The JobKeeper wage subsidy has generated lots of interest and lots of confusion. This list of frequently asked questions has been produced to deal with some of the common issues, particularly in relation to guidance issued by the ATO over the past few days.
- What is JobKeeper?
- Who is eligible to benefit?
- Which employers are eligible?
- What will I get?
- I’m self-employed. Do I qualify?
- How do I measure my drop in turnover?
- What are the alternative tests?
- Does the fall in turnover need to be caused by COVID-19?
- Can I use the accruals or cash basis to work out my turnover?
- What if my fall in turnover for the June quarter turns out to be less than 30%?
- What are the relevant deadlines?
- Can 16 and 17 year olds participate in JobKeeper?
- I haven’t lodged my 2018/19 tax return. Will my business still qualify for JobKeeper?
- Can an employer change my working conditions?
- Can I withdraw super early and receive JobKeeper?
- Can a business subject to the Personal Services Income (PSI) rules apply for JobKeeper?
What is JobKeeper?
JobKeeper is wage subsidy scheme to provide payments of $1,500 per fortnight to millions of Australians.
Payments will be made via businesses impacted by the Coronavirus. These businesses will be able to access a subsidy from the Government to continue paying their employees.
Affected employers will be able to claim a taxable fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months which must then be passed on to employees.
The subsidy started on 30 March 2020, with the first payments to be received by employers in the first week of May.
Payments will be made to the employer monthly in arrears by the ATO. These will then be paid on to eligible employees with PAYG tax deducted in the normal way.
Note: A person receiving the JobKeeper payment cannot also receive the JobSeeker payment for those who have lost their jobs, announced several days before. People who have already applied for JobSeeker can withdraw and shift to JobKeeper payments if they are re-engaged by their employer.
Who is eligible to benefit?
You are eligible if you:
are currently employed by an eligible employer (including if you have been stood down or re-hired);
were employed by the employer at 1 March 2020;
are full-time, part-time, or a long-term casual (a casual employed on a regular basis for longer than 12 months as at 1 March 2020). Casuals employed for less than 12 months are currently excluded;
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. New Zealand citizens will qualify but other temporary visa holders are currently excluded; and
are not in receipt of a JobKeeper Payment from another employer. You can only receive the payment from one employer so if you have multiple jobs, you will need to nominate one employer as the one to make the JobKeeper payments to you.
Which employers are eligible?
Employers will be 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 (so, employees of the big banks are not eligible).
For businesses that are not able to demonstrate that their turnover is down 30% compared to a comparable period a year ago (for instance, new businesses that did not exist a year ago), alternative tests exist to establish that they have been significantly affected by the impacts of COVID-19 (see below).
Qualifying businesses must register on the ATO website or via their tax agent and assess that they have or will experience the required turnover decline. They will also need to provide information to the ATO on their eligible employees, including the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired).
What will I get?
Qualifying recipients will be able to receive this payment in a number of different ways.
If you ordinarily receive $1,500 or more in income per fortnight before tax, you will continue to receive your regular income. The JobKeeper Payments will subsidise part or all of your income.
If you ordinarily receive less than $1,500 in income per fortnight before tax, your employer must pay you, at a minimum, $1,500 per fortnight, before tax. This means your normal income will rise to $1,500 per fortnight.
If you have been stood down, your employer must pay you, at a minimum, $1,500 per fortnight, before tax.
If you were employed on 1 March 2020, subsequently ceased employment and then were re-engaged by the same eligible employer, you will receive, at a minimum, $1,500 per fortnight, before tax.
Your employer must continue to pay the superannuation guarantee on your regular wages but it is up to your employer whether they pay superannuation on additional JobKeeper payments.
Your employer will notify you that you will receive the JobKeeper Payment if you are eligible.
I’m self-employed. Do I qualify?
Sole traders and some other entities (such as partnerships, trusts or companies) can take part in the scheme
One $1,500 JobKeeper payment per fortnight is available for one eligible business participant. , eg:
A sole trader
An individual partner or partnership
A director or individual shareholder of a company
An adult beneficiary of a trust
The entity, not the eligible business participant, receives the JobKeeper payment (except for sole traders).
There is no requirement for the business to pay the JobKeeper payment to the nominated individual.
If the entity also has employees, JobKeeper payments of $1,500 per fortnight per eligible employee can also be claimed.
Businesses that will potentially qualify for payments include contractors, self-employed tradies and workers in the “gig” economy, such as ride-sharing drivers.
