On 30 March 2020, the Government announced $130 Billion in the budget with the goal of keeping workers in jobs over the next six months. This article provides an overview of the information that has been provided so far, as well as answers to some key questions you may have. We will cover the legislation when it is released in the next week or so.
Right now, pre-legislation, the main elements are:
- Businesses impacted by COVID-19 are entitled to a subsidy from the Government to continue paying their employees; and
- Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.
To be eligible for the subsidy, the business must either:
- Have its turnover reduced by more than 30% relative to a comparable period a year ago (of at least a month) if the business has a turnover of less than $1 billion; or
- Have its turnover reduced by more than 50% relative to a comparable period a year ago (of at least a month) if the business has a turnover of $1 billion or more.
Further, the employer must:
- Have been in an employment relationship with eligible employees as at 1 March 2020; and
- confirm that each eligible employee is currently engaged in order to receive Job Keeper Payments.
Not-for-profit entities and self-employed individuals (such as contractors) that meet the turnover test that apply for businesses are eligible to apply for JobKeeper Payments.
To be eligible, employees must:
- be employed by the eligible employer. This includes employees who:
- are currently employed by the eligible employer (including those stood down or re-hired); and
- were employed by the employer at 1 March 2020;
- Work either:
- part-time; or
- long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- Be at least 16 years of age;
- Be one of the following:
- 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.
Process: What do I do as an employer?
- Assess that your company has or will experience the required turnover decline of 30% if your revenue is below $1 billion or 50% if your revenue is $1 billion or more;
- Register an intention to apply on the ATO website;
- Provide information to the ATO on eligible employees. This includes:
- information on the number of eligible employees engaged as at 1 March 2020; and
- information on those currently employed by the business (including those stood down or rehired).
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax), noting that:
- for employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500.
- for employees earning more than this amount, the employer is able to provide them with a top-up.
- Notify all eligible employees that they are receiving the JobKeeper Payment;
- Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.
Your Questions Answered:
Does the JobKeeper Payment apply to new employees hired after 1 March?
No, it does not. The government has specified that the employer must have been in an employment relationship with eligible employees as at 1 March 2020.
What about the 1 million contractors and 2 million casual workers in Australia? Are they eligible for the JobKeeper Payment?
Yes, if the certain requirements are satisfied.
Casuals are eligible to the Payment if they have been employed by the employer for 12 months as at 1 March 2020.
Contractors (such as sole traders and freelancers) are essentially businesses where the contractor employs themselves. Contractors can register their interest in applying for the JobKeeper Payment given certain requirements are satisfied.
Contractors will need to:
- provide an ABN for their business;
- nominate themselves to receive the payment;
- provide their Tax File Number; and
- provide a declaration as to recent business activity.
The government has advised that persons who are self-employed, such as contractors, will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payments will be made monthly to the individual’s bank account.
How will the 30% drop in revenue test be established?
To establish that a business has faced either a 30% or 50% fall in their turnover, most businesses are expected to demonstrate that their turnover has fallen in the relevant month or three months relative to their turnover a year earlier.
Would my business still be eligible if my revenue falls by 29.9%?
Potentially. The Australian government has stated that ‘there will be some tolerance where employers, in good faith, estimate a greater than 30 (or 50) per cent fall in turnover but actually experience a slightly smaller fall.’
Is the income taxable?
Yes. Employees will need to treat the JobSeeker Payment as income tax.
The JobKeeper payment is one of many measures the government has introduced in response to COVID-19. Please contact us if you need advice about the impact of the coronavirus on your business.
This article is part of our “law in the time of corona” series of business law articles.