The Federal Government has moved to give employers the confidence to retain their team. Our Prime Minister yesterday announced the JobKeeper Payment, an initiative budgeted to cost $130b across FY20 & FY21.
The Government strategy is to keep as many people as possible employed and receiving a wage or salary during this time so that when the economy bounces back, businesses across all sectors and all geographies are able to return to scale. The JobKeeper Payment equals $1,500 per fortnight per employee for up to six months. It also applies to the self-employed provided they meet the eligibility criteria outlined below.
Employer eligibility (includes not-for-profits):
- The business has a turnover of less than $1 billion and their turnover will be reduced by 30%. This is to be compared to a comparable period a year ago of at least one month.
- The business has a turnover of over $1billion and their turnover will be reduced by 50%. This is to be compared to a comparable period a year ago of at least one month.
- The business does not qualify for the Major Bank Levy.
- The JobKeeper Payment is to subside all or part of the income of employees.
- Eligible employers will receive $1,500 per fortnight per eligible employee.
- Employees will receive a minimum of $1,500 per fortnight (pre-tax). Employers can top-up payments if they wish.
- If an employee ordinarily receives $1,500 or less per fortnight (pre-tax), the employer must pay their employee $1,500 per fortnight (pre-tax). Employers can top-up payments if they wish.
- An employee who normally earns over $1,500 per fortnight (pre-tax), will continue to receive their regular income, in line with current arrangements with their employer.
- If an employee has been stood down, the employer is obliged to pay them at least $1,500 per fortnight pre-tax.
- If an employee that was employed on 1 March 2020 has since ceased employment and then been re-engaged by the same eligible employer, they will receive a minimum of $1,500 per fortnight.
- The Australian Taxation Office (ATO) will make payments monthly, one month in arrears.
- This subsidy commences on 30 March 2020.
- First payments are expected to be received by employers in the first week of May.
Employers must apply to the Australian Taxation Office to participate in the scheme. Go online to https://www.ato.gov.au/general/gen/JobKeeper-payment/
Supporting information will need to be provided demonstrating the downturn in the business, though there is no facility to provide that information on the relevant ATO page just yet.
Additional eligibility criteria apply to employees.
To be eligible, the employee must be an Australian citizen, holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has resided in Australia continually for the 10 years or more, or a Special Category (Subclass 444) Visa Holder.
Self-employed individuals are eligible if they provide evidence of a 30% decline in turnover, comparable to a year ago (or at least a month).
If an employee has more than one employer, only one claim to receive the JobKeeper payment can be made and that should be from their primary employer.
In terms of superannuation requirements, it will be up to the employer to pay superannuation on additional wage paid caused by the JobKeeper Payment.
What we don’t yet know
As with any new announcement, it contains a lot of generalities and detail will emerge in the coming days and weeks, so please check back for updates. Here are some things we don’t yet know:
- How is a comparable period defined? For example, if we are comparing March 2020 numbers to a comparable period a year ago, should we read that March 2020 vs March 2019 or does a comparison to any month in the preceding 12 months cut it?
- Is eligibility going to be assessed month by month (or period by period)? In other words, if April turns out OK by comparison to April last year, but May is a train-wreck, does the employer get the payment for May but not for April?
- If across the full six months, despite a good April you are down by 30% on that same six months last year, will you retrospectively get the April payment?
- Will you get a payment for each of the six months anyway, but be subject to a claw-back if you can’t subsequently demonstrate the relevant drop-off in revenue?
- What if you are in an industry where you are still fulfilling your pre-existing book of orders, but future orders are going to dry up? Will you receive the JobKeeper Payment for each of the six months, or only receive it in respect of any months that show a 30% drop in revenue compared to the same period last year?
- How will start-ups be able to demonstrate a 30% drop in revenue – they may well have been pre-revenue last year and have some income now, albeit diminished in comparison to pre-COVID-19 expectations.
- Similarly, how will a growing business demonstrate eligibility – they might be doing well in comparison to a comparable period a year ago but be under-performing expectations pre COVID-19.
In both of the latter two situations, jobs may be under threat and the spirit of the announcement would indicate they should be eligible for the same support as a more mature, stable business. Will they get it, though?
The burden on business owners is providing details around your business’ decline in turnover compared to a similar period last year. If you need assistance or clarification on the JobKeeper Payment scheme, please contact BridgePoint Group on 1300 656 141 or send us an email.