Commonwealth’s JobKeeper Scheme
By now most employers are aware of the Commonwealth’s Job Keeper scheme, a $130 billion social welfare program introduced by the Commonwealth Government to encourage employers to retain employees during the economic fallout of the COVID-19 (coronavirus) pandemic. Eligible employers are entitled to receive $1,500 per fortnight for each eligible employee for pay periods between 30 March 2020 and 27 September 2020. However, some employers remain uncertain about the criteria required for qualification under the scheme and how it will operate.
Eligibility for the JobKeeper scheme as an employer
To be eligible an employer must have carried on business in Australia on 1 March 2020 and suffered a reduction in turnover of at least:
• where the employer is an ACNC-registered charity (other than a university or school), 15%
• where the employer has a turnover of less than $1 billion, 30%
• where the employer has a turnover of $1 billion or more, 50%
in all instances compared to the same month or quarter in 2019.
Turnover in this instance is the definition for GST purposes, and can be current or projected in relation to any of the months March to September or the June or September quarters, 2020. So while, for example, this condition will be met if turnover for the month of March 2020 was 35% lower than the figure in March 2019, it will also be met if forward projections show a comparable reduction in turnover provided there is a reasonable expectation of the reduction based on factors such as numbers of quotes, inquiries, forward bookings, sales and customers. The ATO has said that there will be some tolerance where a ‘slightly smaller fall’ than predicted actually occurs but as yet there is no definitive explanation of what this phrase means. It is therefore important that employers retain evidence to be able to show the ATO how they calculated their predicted turnover for the relevant month or quarter so that they do not find themselves having to repay the Job Keeper payments together with penalties and interest or even (where fraudulent activity is involved) face criminal penalties.
Alternative tests in turnover reduction are available to employers where there is not an appropriate relevant comparison period, namely where:
• the business did not exist in the corresponding period in 2019
• the business is not the same business in that period as it is now because of an acquisition or disposal that occurred after the relevant comparison period
• the business is not the same business in that period as it is now because of a restructure that occurred after the relevant comparison period
• there was a substantial increase in turnover prior to the applicable turnover test period
• the entity was affected by drought or other declared natural disaster during the relevant comparison period
• there is a large irregular variance in turnover for the quarters ending in the 12 months before the applicable turnover test period
• the entity is a sole trader or small partnership where sickness, injury or leave have impacted an individual’s ability to work which has affected turnover
If an employer satisfies the turnover test for any one month or quarter it is eligible to receive the payment for the entire 6-month period of the scheme. In other words, there is no need to establish that the reduction in turnover has continued in each month or quarter (as applicable) of the scheme period.
Eligibility for the JobKeeper scheme as an employee
For an employee to be eligible, all of the following must be applicable:
• they were employed on 1 March 2020 on a full-time or part-time basis, or as a casual but on a regular and systematic basis for longer than 12 months
• if they are a casual employee, they are not a permanent employee of any other employer
• they are currently employed (including those stood down or re-hired)
• they were aged 16 years or older at 1 March 2020, with the exception of full-time students who were 17 years old and younger at 1 March 2020 and who are not financially independent
• they were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) visa holder at 1 March 2020
• they were a resident for Australian tax purposes on 1 March 2020
• they are not in receipt of a Job Keeper Payment from another employer
The Commonwealth Government has clarified that non-Australian citizen employees on temporary visas who are not Special Category (Subclass 444) visa holders are not entitled to receive the Job Keeper payment. The Prime Minister has made public announcements to the effect that if any such temporary visa holders are unable to support themselves in Australia they should return to their home countries.
The ATO will make the payments to employers monthly in arrears with the first payment to be made in the week commencing 4 May 2020. In order to be eligible to receive the payment the employer must have already paid each eligible employee at least $1,500 in respect of the relevant fortnight. In some instances – likely part-time and long-term casual employees – this will mean that wages need to be topped up to $1,500 (pre-PAYG withholding). Initially, employers were obliged to have enrolled for the scheme by 30 April 2020 and, if they wanted to claim the payment for the 2 fortnights in April, to have paid employees a minimum of $1,500 for those 2 fortnights by 30 April 2020. However, after receiving feedback on the cash flow problems that businesses are facing the Government amended the registration cut-off date to 31 May 2020 and the date by which payment of employees’ wages for April must be made to 8 May 2020.
It is inevitable that the legislation which was hurriedly introduced to create the largest social welfare program in Australian history will continue to be clarified and, where necessary, amended as its practical application unfolds. For example, the Treasurer recently announced that rules would be introduced to provide a turnover test for service entities that provide employees to related operating entities where the service entity’s fixed turnover has not reduced but the operating entity’s turnover has. Such rules will help service entities retain their employees in accordance with the stated aim of the JobKeeper scheme.
Rostron Carlyle Rojas is staying abreast of these changes as they occur and is available to discuss your obligations and entitlements under this unprecedented program.