I have missed paying some of my employees the minimum $1,500 in the first JobKeeper fortnight. Can I still apply for JobKeeper for that first fortnight?
Yes.
The information that the ATO has released states that for the first two JobKeeper fortnights, it will accept the minimum $1,500 payment for each fortnight has been paid by an employer even if it has been paid late. However, the amounts must be paid by the 8th of May. This means that a combined payment of at least $3,000 must be made by the 8th May to each eligible employee.
The Commissioner is given the power to treat a particular event that happened in a fortnight as having happened in another fortnight, if it is reasonable to do so in the opinion of the Commissioner.
Does a business have to wait until it lodges its BAS before it gets JobKeeper payments from the ATO?
No. The rules state that the Commissioner must pay the JobKeeper payment no later than the later of:
A sole trader has an ABN but has never lodged a BAS because it is not registered for GST and does not deduct PAYG withholding. Can the entity claim JobKeeper for the owner of the business?
First, it should be remembered that only one JobKeeper payment can be claimed for one individual. If the individual has another source of income, other than the business, the JobKeeper payment may have been claimed for the individual by another entity.
It will be assumed that the entity had an ABN on 12 March 2020.
The fact that a business has not lodged a BAS does not prevent it from satisfying the decline in turnover test. This is due to the way that the “projected GST turnover” and “current GST turnover” have been defined. The ATO also says “The amounts included in calculating projected GST turnover and current GST turnover are the same regardless of whether you are currently GST registered”.
On the assumption that the individual satisfies all of the requirements, including being actively engaged in the business, there can be a claim for JobKeeper provided the individual has lodged his/her income tax return for the year ended 30 June 2019 that includes assessable income from the business. The tax return would need to have been lodged by 12 March 2020, or a later time allowed by the commissioner.
The Commissioner has discretion to allow further time, but only in limited circumstances, and this includes if the entity:
Examples include:
What if a client is behind several quarters in relation to the lodgement of BASs and is also behind with the lodgement of income tax returns? Is that a problem with JobKeeper?
This depends on whether the client is claiming for an eligible employee or whether the client is claiming for a non-employee business participant.
If an employer is claiming for an employee, the Rules do not have any reference to notifying the Commissioner of assessable income or GST taxable supplies. As discussed above, the projected GST turnover and current GST turnover, for the purposes of the decline in turnover test, are based on the value of supplies made, or likely to be made in a period. That is a question of fact and does not rely on what has, or has not, been disclosed in a BAS or income tax return. However, in the practical operation of the JobKeeper scheme, the ATO is likely to check information given to it against lodged BASs and income tax returns. If those documents haven’t been lodged, we do not know what the ATO will do.
If the client is claiming for a non-employee business participant (e.g. a partner in a partnership or a beneficiary in a trust) the lodgement of BASs and income tax returns is made specifically relevant by the integrity rules[1]. These require (among other things) that either:
It should be noted that for the purposes of this test:
[1] Subsections 11(6), (7), (8) and (9) of the Rules.
If Mum has her own business and Dad has his own business, what happens under JobSeeker?
In most situations, the fact that related people own different businesses will not affect the applicability of JobKeeper to either business. If Mum is not an employee of her business and Dad is not an employee of his business, they will able to claim JobKeeper payments in relation to their own businesses for themselves, provided all other relevant conditions have been satisfied.
If an individual operates multiple businesses, when determining whether the decline in turnover test has been satisfied, can the individual satisfy that for just one business or are all businesses involved in the calculation?
The analysis needs to be done by including the supplies of all businesses. This is due to the wording of the definition of “projected GST turnover” in the GST law. Projected GST turnover is “the sum of values of all the supplies that you have made, or are likely to make, during that period…”. There is no distinction between the enterprises that the individual operates.
What happens if a business is unsure about whether it will have a 30% decline in turnover for the June 2020 quarter in April and May 2020, but realises that it will have such a decline on say, 10 June 2020? Can it still enter the JobKeeper scheme? Can it (legally) back-date its involvement to 30 March 2020?
