Understanding the COVID-19 JobKeeper Payment

The Government’s $130 billion JobKeeper scheme has now passed and is expected to help keep about 6 million Australians in work

The JobKeeper Payment is the Governments “lifeboat” economic initiative to combat the economic downturn being caused by the Coronavirus. It is the follow up to the government’s previous stimulus initiatives that were released in mid-March that you can read about here.

The JobKeeper Payment subsidy is an unprecedented assistance package designed to help keep active businesses solvent during the COVID-19 lockdown, and inactive businesses connected with their staff, so they are ready to rebound as soon as the lockdown passes.

Here is a quick summary:

  • Businesses affected by COVID-19 can receive $1,500 per employee, per fortnight that are currently employed or were employed by your work at March 1, 2020
  • Employees must be either a full-time or part-time employee or a casual worker who has been employed regularly with the same employer for more than a year.
  • The businesses must pass the payment on to their staff
  • The wage subsidy package is budgeted for six months
  • Employers must show at least a 30% or 50% reduction in turnover

What follows is a high-level summary on the JobKeeper Payment subsidy.

Eligibility for Employers

The Job Keeper Payment entitles any business that stays active and experiences a downturn of more than 30% in at least one month, to a flat $1500 per fortnight payment for any employee listed on their books at the 1st of March.

To receive the JobKeeper Payment, employers must:

  • register to apply on the ATO website and assess that they have or will experience the required turnover decline.
  • Provide information to the ATO on eligible employees. The number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired).
  • For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
  • Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests and apply are eligible to receive JobKeeper Payments.

‘Active’ Business Eligibility

Any employers with an annual turnover of less than $1 billion, who self-assess that they have a reduction in revenue of 30% or more, since 1 March 2020, over a minimum one-month period, is eligible for the payment.

Employers with an annual turnover of $1 billion or more will be required to demonstrate a reduction in revenue of 50% or more in at least one month, to be eligible. Businesses subject to the Major Bank Levy will not be eligible.

Eligible employers include businesses structured through companies, partnerships, trusts and sole traders.

On April 6th the Government announced more lenient eligibility criteria for ACNC (Australian Charities and Not-for-profits Commission) registered charities which only need show a decline in turnover of 15% or more, regardless of turnover.

Not for Profit entities, including charities, are also eligible to apply for the payment.

 ‘Inactive’ Business Eligibility

The payment is also available to any business that is inactive because of the Federal Government’s mandated closure of  “principal places of social gathering,” i.e. public venues and businesses where large amounts of people tend to congregate, raising the risk of COVID-19 transmission.

Banned or closed businesses able to claim include:

  • Registered and licensed clubs, licensed premises in hotels and pubs, casinos and night clubs.
  • Cinemas and entertainment venues.
  • Auctions and open house inspections.
  • Personal services such as beauty therapy, tanning, massage and tattoo parlours (but not physiotherapy).
  • Outdoor and indoor markets.
  • Amusement parks and arcades, and indoor and outdoor play centres.
  • Galleries, museums, libraries and swimming pools.
  • Gyms, boot camps and indoor sport venues.

Eligible Employees

Eligible employees are employees who:

  • Are currently employed by the eligible employer (including those stood down or re-hired).
  • Were employed by the employer at 1 March 2020.
  • Are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020).
  • At least 16 years of age.
  • Are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
  • Are not in receipt of a JobKeeper Payment from another employer.

Is the JobKeeper Payment Taxed

Yes it is. The JobKeeper amount is taxable income for the employee and the employer must withhold PAYG income tax.

Another thing to note is that SGC superannuation contributions are not required on this payment.

Payment Process

The subsidy started on 30 March, with first payments to be received by employers in the first week of May. In the meantime, employers must continue paying their employees and then claim the money back from the ATO in May.

However, if you employers aren’t in a financial position to make these payments now, then employees may need to wait until the beginning of May.

What Next?

You can register for the JobKeeper payments by visiting the ATO website. If you would like further information visit the Treasury website or contact us on 8419 9800.

Need Help?

If you are struggling and need assistance to apply for the JobKeeper Payment and other government stimulus packages, please check out our Cash Boost Service Offer here.

The $500 Million Business Support Fund that was recently released, advises that you can use the grant funding to seek financial, legal or other advice to support business continuity planning, which may mean that you can use it om our fixed price Cash Boost Engagement offer mentioned above.

Please contact us on 03 8419 9800 for more information. 

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