JobKeeper Payments: explained in 5 stepsStuart Taverner
This is a suggested guide only based on the latest information available from the ATO. We recommend seeking advice from your Accountant or Bookkeeper to confirm payment setup.
What is the JobKeeper payment?
The Australian Government announced a wage subsidy scheme in March 2020 to help businesses impacted by COVID-19; the JobKeeper Payments scheme. Businesses who are both eligible and have registered will be able to access a subsidy from the government, helping them to continue paying employees. These payments are due to begin being paid by the ATO from the first week of May 2020.
The JobKeeper scheme will reimburse $1,500 per fortnight to employers and employees who meet the eligibility criteria; this also includes one eligible business participant i.e. a sole trader, business founder or director of a company.
Any business that has had a reduction in revenue of 30% or more over at least one month since 1st March 2020, is eligible to apply for the subsidy.
For the most up to date information about how the ATO is organising the JobKeeper payments, please refer to the relevant ATO webpage.
Applying for JobKeeper payments
To help you navigate the application process, we have distilled the information you need to know, from application to payment of JobKeeper, into 5 steps.
Step 1: Are you eligible?
To be eligible you must satisfy the following criteria:
- On 1st March 2020, you were either in business or running a non-for-profit in Australia
- You have at least 1 employee (or are an eligible business entity such as a sole trader or director)
- Eligible employees are employed by your business for the fortnights you claim for
- Your business has faced either a 30% fall in turnover if your aggregated turnover is $1 billion or less, or a 15% fall in turnover for ACNC-registered charities
Calculating a fall in turnover
In order to work out if your business is eligible, you must show that you have had a fall in turnover. The turnover calculation is based on GST turnover. This applies even if your business is not registered for GST. You can do this in the three following ways:
- Compare GST turnover for March 2020 with GST turnover for March 2019
- Compare projected GST turnover for April 2020 with GST turnover for April 2019
- Compare projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.
You can satisfy the fall in turnover by conducting the basic test.
If you work out that you do qualify for JobKeeper payments for the first fortnight, because your turnover has declined by the relevant amount (30%), you remain eligible and are not required to keep testing turnover in following months. However, you will need to reconfirm your reported eligible employees.
The easiest way to do this is through Single Touch Payroll (STP) via a payroll software provider.
Step 2: Are your employees eligible?
The ATO stipulates the following criteria to determine if your employee is eligible for the JobKeeper Payments scheme:
- They are employed by you
- Permanent, full-time or part-time employee at 1st March 2020
- Long-term casual employee, employed on a regular basis for at least 12 months at 1st March 2020 and not a permanent employee of any other eligible employer
- At least 16 years of age at 1st March 2020
They are an Australian resident at 1st March 2020, requiring the following criteria:
- An Australian citizen
- Permanent visa holder
- Protected Special Category Visa Holder
- Australian tax resident who is a Special Category (Subclass 444) Visa Holder
- More info can be found here
Not in receipt of any of the following payments during the JobKeeper fortnight:
- Government parental leave or Dad and partner pay
- A payment in accordance with Australian worker compensation law for an individual’s total incapacity for work
- Finally, agree to be nominated by you – see how to nominate an employee
If you decide to participate in the JobKeeper Payment scheme, you must nominate ALL of your eligible employees – you cannot choose to nominate only some employees. However, individual eligible employees can choose not to participate at their discretion.
If your employees have multiple employers, they can typically choose which employer they wish to nominate through. However, if your employees are long-term casuals and have other permanent employment, they must choose the permanent employer and therefore cannot nominate you. This means that they cannot be nominated for the JobKeeper payment by more than one employer.
Employees who were stood down or on long term leave
Employees who have been stood down from work, meeting the criteria listed under the Fair Work Act 2009 without pay, may still be eligible employees as long as they were in your employment and met the eligibility criteria on 1st March 2020.
To receive the JobKeeper payment, you will need to have paid them at least the minimum amount of $1,500 for each fortnight you claim for.
Employees who have been terminated
If you terminated an employee after 1st March 2020, make steps to re-engage them, and they will then be eligible if they met the eligibility criteria on 1st March 2020.