The JobKeeper scheme operates prospectively only (except for transitional provisions for the first two fortnights). The scheme operates in respect of JobKeeper fortnights. If an employer comes to the conclusion on 10 June 2020 that it is going to have a greater than 30% decline in turnover and satisfies all of the requirements of the JobKeeper scheme, it will be entitled to JobKeeper payments for the JobKeeper fortnight ending 21 June 2020 and following.
A business owner has ceased trading for a time due the coronavirus. He is not employed by his business. On 3 April 2020, he decides to get a job to supplement his income but will quit his job and return to his business when the economy recovers. Can he get the JobKeeper payment?
If he wants to be treated as an “eligible business participant” in relation to his business, he will need to continue to be actively engaged in the business. Will his new job commitments enable him to do this? This is a question of fact. The policy is that the individual will try to keep running his business, if that is permitted. Note that he will not be able to obtain the JobKeeper payment from his new employer because he was not employed as 1 March 2020 with that employer. Also, the business owner will not be open to claim the JobKeeper payment in relation to his own business if he is employed as a full-time or part-time employee with his new employer. The JobKeeper payment may only be claimed by his own business if he is a casual employee of this employer.
Start Up Business
A business commenced in October 2019. How is the decline in turnover test calculated for this business?
The business will have to rely on the alternative decline in turnover test(s) that will be issued, by legislative instrument, by the Commissioner of Taxation. If the Commissioner of Taxation makes a legislative instrument, it will apply to a certain class of entities. The ATO information nominates the commencement of a new business as an event where it may be appropriate to make a legislative instrument.
Is a business that receives the 50% wage subsidy for apprentices and trainees also eligible for JobKeeper in relation to the apprentice or trainee?
“Eligible small businesses can receive the 50% wage subsidy for apprentices and trainees in the Supporting Apprentices and Trainees measure from 1 January to 31 March 2020, and the JobKeeper Payment. Where small businesses receive the JobKeeper Payment, they are not eligible to receive the apprentice and trainee wage subsidy from 1 April 2020 onwards”. It is noted that this is not referred in the JobKeeper Rules. (From Treasury information)
Normally, a business pays one of its employees $800 per fortnight. What must it do under JobKeeper? If the employee is eligible, the employer must pay the employee $1,500 per fortnight, before tax, while JobKeeper is in operation.
Yes, provided mum can satisfy all of the conditions. One of those conditions is that mum is “actively engaged in the business”. This is a question of fact. There is currently no guidance on what this term means.
When calculating the decline in turnover test, are all members of a consolidated group included in the calculation?
No. The turnover test is undertaken on an entity by entity basis. An entity is not defined to include a consolidated group. However, the existence of the “single entity” rule for the purposes of the consolidations tax provisions will confuse people. This matter should be clarified by the ATO.
Note, however, that in determining whether the turnover of an entity is above or below $1 billion, it is the entity’s aggregated turnover that is used.
Note, however, that in determining whether the turnover of an entity is above or below $1 billion, it is the entity’s aggregated turnover that is used.
A business was about to go through a restructure, should we continue with this? Alternatively, a business needs to restructure due to the coronavirus.
Exercise great caution with restructures. These are possible but a restructure will cause a number of issues to arise such as change of employer, inability to directly compare turnovers with prior periods, employment law issues and so forth. Restructures will very likely require the exercise of the Commissioner’s discretions so as not to lose the JobKeeper benefit.
A trust operates a business. There are some arm’s length employees. Some of the beneficiaries of the trust have been paid salary or wages in the past but it is somewhat sporadic. Is it OK to put the beneficiaries working in the business on the regular payroll so that the JobKeeper payment can be obtained for them?
The first requirement is that the individuals were employees as at 1 March 2020. That will be a question of fact. If the way in which these individuals are remunerated is changed for the sole or dominant purpose of obtaining the JobSeeker payments for them or increasing the amount, the actions will fall foul of the anti-avoidance provision. The ATO has released some limited information on this issue. Go to the ATO website and search for QC 62201.
