JobKeeper Tax: Do I Pay Tax on JobKeeper Payments?
The outbreak of COVID-19 has resulted in many people losing their jobs in countries around the world, including Australia. One of the ways the Australian government is helping to support local businesses has been to introduce the JobKeeper program.
What are JobKeeper Payments?
Essentially, from 30 March 2020, eligible businesses and not-for-profits who choose to be part of the program will receive a payment of $1,500 per fortnight per eligible employee employed at 1 March 2020 and currently employed by the business (including those who are stood down or re-hired). This payment will then be passed on to the employee by the business (not the ATO), minus tax withheld by the employer at the relevant marginal tax rate.
The JobKeeper payment is available to Australian businesses until 27 September 2020 and you can enrol in the program at any time before this date.
Who is eligible for JobKeeper?
Employers are eligible for JobKeeper if their business has a turnover of less than $1 billion and they estimate their GST turnover has fallen or will likely fall by 30% or more compared to a similar period a year ago. Larger businesses are also eligible but their turnover needs to have fallen by 50% or more. The business can’t be subject to the Major Bank Levy (which means the big banks are excluded).
Employees are eligible for JobKeeper if they:
- Are currently employed by an eligible employer (even if they have been stood down or re-hired);
- Were employed by the employer at 1 March 2020;
- Are employed full-time or part-time, or a casual employed on a regular and systematic basis for longer than 12 months as of 1 March 2020;
- Are a permanent employee of an eligible employer, or if a long-term casual employee, not a permanent employee of any other employer;
- Were aged 16 years or older at 1 March 2020, with the exception of full time students who are 17 years old and younger and not financially independent;
- Were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
- Were a resident for Australian tax purposes on 1 March 2020; and
- Are not receiving JobKeeper payments from another employer.
Employees can only receive JobKeeper payments from a single employer, so if you earn your income from more than one employer, you must choose which one you want to use for JobKeeper and inform this employer of your decision.
The JobKeeper payment system also works on a ‘One in, all in’ principle, which means once an employer decides to participate in the JobSeeker scheme and their eligible employees have agreed to be nominated, they must make sure all eligible employees are covered (they can’t pick some employees and not others).
Do I have to pay tax on JobKeeper?
Businesses enrolled for JobKeeper must pay a minimum of $1,500 (before tax) per fortnight to all eligible employees, withholding income tax as appropriate. If an employee is paid more than $1,500 per fortnight, superannuation obligations will not change. If an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper Payment, it will be up to the employer if they want to pay superannuation on any additional wages that relate to the JobKeeper Payment.
For employees, the payment from your employer is generally treated the same as salary or wages for tax purposes, so your employer must withhold income tax and any other amounts that are ordinarily withheld from your wage or salary (such as HECS-HELP repayments or salary sacrifice arrangements). For employees, this means that tax is withheld from payments at your marginal tax rate – so you may receive less than $1,500 in your bank account.
Still have some questions about the JobKeeper payment scheme? Talk to H&R Block. Our experienced tax consultants will be able to help. Call 13 23 25 for details or find your nearest office and book an appointment online.