The biggest financial support package in Australian history, designed to ensure that businesses can retain employees was announced 30 March 2020 and the legislation received Royal Assent on 9 April 2020.
What is it?
At a high level
If you are an eligible employer, employing eligible employees – you will receive $1,500 per employee, per fortnight paid monthly in arrears.
It will be paid for a 6 month period, ending 27 September 2020
Now there are two, very interesting terms in that paragraph:
- Eligible Employer
- Eligible Employee
Each of these has since been subject to many a sleepless night for business around the country. But what do they actually mean?
So let's go to the legislation (with a hint of Illumin8 flair)
By the way - for the sake of this piece, let's assume your turnover is less than $1b - if it’s more than that you shouldn’t be seeking advice from us.
An eligible Eligible Employee is:
- Currently employed (including those stood down or re-hired)
- Was employed as at 1 March
- Was over 16 years of age at 1 March
- Employed either, Full time/Part Time
- If employed casually, must have been employed in a regular & systematic way for last 12 months
- They are an Australian citizen, perm visa or Subclass 444 Visa (NZ)
- They are a resident for tax purposes
- Not in receipt of Jobkeeper elsewhere
- They are not being paid maternity leave, dad/partner pay or workcover payments
Let's get to some FAQ’s that are out there
What if I changed structure during the year and my casuals have been employed within the current legal structure for less than a year?
Provided that the combined length of employment from the current & previous employer is at least 12 months, then they will be eligible.
The same approach is taken if you purchased a business of someone else in the last 12 months.
What if I stood down my employees? Are they still included?
Yup - they are included, whether they have work to do or not, provided they satisfy the other requirements listed above.
What if I made my employees redundant?
You can re-hire them, and as long as they were employed as at 1 March, and they are re-hired to the same role (with the same pay rate) then they are included.
What if, as the business owner, I don’t take a wage, and then am technically not employed?
All good... kind of.
The following table breaks down how business owners that are not on paying can still be in receipt of a Jobkeeper payment
The key here is that only 1 business owner can be nominated per business, regardless of whether there are more that are actively engaged in the operation of the business.
Note - if the business owners are on payroll then they are covered in the standard definition of an eligible employee.
Can I receive jobkeeper at two places of employment?
No. And as an employer you need to ensure that if you elect to pay jobkeeper to an employee that are not receiving it elsewhere
If I am employed elsewhere, but not receiving jobkeeper, can I still receive it?
If those other jobs are casual, then you are eligible(provided they are not claiming jobseeker elsewhere)
If those other jobs are permanent. Be it full time or part time (even if it’s part time 1 day per week) then you are not able to receive jobkeeper.
This means if you work 2 jobs a week, 2 days permanent part time - you are not eligible to receive jobkeeper payments at either employer unless you are released from employment at one of those employers.
An eligible employer is
- If a not for profit, one that has, or estimates that it will have a reduction in turnover of at least 15%
- If a normal “for profit” business, one that has, or estimates that it will have a reduction in turnover of at least 30%
Lots of questions coming out of this definition, so let's do our best to answer them for you
How do you define turnover?
The legislation points to the GST definition of turnover - i.e. one that is connected to a supply of a good or service.
It specifically excludes any input tax supplies (interest on bank accounts)
The ATO has released guidance that states that if you lodge your BAS on a cash basis, you can elect to either report your turnover for the purposes of Jobkeeper on either a cash or accruals basis.
If you report on an accrual basis on your BAS - you have to stick with that as the basis going forward.
Note - The ATO is giving businesses with turnover under $10m the discretion to change their reporting methodology for BAS from accruals to cash as of 1 April 2020.
How do you work out if your turnover has dropped by 30% or more?
Compare one period, to the same period a year ago.
You can compare either
- March 2020 actual turnover to March 2019 actual turnover
- April 2020 projected turnover to April 2019 actual turnover
- April-June 2020 quarterly projected turnover to April-June 2019 quarterly actual turnover
If the turnover is down 30%, then you qualify
I hear you - there are many holes in how this is calculated. The legislation allows for commissioner's discretion - effectively if we can pitch a scenario that makes sense to the commission they will allow it.
Given that we don’t know exactly how the commission will approach each & every case it can be tough to advise on this. We have been given a few examples however.
If your business is less than 12 months old, you cna average your monthly turnover year to date. If the period in question (actual or projected) fall 30% below the average, it’s likely to be considered
If last year's revenue does not reflect true business performance for reasons such as drought etc. You can go back to a further year to identify what typical business income looks like & compare to that period.
There are a couple of additional things you need to know
You MUST be paying your eligible staff $1,500 per fortnight (less tax) to receive a payment
That might look like
- Being on a salary where they earn (and are paid) more than 1,500 per fortnight anyways
- Being paid an amount under $1,500 per fortnight & having the balance topped up to $1,500 via a Jobkeeper categorised allowance
- Being on full stand down with no earnings, but still receiving the $1,500 (less tax) as a Jobkeeper categorised allowance
If you need to know how to set this up in Xero we are running a webinar on Wednesday 22 to walk you through every step of it, it’s only $33 and you can sign up here.
Jobkeeper is designed as a reimbursement
That means that you have to fund the payments throughout the month before getting paid about a fortnight after the end of the month.
Check out our blog here to see what the enrolment process currently looks like as at 19-4-20.
If it turns out that some of your employees are ineligible, the options you have are
- To pay them for the work they do (if you have any)
- To release them so that they can apply for jobkeeper
Note - it is our very high recommendation that you seek out advice from a HR professional - give Carly from Armadillo HR a buzz and tell her we recommended you.
Sing out if you need a hand. Team Illumin8 are doing a bunch of stuff to get info into the hands of those that need it including:
- Our dedicated COVID fact sheet page
- Our weekly webinars with various special guests
- All sales from our merch goes directly towards providing free advice to those who need it the most - check the gear out here
If you want Illumin8 to assist with assessing your eligibility & enrolments for Jobkeeper, please let us know here
If you want to read the ATO guidance on Jobkeeper, you can do so here