My client operates a personal services business through a company. No wages are paid to the individual involved but all of the income is attributed to him due to the PSI rules. What is the position with JobKeeper in relation to this individual?
The individual should be able to be classed as an eligible business participant and the company should be able to claim the JobKeeper payment, provided all necessary conditions are met.
My client has poor, informal pay-roll records. Can the client claim the JobSeeker payment for his employees?
Yes, but with difficulty. The client must get their record keeping up to the standard required or miss out. Certain information must be supplied to the ATO for each JobSeeker fortnight. If this is not supplied, the business is ineligible. Also, there are record keeping requirements that have been legislated[1]. If the ATO discovers that these records have not been kept, the entity is not entitled, and is taken never to have been entitled, to the JobKeeper payment.
The Commissioner can request an entity to produce the records within 28 days.
If a business has a number of branches, is each branch assessed in relation to the decline in turnover or is the whole entity assessed?
The whole entity is assessed.
Can a business cancel its involvement with the JobKeeper program if an election has been made?
Yes!
If a business elects to be involved in the JobKeeper scheme because it projects that its turnover will fall by more than 30%, what happens if the fall in turnover turns out to be something less than this?
The answer to this is not entirely clear. The ATO needs to give specific information about this.
What we can say is that the Payments and Benefits Act contains a number of provisions[1] that deals with overpayments of the JobKeeper payments. The entity will need to repay the amount and also be charged General Interest Charge.
We note that there is not a general discretion given to the Commissioner in relation to the calculation of the 30% downturn. The Commissioner is given the power to make legislative instruments about this requirement. There is nothing that refers to “honest mistakes or inadvertent errors” as is found in some other legislation (sections 9, 10, 11 of the Payments and Benefits Act).
If a business has both business income and passive income (e.g. interest and dividends) is the passive income taken into account when calculating the decline in turnover test?
No. The passive income is very likely to be input taxed income. Input taxed income is not taken into account when undertaking the decline in turnover test. It is specifically excluded from the definitions of “projected GST turnover” and “current GST turnover”.
Can a business be eligible for both the cash flow boost and JobKeeper?
Yes!
Are employees who have returned from maternity leave eligible for JobKeeper assistance, even if there is no actual work for the employee to do?
Yes, provided they meet the “eligible employees” tests. Also note that employees who are currently on maternity leave with paid parental leave from their employer are also eligible for JobKeeper assistance. However if the employee receives paid parental leave or dad and partner pay under the Paid Parental Leave Act 2010 and the person’s paid parental leave period overlaps with or includes a fortnight in respect of which a JobKeeper payment may be paid, the person is not an eligible employee for JobKeeper for that fortnight.
Is an employee who has been with the company for more than 3 years and works 3 hours a week or 6 hours a fortnight eligible for JobKeeper assistance?
Yes, provided they meet the “eligible employees” tests and their hours per week/fortnight are “regular and systematic”. While these terms are not defined, the Explanatory Statement to the Rules states: A casual employee is likely to be employed on a regular and systematic basis where the employee has a recurring work schedule or a reasonable expectation of ongoing work.
Is a casual employee who has been with the organisation more than one year, but opted not to work due to COVID-19, eligible for JobKeeker assistance?”
If the employee’s decision not to work meant that they had terminated their employment: No Only a person who has been stood down or is on leave is considered to be an employee of their employer for the purposes of the JobKeeper payment. However, if the employee was on an approved absence from the organisation due to their concern about contracting COVID-19, but were still an employee of the organisation as at 1 March 2020 and satisfied the other “eligible employees” tests then: Yes
JobSeeker: Yes, but not if the employee is receiving JobKeeper payments.
Previously if a sole trader was trying to access income support payments they had to be willing to seek, and be available to take up, alternative work which effectively would have required them to close their business. These mutual obligation requirements will be temporarily removed to allow sole traders to continue operating and receive the JobSeeker Payment if they are eligible to do so. A sole trader who is eligible for a payment can meet their mutual obligation requirements during this period by continuing to sustain their business. Income testing will apply consistent with current arrangements. So the level of support a sole trader will receive will depend on their ongoing income and that of their partner, if they are in a relationship.
