Treasury) Economic Response to the Coronavirus.

As an employer, what are my obligations to receive the JobKeeper Payment?

To avoid the potential for employers applying for the JobKeeper Payments and not passing the intended benefits onto the employees when required, the Australian Government has established a variety of obligations an Employer must follow to receive the JobKeeper payment.

These obligations are:

1. The employer must register on the ATO website where they’re assessed on whether they have or will experience the required turnover decline.
2. The employer must provide information to the ATO on eligible employees. This will be information such as number of eligible employees including those stood down and rehired, however for most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
3. The employer must ensure that each eligible employee receives at least $1,500 per fortnight (Before tax). This will typically result in two scenarios (1) where the employee is already receiving more than $1,500 per fortnight and (2) where employees earn less than $1,500 per fortnight (Before-tax)

   1. Where an eligible employee already earns above $1,500 per fortnight from their employer their income will not be required to change.
   2. Where an eligible employee earns less than $1,500 per fortnight from their employer, the employer will be required to top up the payment to the employee up to $1,500 before-tax. All additional amounts received by the employer will be used to subsidise the cost of wages and the loss in revenue due to the impacts of COVID-19.

4. The employer must, notify all eligible employees that they are receiving the JobKeeper Payment.
5. The employer must, continue to provide required information to the ATO on a monthly basis.

Criteria source: Australian Government (Treasury) Economic Response to the Coronavirus.

It will be up to the employer if they wish to pay Superannuation Guarantee on any additional wages paid because of the JobKeeper payment.

As an Employer, what is the process to apply for the JobKeeper Payment?

The exact process for an employer to apply for the JobKeeper Payment is dependent on whether they are a business with employees or without employees.

What if I’m a business with employees?

From the 30^th March 2020, Employers can register their interest in applying for the JobKeeper via the ATO website.

Those eligible, will be then need to apply through an online application and upon successful completion the first payment will be received in the first week of May.

What if I’m a business without employees?

Similar to those businesses with employees, businesses without employees will be able to register their interest via the ATO website.

However, businesses without employees such as the self-employed, will also need to provide the ABN for their business, nominate an individual to receive the payment and provide that individuals Tax File Number (TFN). In addition, they will also be required to provide a declaration as to the recent business activity.

You will then be required to provide monthly updates to the ATO to ensure your ongoing eligibility to the payments and the payments will be made monthly to the individual’s bank account.

Where can I get more information?

The following websites are valuable resources available to the public:

• The ATO Website; and
• The Treasury Website.

In addition, another resource available, is the Government’s Coronavirus Australia App which can be downloaded for free here!

Yield Financial Planning is here to advise

As Financial Planner’s the team at Yield are specialists in navigating changes in legislation and understanding how these processes may apply to individual circumstances. So, if you’re confused by any of this or simply wish to understand your financial position better, please contact us here.

We’ve also written summaries of a handful of other Government stimulus and assistance that will be made available for Australians, to read more please click here.

Important Note

Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.