A business is eligible if:
It carried on a business in Australia on 1 March 2020
- For example, a trust owning investment properties (for instance) wouldn’t count but a trust running a property development business would count
It satisfies the fall in turnover test
It had an ABN on 12 March 2020
- It had lodged, on or before 12 March 2020, at least one of:
A 2018–19 income tax return showing business income, or
An activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing that it made a taxable, GST-free or input-taxed sale.
A non-employee individual is a relevant business participant if:
They are an individual not employed
They are actively engaged in the business at 1 March 2020 and for the fortnight of the claim.
a sole trader
a partner in the partnership
an adult beneficiary of the trust
A passive beneficiary of a trust wouldn’t count
a shareholder or director in the company.
As at 1 March 2020, they are not an employee (other than a casual employee) of another entity. Note they are excluded even if they do not qualify for JobKeeper through that other entity, for instance because the employer has not met the turnover fall critiera
Other eligibility criteria as for employed individuals.
How do I measure my drop in turnover?
To qualify for the JobKeeper payment, you need to show a 30% drop in turnover (50% if turnover is over $1bn or 15% if a charity).
The starting point is the basic test.
- If reporting monthly, compare turnover in March or April 2020 or a later month before October 2020 to turnover in March or April or the equivalent month in 2019
If reporting quarterly, compare your June quarter of 2020 to your June quarter in 2019.
If that comparison shows a 30% drop, the business meets the turnover test and no further testing need be done.
If a business doesn’t pass the basic test, it can look to apply an alternative test. There are seven alternative tests that apply to different circumstances.
The alternative tests are only applicable if the basic test is failed.
The grounds for applying an alternative test is that the comparison period is not an appropriate reference point. Therefore, something needs to have happened in the prior 12 months that renders the comparison period unfair. That something also needs to be outside the usual business setting for that entity.
If more than one alternative test applies, only need to satisfy one of them.
The Commissioner has determined that these are the classes of business that the alternative test applies to. Therefore, for an alternative test to apply a business needs to come under one of these classes.
The tests are self-assessment based much like the basic test. The application form does not require any test data or proof of satisfying the test to be submitted.
Alternative Test One: If the business is less than 12 months old
This test applies if a business was established less than a year ago, and so cannot show a decline in turnover year-on-year.
It is available to businesses that commenced before March 1, 2020, but after the one- or three-month relevant comparison period.
The alternative test
- If the business chooses a one-month period, it should calculate its average monthly GST turnover, based on each whole month it has been in business.
- If the business chooses to measure turnover on a quarterly basis, it should take that monthly average GST turnover, and multiple it by three, to get the comparable quarterly figure.
- If the business launched after February 1, 2020, and so had not been in business for a full month as of March 1, the average monthly turnover should be calculated by dividing total February turnover by the number of days the entity was in business, and multiplying that number by 29.
A second alternative test
If the business has been around for three months or more, as of March 1, 2020, the business owner can choose to use the GST turnover for the three months leading up to March 1, 2020 as the comparison period.
Monthly reporters can divide that turnover figure by three, and use that as the comparison.
Concessions to consider
There is an additional note for any businesses that qualified for the ATO’s 2019-20 bushfire lodgement and payment deferrals, or received any drought help concessions.
If you qualified for either of these benefits, then you should exclude the months covered by those from your calculations.
But, if the months in which you received those concessions are the only months you have been in business, you can include those months.
Alternative Test Two. If an acquisition or disposal has changed turnover significantly
This applies if a business went through an acquisition or disposal process that changed its turnover, meaning a year-on-year comparison no longer makes sense.
The alternative test
- Business owners in this situation should use the month directly following the acquisition or disposal event as the comparison period.
- If the business is using a quarterly comparison, then the turnover of that month should be multiplied by three. The comparison period should not be the three months following the event.
- If a business has been through more than one acquisition or disposal, they should use the month following the most recent event.
- If the most recent event was less than a month before the start of the testing period (whether that’s the month of March or a three-month period), the business should use the month immediately before the testing period begins.
Concessions to consider
Again, if a business received a bushfire payment lodgement and payment deferral or drought help concessions, they should exclude any month that was covered by these concessions.
They should instead use the nearest alternative month instead, unless there are no other months available to them.
Alternative Test Three. If a business restructure has changed turnover significantly
This alternative test applies if your business, or part of it, has undergone a restructure in the past 12 months, meaning year-on-year turnover is not a suitable comparison.
The alternative test
If the business is making a monthly comparison, it should use the GST turnover for the month immediately following that in which the restructure occurred.
