JobKeeper payment wage subsidy measures announced

The Government announced a “JobKeeper” payment scheme to subsidise wage payments for eligible businesses affected by the COVID-19 pandemic. The payments will comprise of a payment of $1,500 per fortnight, for each eligible employee, for a maximum of six months from 30 March 2020. Eligible businesses can be structured as sole-traders, partnerships, trusts or companies.

Eligibility criteria

To be eligible for JobKeeper payments, the business must show that:

  • their turnover will have a reduction of 30% or more compared to a year ago (50% reduction for businesses greater than $1b in turnover)
  • they are not subject to the Major Bank Levy
  • an employment relationship with eligible employees existed as at 1 March 2020
  • they have confirmed that each eligible employee is currently engaged, and
  •  if they are not-for-profit or self-employed individuals, to meet the turnover test above.

To be eligible for JobKeeper payments, the employees must show that they are:

  • currently employed by the eligible employer, including those stood down or re-hired
  • able to state that they were employed by the employer at 1 March 2020
  • full-time, part-time or long-term casual employees. Long-term casuals must be employed for more than 12 months as at 1 March 2020
  • at least 16 years old
  • Australian citizens, permanent residents, Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has resided in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder, and
  • not receiving a JobKeeper payment from another employer.

How to apply for the payment

Businesses can register their interest in applying for the JobKeeper payment via ato.gov.au from 30 March 2020. Upon the scheme being made available for registration, eligible businesses can apply for it via an online application. It is expected that data submitted via Single Touch Payroll will be used to pre-populate the form. The first payment should be received from the ATO in the first week of May 2020, paid in arrears, and backdated to 30 March 2020.

Eligible businesses must identify eligible employees and provide monthly updates to the ATO. All eligible employees must receive, at a minimum, the amount of $1,500 per fortnight, before tax. The payment will be taxed as ordinary income in the hands of the recipient, and it will be up to the business if they want to pay superannuation on any additional wage paid because of the JobKeeper payment.

Self-employed businesses can likewise register their interest in applying for the JobKeeper payment via ato.gov.au from 30 March 2020. They will be required to provide their ABN for their business, nominate an individual to receive the payment. The nominated individual must provide his/her TFN and provide a declaration to recent business activity.

Self-employed businesses will have to declare their continued eligibility for the payments, through a monthly update to the ATO. Payments will be made monthly to the nominated individual’s bank account.

Eligible employees currently receiving the previously announced JobSeeker payments will not be allowed to also access the JobKeeper payments.

Sole traders are specifically included in the scheme, which may lend a lifeline to smaller businesses. From a legal perspective, company directors, even though they control the company, more often than not are considered employees of the company and should be eligible to receive the JobKeeper payment subsidy to their wages.

Partners in a partnership, on the other hand, are not employees, but still should be able to apply for the payments as a self-employed business.

If you or your business require assistance regarding this announcement, please do not hesitate to contact us.