RSM Australia

The JobKeeper payment for your SME business

Business Insights

Enrolment applications for the JobKeeper payment have now opened and for many business owners, the program will provide a much needed lifeline.

Small business owners, however, may be feeling the pressure from laid off or stood down employees to apply for JobKeeper, whilst at the same time facing uncertainty not only around eligibility for the program but also their business and personal financial future. Is the JobKeeper payment program right for your business?

Some Australian Government social media posts promoted JobKeeper at employee level, recommending employees contact their employer about the $1,500 JobKeeper payment. What these employees might not realise is that under the program, Australian business owners are required to fund up to the first four to six weeks of wages from their own cash resources.

They then need to apply for reimbursement by the ATO, provided the business and the employees satisfy the required eligibility criteria.

There are reports some business owners have been approached by workers refusing to return to the work demanding the ‘government payment’ as they see it as temporary financial windfall or a personal right, creating tensions in the workforce and placing even further stress on the business owner.

For many small to medium size business owners, the JobKeeper payment will not provide a financial lifeline promised and serious questions may need to be asked as to whether the program is right for their business.

Many small business owners are already suffering cash flow issues as a result of substantially reduced turnover, or from complete business closure. Cash resources that were available at the beginning of March have now been exhausted on outgoings such as rent, wages and other requirements. Loan repayment holidays and rent relief, whilst providing immediate cash flow relief, are merely a deferral and repayments will need to re-start or be re-negotiated when the six month deferral period expires.

JobKeeper payments for casual employees.Unless the business owner has a degree of certainty around business recovery and their ongoing capacity to fund outgoings including wages, and repayment of expenditure deferred under State and government stimulus measures, the JobKeeper program may not be the right choice to aid with business continuity or survival.

Determining eligibility and ensuring ongoing compliance with the JobKeeper program may also present significant cash flow pressure to the business. Uncertainty surrounding the determination of projected turnover and documenting estimates of decline in turnover, combined with the requirement to consider complex employment law and income tax concepts when determining the eligibility of employees, may mean business owners have no choice but to seek professional advice from lawyers and accountants.

The determination of eligibility of long term casuals who have worked on a ‘regular and systemic’ basis, as well as Australian tax residency of holders of special subclass 444 visas for the JobKeeper program is already proving to be a challenge for some employers, and the ‘one in, all in’ approach, leaves no flexibility for businesses to choose which employees participate in the program.

Failure to comply with the ‘one in, all in’ policy intent may result in non-compliance with amendments to the Fair Work Act, however, this is not clear from the Treasurer’s Rules or the guidance provided by the Australian Taxation Office (ATO) and urgent clarification is required.

Where small and medium sized businesses are already in financial distress, the program may provide a lifeline to stood down employees, however with lack of clarity around the interaction of JobKeeper with superannuation laws, payroll tax and workers compensation premiums, additional record keeping and reporting requirements, complex guidance surrounding eligibility and ultimate risk and liability where business owners or employees get it wrong, the program may not be the right choice for the business owner.


If a business is already in financial distress, serious questions will need to be considered before enrolling for the JobKeeper payment and looking to short term funding options in order to source the cash flow to fund the initial minimum wage payments to eligible employees.

The harsh reality is, for some business, remaining in hibernation will be the right choice both from a business continuity and asset protection perspective. Where a business is in severe financial distress, enrolling in the JobKeeper program may make the pain worse, and now may be the right time to talk to an insolvency specialist about the benefits of winding up the business.


How can RSM help?

If you are concerned about JobKeeper payment and the impact on your business, please reach out to your local RSM office who can assist with determining whether the program is the right choice for your business.