JobKeeper: Yes
An “eligible business participant” who is involved in the daily running of the business can be nominated to receive JobKeeper assistance provided they meet the eligibility criteria. However please note:
Cash Flow Boost: No
The cash flow boost assistance is only available to businesses with employees.
The ATO will be accepting applications for JobKeeper assistance from Monday, 20th April 2020. There is information on the ATO’s website as to the steps to be taken once applications open.
If a subcontractor satisfies the definition of employee but invoices for his services, can a business apply for JobKeeper assistance for that subcontractor?
If the subcontractor meets the “eligible employee” tests then the business can apply for JobKeeper assistance for the subcontractor. However if the subcontractor is invoicing for his services rather than receiving salary and wages, there should be an analysis as to whether the subcontractor is indeed an employee. There is no definition of “employee” for the purposes of the JobKeeper rules, therefore the term will take its ordinary, common law meaning.
If my company earned $5,000 in April 2019 but in April 2020, it has zero income, is my decline in turnover 30% or more?
Yes, on its face, the decline in turnover is 100%. However, the JobKeeper rules use the GST concepts of “projected GST turnover” and “current GST turnover”. You will need to satisfy yourself that the amounts you are referring to in your question satisfy these definitions. You should take note of the comments that are made in the ATO document entitled “Applying the turnover test” (QC 62132).
If a business does not satisfy the decline in turnover test at the start of the JobKeeper scheme, but does satisfy the test in a later test period, can the business apply for JobKeeper assistance from that later period?
Yes, if an entity does not qualify for, say, the month of April 2020 because its turnover has not been sufficiently affected, it can test in later months to determine if the test is met. This allows entities that only become affected part way through the six month period of operation of the JobKeeper scheme to continue to monitor for any decline in turnover until they qualify for the scheme in a later period. Also, if the business does not think it will have a sufficient decline in turnover for the month of April 2020, it can also undertake the test in relation to the June 2020 quarter. This can be done whether the business lodges its activity statements on a monthly or quarterly basis.
Once an entity satisfies the decline in turnover test does it need to retest its turnover in later months?
No.
No, the employee must meet the “eligible employee” tests as at 1 March 2020.
If an employer stands down all employees, can some be paid for hours they work while not working their regular hours. It seems inequitable if all employees are paid at least JobKeeper, but some will be asked to work.
To be eligible for JobKeeper assistance employees must receive a minimum of $1,500 per JobKeeper fortnight, regardless of hours actually worked. There have been amendments made to the Fair Work Act that enables employers who qualify for the JobKeeper scheme to give directions to their employees called “JobKeeper enabling directions”. These will not be explained here, but are relevant to this question. Refer to https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/flexibility-in-workplace-laws-during-coronavirus/jobkeeper-changes-to-the-fair-work-act
Is the decline in turnover test calculated on a cash or accruals basis? Does the employer get to pick which to use or does it depend on how you lodged your last tax return or GST reporting basis?
In our view, that question is not relevant (however, see below ATO information). This is because the GST legislation, when referring to projected and current GST turnover, refers to the value of supplies made, or likely to be made in the period. The process is:
The question of whether the amounts should be accounted for on a cash or accruals basis does not arise in the above process. Despite what we have said above, the ATO have flip flopped on this issue but at the time of writing (3 May 2020) the document entitled “Applying the turnover test” (QC 62132) states the following:
“Cash or accruals basis
The turnover calculation requires you to include sales that you have made, or are likely to make, in the relevant month or quarter. The calculations are based on the time you make the sales.
There are different ways of calculating turnover that may be reasonable in your circumstances.
As a practical matter, we expect that you will use the GST accounting method that you normally use. In other words, you may use a cash or accruals approach to determining the value of your sales in the relevant month or quarter. If you do this, typically, turnover for the relevant period will equal your GST exclusive sales less your input taxed supplies.
If you use GST calculations to determine turnover, don’t forget to include GST-free sales.