If the business reports quarterly, it should take the GST turnover for the month following the restructure, and multiply it by three.
If there is more than one restructure, the business should use the month following the second event as the comparison period. Again, if the business is making a three-month comparison, that figure should be multiplied by three.
If the most recent restructure happened less than a month before the turnover test period, the business should use the GST turnover for the month immediately preceding that test period.
Concessions to consider
Once again, if a business received the bushfire payment lodgement deferral, or drought help concessions, these must be taken into account.
Business owners should not use any month covered by these concessions as the comparison, unless there is no alternative month available to use.
Alternative Test Four. If the business has seen substantial growth in turnover
This test makes allowances for high-growth businesses, including startups, that may have seen a significant increase in GST turnover in the past 12 months, but still suffered a decrease caused by the COVID-19 outbreak.
A business can use this test if it has seen more than 50% growth in GST turnover in the 12 months leading up to the test period.
The alternative test also applies if the business has seen 25% growth in turnover in six months, or 12.5% growth over three months, leading up to the test period.
The alternative test
- If the business reports quarterly, it can use the three months directly preceding the test period as its comparison period.
- If the business reports monthly, it should take the GST turnover from those three months, and divide it by three, to get a more accurate monthly figure.
Concessions to consider
There are, again, rules for businesses that received bushfire lodgement and payment deferrals or drought help concessions.
In this case, a business should not use the months in which it received these concessions as the comparison period. Instead, it should use the three months immediately before the concessions applied.
Alternative Test Five: If the business has been affected by drought or natural disaster
This test applies to entities that conducted some or all of their business in a declared drought or natural disaster zone during the relevant comparison period which had a negative effect on their turnover for the comparable period last year, making a comparison meaningless.
The alternative test
- Businesses in this situation can simply use a comparison period from the equivalent period in 2018, instead of 2019.
- So, instead of comparing April 2020’s revenue, for example, to April 2019, they can compare April 2020 to April 2018, to get a more accurate idea of the effect the virus has had.
Alternative Test Six: If a business has irregular turnover
A business can apply this test if their turnover is not considered cyclical. Businesses will also have to prove a significant difference in quarterly turnover.
A business will be eligible if, over the 12 months leading up to the test period, the quarter with the highest GST turnover saw more than twice the revenue of the lowest-performing quarter.
The alternative test
- In this case, a business can calculate an average monthly GST turnover for the 12 months leading up to the test period. That monthly figure will act as the comparison turnover figure.
- If the business reports quarterly, that monthly figures should be multiplied by three.
Concessions to consider
If the business has received the bushfire lodgement and payment deferrals, or drought help relief, it should exclude the months in which those concessions were received from the calculation of the average.
Alternative Test Seven: If a sole trader or partner has taken leave
This test is ONLY for sole traders or partnerships with no employees, where an individual did not work for all or part of the comparison period in 2019, because of illness, injury or other leave. The alternative test applies if that leave caused a negative impact on revenue at the comparable time last year.
The alternative test
Business owners should take the month immediately following the individual’s return to work, and use this as the comparison period.
If the business is using a three-month test period, they should multiply the turnover for that month by three, rather than using an actual three-month period.
Concessions to consider
Where the business qualified for the ATO’s bushfire lodgement and payment deferrals, or received drought relief concessions, if these concessions applied in the month after the individual returned to work, then instead of using that month as the comparison point, the business should use the month immediately after those concessions stopped, instead.
Does the fall in turnover need to be caused by COVID-19?
No. It does not matter whether it is COVID-19 or some other factor (or a combination of factors) that has caused the drop in turnover, provided the turnover has fallen by the required percentage and the other eligibility criteria are met.
Can I use the accruals or cash basis to work out my turnover?
If you account for GST on a cash basis, you can use either cash or accruals (non-cash) to calculate your GST turnover.
If you currently use accruals to account for GST, the ATO expects that in most cases you would continue to use this method. However, you can choose to measure turnover using the cash basis. If you do, the ATO says that it may want to understand why the different approach is an appropriate reflection of turnover.
In both cases, the basis used must be the same for calculating your projected and current GST turnover.
If you aren’t registered for GST, use the same accounting method you use for income tax purposes.
What if my fall in turnover for the June quarter turns out to be less than 30%?
The ATO says that you will not necessarily lose access to JobKeeper. They will accept your assessment of projected turnover unless they have reason to believe that the calculation of your projected GST turnover was not reasonable.
