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In recent days, the Federal Government has made updates to the JobKeeper payment Fact Sheet, providing clarity surrounding eligibility for certain individuals and consolidated groups, and extending the eligibility criteria for eligible charities.
We summarise the key JobKeeper changes
and additional information on:
This update should be read in conjunction with our original summary of the JobKeeper payment, contained in our report outlining Government assistance measures available to assist with the impact of COVID-19.
This report can be found on our coronavirus resource centre at rsm.com.au/coronavirus.
We will bring you additional information and further analysis of the JobKeeper payment once the legislation has passed.
Definition of ‘turnover’
The Federal Government has confirmed that ‘turnover’ will be calculated as it is for GST purposes and is to be reported for Business Activity Statement (BAS) purposes.
This means that all GST-free and taxable supplies are included in turnover (including supplies made between related, but not GST-grouped, entities) but would exclude all input taxed supplies, supplies not connected with Australia and supplies between members of the same GST group.
Given the exclusion of input taxed supplies from turnover, on the face of it, entities who make predominantly input taxed supplies (eg financial institutions not subject to the major bank levy, investment funds and lessors of residential property) will have turnover less than $1b and may only need to show a 30% decline in revenue (rather than 50%) to be eligible for the scheme.
What remains unclear at this stage is whether an entity will be entitled to access the JobKeeper scheme based on its projected turnover only (which looks to the forecasted next 12 months) and how the turnover threshold is to be applied where an entity has joined a GST group within the last 12 months, since individual GST group members will not be lodging BASs separate to that of the representative member
Consolidated groups
The Federal Government has clarified its position in relation to the application of the JobKeeper payment to income tax consolidated groups. Importantly, the turnover test is to be applied on an entity by entity basis for income tax consolidated groups and not to the group as a whole. Hence, some businesses within a tax consolidated group may be eligible for the JobKeeper payment whilst others may not.
This is a welcome clarification.
Importantly though, if the consolidated group has a turnover of greater than $1b, the 50% turnover test will apply to each entity within the group whereas if it is less than $1b, the 30% turnover test will apply.
The clarification does not specifically deal with the situation where the Australian tax consolidated group is an SGE although turnover of the Australian group is less than $1b. On the face of it though, it seems that provided the turnover of the Australian group is under $1b, the 30% test should apply to each entity within the group but this needs to be confirmed.
Charities
The Federal Government also announced charities registered with the Australian Charities and Not-For-Profit Commission (ACNC) will be eligible for the JobKeeper payment if they estimate their turnover has or will likely fall by 15% or more relative to a comparative period.
The more generous turnover threshold, if passed, will apply to all eligible charities, irrespective of turnover.
This means an eligible charity with an annual turnover exceeding $1 billion will be eligible for the payment if they estimate a reduction in turnover of 15% or more, whereas a business with turnover exceeding $1 billion will need to demonstrate a reduction of turnover of 50% or more. It is proposed non-government schools and private vocational education providers will be eligible.
Casual employees
Despite calls for JobKeeper to be extended to include casual workers who have been working for less than one year, the Federal Government has indicated that whilst JobKeeper will be as ‘inclusive and reasonable’ as possible, eligibility for casual workers will be limited to circumstances where the casual worker has been employed by the employer on a regular and systemic basis for more than a year.
Salary sacrifice arrangements
The minimum payments of $1,500 per fortnight (before tax) may be satisfied by effective salary sacrifice arrangements.
This means the payment could be some combination of cash, fringe benefit and superannuation contribution where the employer and employee agree on an effective prospective basis and subject to their applicable workplace agreements.
Business owners
In welcome news for family businesses, the JobKeeper payments may be available to various private business structures where the owners work in the business but are not or cannot be remunerated as employees, as follows:
• Partnership – nominate only one individual partner
• Trust – nominate only one individual beneficiary
• Company – nominate only one director or individual shareholder
Employees receiving parental leave pay from Services Australia or workers compensation payments
Employees receiving parental leave pay from Services Australia will not be eligible for the JobKeeper payment, however, employees on parental leave from their employer will be eligible
Employees receiving workers compensation payments may be eligible for the JobKeeper payment where they are still working (eg they are working on reduced hours). If the employee is not working, they will not be eligible for the JobKeeper payment.
At this stage it is unclear how employers will distinguish between eligible and ineligible employees in their payroll systems in order to claim the payment via the ATO. Placing on onus on employers to individually assess individual employee eligibility for JobKeeper payment may prove to be an overly burdensome task for some employers.
Interaction with state / territory payroll taxes
At this stage, the various offices of state and territory revenue are yet to formally announce whether they intend to treat the JobKeeper payments made to employees as taxable wages and subject to payroll tax.
Prima facie, the JobKeeper payments would appear to fall within the definition of ‘taxable wages’ in most jurisdictions and, therefore, subject to payroll tax.
However, subjecting the JobKeeper payments to the payroll tax would seem counter to the intended policy of merely using the employer as the mechanism by which to pass through the payment through to employees as the imposition of payroll tax would add a real cost to the employer. Though there are no formal announcements yet, we expect that the offices of state and territory revenue will issue guidance on this issue once the legislation has been issued.
Further details about JobKeeper
We reiterate, the recent updates announced by the Federal Government and the changes to the Fact Sheets on the Treasury website are announcements only and can only be used as a guide.
Until we see the legislation, which is scheduled to be introduced on Wednesday 8th April 2020 we will not know the detail of how the JobKeeper payment will actually apply in practice. We also note, the measure will not become law until the legislation has been passed by both Houses of Parliament and receives Royal Assent.