The Federal Government announced on 30 March 2020 further support measures for businesses and individuals impacted by COVID-19.
The JobKeeper payment for eligible employers will be effective from 30 March 2020 and delivered through the tax system.
The JobKeeper payment will provide cashflow relief to assist employers to retain their employees and financial support to individuals who have been stood down since 1 March 2020.
Key elements of the measure include:
- The JobKeeper payment will be paid to eligible employers for up to six months.
- The payment will be made in respect of employees who were on the books at 1 March 2020, have been retained and continue to be engaged by the employer.
- Full time and part-time employees, including stood down employees will be eligible to receive the JobKeeper payment.
- A casual employee that has been with their employer for at least the previous 12 months will also be eligible.
- Eligible employees must be over 16 years of age.
- Businesses without employees, such as sole traders, will be eligible for the JobKeeper payment. These businesses will be required to provide an ABN for their business and nominate an individual to receive the payment. The business must also provide that individual's Tax File Number and provide a declaration as to recent business activity.
- Eligible employees will only be eligible to receive this payment from one employer.
- Eligible employers are those with an annual turnover of less than $1 bn who have had a 30% or more reduction in revenue from 1 March 2020.
- Employers with an annual turnover of greater than $1 bn would be required to demonstrate a reduction in revenue of 50% or more to be eligible.
- Reduction in revenue will be tested over a minimum one month period post 1 March 2020 and will be relative to a comparative period a year ago.
- Eligible employers include companies, partnerships, trusts, sole traders and not for profit entities including charities.
- Eligible employers will receive a payment of $1,500 per fortnight per eligible employee.
- The JobKeeper payment will be made to eligible employers even where their business is in hibernation.
- Every eligible employee must receive at least $1,500 per fortnight from this business before tax.
- Eligible employees include Australian residents, New Zealand citizens in Australia who hold a subclass 444 special category visa and migrants who are eligible for JobSeeker Payment or Youth Allowance (Cth).
- JobKeeper payments will be delivered to employers through the ATO. Payments to employees is likely to be processed through single touch payroll. Monthly updates will be required to be provided to the ATO.
- Businesses are not required to pay the superannuation guarantee on any additional wage paid because of JobKeeper payments, although they may so choose.
Eligible businesses can apply for the payment and register their interest online via the ATO website.
We await guidance on the definition of annual turnover and whether this will be aggregated turnover or limited to the annual turnover of the actual employer.
It is interesting to note eligible employees must receive at least $1,500 per fortnight before tax from the eligible employer. Where the employee was receiving less than this amount, the employer will have to ‘top-up’ their payment. This is a win for eligible employees who currently earn less than $1,500 per fortnight before tax.
JobSeeker Payment – Support Partner Income Test
The Federal Government has also announced they will temporarily relax the partner income test to ensure a person eligible to receive the JobSeeker Coronavirus Supplement, provided their partner earns less than $3,068 per fortnight (approximately $79,762 per year).
The personal income test for individuals on JobSeeker Payments will remain the same.
Further announcements are expected in the coming days on additional support measures for business. We note the announced measures will not become law until the legislation has been passed by both Houses of Parliament and receives Royal Assent.
Parliament was not scheduled to sit again until August 2020, however, given the urgency of these measures we anticipate Parliament will be recalled early.
For more information
If you are an employer and you require assistance in determining eligibility for the JobKeeper payment, including assistance in determining the reduction in revenue and eligibility for other COVID-19 and ATO administrative measures, please contact your local RSM adviser.