The ATO says that their compliance focus will be particularly directed toward schemes where there has not been a genuine fall in turnover in substance, but arrangements are contrived to ensure the turnover test is satisfied.
What are the relevant deadlines?
Wage payment deadline for April
The ATO has extended the wage payment deadline for the first two JobKeeper fortnights (30 March to 12 April and 13 April to 26 April) to 8 May (the deadline was previously 30 April). This deadline should approximately coincide with the date that the ATO pays the first JobKeeper reimbursements for the same period, reducing cash flow pressure on enrolled businesses.
The ATO notes that if an employer usually pays their employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if they pay employees on a monthly pay cycle, those employees must have received the monthly equivalent of $1,500 per fortnight.
The ATO has also extended the time to enrol for the initial JobKeeper periods, from 30 April to 31 May.
If employers enrol by 31 May they will still be able to claim for the fortnights in April and May, provided they meet all the eligibility requirements for each of those fortnights. This includes having paid employees by the appropriate date for each fortnight.
Can 16 and 17 year olds participate in JobKeeper?
In a media release issues by the Treasurer on 24 April, it was announced that full time students aged 16 and 17 years old who satisfy the basic eligibility criteria, will no longer be eligible for JobKeeper Payment unless they are financially independent. This will largely exclude those who, for instance, live at home with parents.
This change will apply prospectively from 24 April so employers who have already made the minimum $1,500 to those students who will now be ineligible for the payment, are not financially disadvantaged.
This change will have significant impact on the hospitality and retail industries.
Details of the change have not yet been included on the ATO website which does not yet include the exclusion in its materials regarding eligibility.
Nor are there details as yet to explain how a full time student proves or disproves financial dependence.
Under the current rules (as still showing on the ATO website), an eligible employee simply must be aged 16 years or over. In the absence of this amendment, 16 and 17 year old casuals who were still at school were eligible for the payment.
I haven’t lodged my 2018/19 tax return. Will my business still qualify for JobKeeper?
One of the eligibility criteria that sole traders, partnership and other eligible business entities need to meet relates to lodgement of tax obligations.
The business entity must have lodged, on or before 12 March 2020, at least one of
a 2018–19 income tax return showing that it had an amount included in its assessable income in relation to it carrying on a business, or
an activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing that it made a taxable, GST-free or input-taxed sale.
In many cases, the actual due date for lodgement of the 2018/19 tax return is not until 15 May 2020 (for instance, if the client is registered with a tax agent like H&R Block). Such clients are unlikely to have lodged by 12 March 2020.
Assuming that the business entity can’t meet the lodgement test for activity statements (as will be the case with many non-GST registered businesses), the ATO has advised that businesses should still be eligible even where they haven’t met the income tax return lodgement condition.
The ATO will exercise discretion to give further time if you:
did not have a requirement to lodge your 2018-2019 return until after 12 March 2020 (such as where your actual due date was 15 May 2020)
have deferred your lodgement under an extension of lodgement date the ATO initiated (for instance because of the bushfires of late 2019/early 2020).
It is still not clear how taxpayers apply for the ATO to exercise this discretion.
Can an employer change my working conditions?
An employer can provide the following directions to employees:
A ‘stand-down’ direction for the employee to not work on particular days, to work for a lesser period or to work fewer hours, provided the employee cannot work normal days or hours because of the coronavirus
A direction about the duties to be performed within their skills and competency
A direction for the employee to work at a different location (including at home), provided the distance is not unreasonable
Employers can also ask employees to perform duties on different days or at different times (without reducing hours) or take annual leave provided leave balance remains two weeks or more.
These directions cannot reduce the employees hourly base rate of pay and the full $1,500 per fortnight JobKeeper payment still needs to be paid.
Can I withdraw super early and receive JobKeeper?
Yes. The two schemes are separate and provided you meet the eligibility criteria for both, you can receive the $1,500 per fortnight JobKeeper payment and withdraw up to $10,000 in super early, tax free.
To access super early as an employee, your working hours must have been reduced by 20% or more.
Can a business subject to the Personal Services Income (PSI) rules apply for JobKeeper?
Yes. In advice provided to H&R Block on 4th May, the ATO confirms that for a sole trader subject to the PSI rules, Jobkeeper is available if all the eligibility requirements are met. Similarly, if the business uses a company structure (or trades through some other entity) and that business receives PSI (and the PSI rules apply), Jobkeeper based on business participation would be available if the company met all the other eligibility criteria and the individual was an eligible business participant of the company.
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