Coronavirus Support: The JobKeeper Payment Scheme

The government has introduced the 130 billion-dollar JobKeeper Payment scheme as part of the Coronavirus Economic Response Package (Payment and Benefits) Rules 2020. This scheme is aimed at keeping Australian’s employed and supporting businesses during the COVID-19 pandemic.

About the JobKeeper Scheme

This scheme is available to be enrolled in on or after 20 April 2020. The scheme allows eligible employers to be reimbursed a fixed amount of $1,500.00 per fortnight for each eligible employee. The JobKeeper payments for each eligible employee will be paid to the employer by the Australian Taxation Office (ATO) monthly in arrears commencing in May 2020. The fortnightly payment scheme commences on 30 March 2020 and applies to each subsequent fortnight with the last fortnight ending on 27 September 2020.

Eligible employers

The following employers are eligible for the JobKeeper Payment if all of the following apply:

  • On 1 March 2020, the employer carried on business in Australia or operated as a not-for-profit organisation that pursued objectives principally in Australia;
  • The employer employees at least one eligible employee on 1 March 2020;
  • The eligible employee is currently employed by the business for the fortnights in which the JobKeeper payment is being claimed (this includes those employees who are stood down or re-hired);
  • The business of the employer has faced a 30% fall in turnover (for an aggregated turnover of $1 billion or less) or 50% fall in turnover (for an aggregated turnover of more than $1 billion) or 15% fall in turnover (for ACNC- registered charities other than universities or schools).
  • The business must not be named in an ineligible category which includes an entity is an individual who has entered bankruptcy, the company is in liquidation, the entity is a local governing body, the entity is or is wholly owned by an Australian government agency.

The turnover which is used to calculate the fall in business is based on the GST turnover, however there are modifications in the event that two or more associated business entities operate as one single GST group.

It is important to note that employers cannot pay their employee less than $1,500.00 per fortnight before tax otherwise the employer and employee will not be eligible under the scheme. Therefore, even if the employee earns less than this amount you must still pay this to ensure they are eligible. If any employee earns in excess of $1,500.00 any amount over the this will not be subsidised however as an employer you should still pay your employee this amount unless their hours have been reduced in accordance with the Fair Work Provisions.

Business owners may also be able to benefit from this scheme. Sole traders can be eligible for the JobKeeper payment if their business experiences a downturn. In addition, other business entities in the form of a company, trust or partnership can also qualify for payment where the business owner or director is actively engaged in the business.

The employer must notify the ATO in the approved form that they elect to participate in the scheme before the end of the JobKeeper fortnight for the employer to be entitled to a payment for that fortnight. It is important to note that if an employee wishes to receive the first or second JobKeeper payment (relating to the JobKeeper fortnights commencing on 30 March and 13 April 2020 respectively) the employer has until 26 April 2020 to provide the ATO with the election requirement to receive the payment.

Eligible Employees

An employee is eligible to receive payment under the JobKeeper scheme if they have been employed by the business and worked either permanent full time or part-time employee or as a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at the date of 1 March 2020. A casual employee can not be a permanent employee of any other employer in order to receive the JobKeeper Payment. For those employees who have multiple employers, you may nominate one employer to receive the payment from. However, you should choose your permanent employer if you engage in both casual and full-time work.

Employees who have been stood down can still receive the payment as long as they were an eligible employee pursuant to the criteria on 1 March 2020. The payment is not available to those under the age of 16 years at 1 March 2020 or for those who are not Australian citizens, hold a permanent via, or a Special Category (subclass 444) Visa holder as at 1 March 2020. It is also important for employees to note that they will still be taxed on the JobKeeper payment.

Employers should consider penalties for contrived arrangements relating to the JobKeeper Payment. Existing administrative, civil and criminal penalties may apply. Further the Tax Commissioner may take action against entities that undertake a scheme to gain benefit of the JobKeeper Payment which allows the Commissioner to undo the effect of the scheme and recover any payment.

Looking for an experienced solicitor in Newcastle, Sydney or the Hunter to assist you with a tax matter? Call us on (02) 4929 7002, or email us or complete an enquiry form.