To claim the JobKeeper payment for employees you have re-engaged, you will need to:
- Re-engage the employees you want to claim for
- Confirm that they want to be re-hired and participate in the JobKeeper Payment scheme with you as their employer
- Ask them to complete the JobKeeper employee nomination notice and return it to you. Under the law, you are required to keep this form as part of your record keeping obligations
- Start paying them a minimum of $1,500 – before tax – for each fortnight they are employed, and you claim for
You will only be paid a JobKeeper payment for employees from the fortnight they were re-engaged – you cannot claim for them retrospectively.
Step 3: Enrol for the JobKeeper payment
Enrolment opens Monday 20th April 2020. See Enrol and apply for the JobKeeper payment.
To ensure you receive your JobKeeper payments as early as possible, you should enrol by the end of April. However, be aware enrolments are open till the end of May if you need more time.
Note: You or your registered tax or BAS agent can enrol for the JobKeeper payment
- Log in to the Business Portal using myGovID
- Select ‘Manage employees’ and then select the link for the JobKeeper payment
Fill in the JobKeeper enrolment form and provide your:
- eligibility information
- expected number of eligible employees
- contact details and bank details
- You must notify all your eligible employees that you have nominated them
Step 4: Identifying, setting up and maintaining eligible employees with Payroll software
The quickest and easiest way to identify and lodge for JobKeeper payments is through Singe Touch Payroll (STP). As a provider of accounting and payroll software for small businesses in Australia, Cashflow Manager enables you to lodge Single Touch Payroll at no extra cost with our Cashflow Manager Gold, Wages Manager, or Wages 1-4 solutions.
You or your registered tax or BAS agent can identify each eligible employee that you are putting forward for JobKeeper Payment. You must maintain their details each month for the next 6 months.
If you are already a Cashflow Manager customer please follow the instructions in this article. It covers codes used to identify the various categories of employee and how to set up JobKeeper payments for the first time.
The ATO requires you to reconfirm the eligibility of your business and your reported eligible employees each month.
Additionally, you must provide information on your current and projected GST turnover. This does not reset your eligibility but provides an indication of how your business is progressing under the JobKeeper Payment scheme.
Each month you must:
- Ensure you have paid your eligible employees at least $1,500 per fortnight
Log in to the Business Portal to:
- Review the number of eligible employees for each JobKeeper fortnight
- Update employees who have been receiving JobKeeper payments if any of those employees change or leave your employment
- Provide your current and projected GST turnover
- Re-confirm your contact details and bank details for payment
Step 5: Paying your employees using Payroll software
Eligible employees will need to be paid the minimum of $1,500 regardless of whether they earn less than this per fortnight. You must not pay less than this per fortnight and retain the difference.
How to pay
You must either re-start or continue to pay all your eligible employees at-least $1,500 each fortnight, matching your existing pay cycle made within your payroll software.
When to pay
Pay your employees for each JobKeeper fortnight claimed for. The first fortnight begins 30th March – 12th April 2020, with each JobKeeper fortnight following that.
Provided that the JobKeeper fortnight has been paid to your eligible employees by the end of April, within the first two fortnights (30th March – 12th April and 13th April – 26th April), the ATO will accept late payment to employees. This rectified through a combined payment of $3,000 or two fortnightly payments before the end of April 2020.
What to pay
You must pay $1,500 – before tax – to each employee that meets the eligibility criteria for every fortnight you claim, even if your employee earns less than $1,500. This is known as a ‘Top-up’.
If your employee earns more than $1,500 per fortnight, you should continue to pay them their regular wages.
All JobKeeper payments are not subject to GST but are considered assessable income of the business.
Whilst it has not been introduced, the government is working to implement rules around superannuation payments. The intention is to not require employers to pay super guarantee on additional payments that are made to employees as a result of JobKeeper payments.
COVID-19 has hit small businesses in Australia with substantial hardship and like many businesses across the country, we are working hard to fight through this crisis and support our small business community with helpful information as and when it is available.
If you require payroll software to help with JobKeeper payments, please visit Cashflow Manager to look at our solutions. Cashflow Manager Gold, Wages Manager, and Wages 1-4 all enable you to report to the ATO using STP.
For help with your application and setting up JobKeeper payments with the ATO, please speak to your accountant or bookkeeper who will be able to assist you further.