If you normally account for GST on an accruals basis, but seek to calculate on a cash basis (or vice versa), we may seek to understand your circumstances to ensure that the calculation achieves an appropriate reflection of your turnover.
If you aren’t registered for GST, we would expect you to use the same accounting method you use for income tax purposes.
Importantly, whichever basis you use must be used consistently in comparing the month or quarter in 2020 with the comparison month or quarter in 2019.”
Is an “eligible business participant” required to be paid a minimum of $1,500 per JobKeeper Fortnight to be eligible for JobKeeper assistance?
No. Unlike for an employee, there is no “wage condition” to be satisfied for an eligible business participant. It appears that the entity that receives the $1,500 on behalf of the individual can choose to do what it likes with that amount.
The key issue is to determine whether the business has satisfied the decline in turnover test. The business will have to satisfy the “alternative test”. This requires the Commissioner to make a legislative instrument in relation to the particular class of business. At the time of writing the Commissioner has not released any legislative instrument. On the assumption that a future legislative instrument will enable the business to satisfy the decline in turnover test, provided that the entity satisfies the criteria for entitlement to JobKeeper assistance for a business participant and the individual meets the eligibility criteria of an eligible business participant, the nonemployee owners/operators will be able to claim one JobKeeper payment. The key issue is to determine whether the business has satisfied the decline in turnover test. The business will have to satisfy one of alternative tests discussed above.
The duration of the entity’s pay period is not relevant for determining whether the wages condition has been met for a JobKeeper fortnight. All that is required is that the minimum amount of $1,500 has been paid within the particular JobKeeper fortnight. However, for the first two jobkeeper fortnights (ending 26 April 2020), the ATO has stated that it will accept that the wages condition has been satisfied if an employee has been paid a minimum of $3,000 for the first two jobkeeper fortnights by the 8th of May. The JobKeeper rules also provide that if an employer’s ordinary arrangement is to pay its employees on a frequency that is longer than a fortnight, then the payment can be allocated between fortnights on a reasonable basis. Also, the JobKeeper rules provide the Commissioner with an ability to treat a particular event that happened in a fortnight as having happened in a different fortnight if the Commissioner considers it reasonable to do so.
No, as Australian government agencies, local governing bodies, or wholly owned entities of these agencies/bodies are specifically excluded from JobKeeper eligibility, government schools cannot be eligible employers.
Employees that were employed on 1 March 2020 and have been stood down from their employer will be eligible for JobKeeper assistance provided the eligible employer and eligible employee tests are met.
If an employer did not pay wages and reported nothing on STP for the month of April, will the employer get JobKeeper payments for the two April fortnights?
No. The JobKeeper scheme starts from 30 March 2020 with employers to receive the first reimbursements in May. Therefore, if the employer meets the JobKeeper scheme eligibility and is intending to claim JobKeeper payments, payments to employees on or after 30 March 2020 should be made under the JobKeeper arrangements. As per Prime Minister’s press conference on 3rd April 2020: “Well, the employers need to talk to their banks straight away, because what we’re providing under the JobKeeper program is an absolute guarantee you can take to the bank. Because those payments will be made for each of those employees and that should enable them to put a facility in place with their bank so they can make those payments to their employees.”
What is the situation for groups where individual group members are on different BAS cycles? On what basis is the decline in turnover test conducted?
The frequency with which BASs are lodged is, technically, irrelevant for the purposes of the decline in turnover test. However, practically, businesses may choose to use their BAS period as the comparison period between 2020 and 2019. The decline in turnover test will apply to each business connected with or affiliated with a group. Individual businesses within a corporate group may be eligible for the JobKeeper payment while other businesses in the group may not be eligible. Further, GST groups are ignored for the purposes of the decline in turnover test.
The decline in turnover test applies to the “entity” and the entity’s projected GST turnover.
Yes, indeed employers must elect to participate in the scheme. Employers are not automatically included in the scheme. An employer may not come to the conclusion that it has had the necessary decline in turnover until, say, July 2020. The employer can elect to become part of the JobKeeper scheme in the relevant fortnight in which the employer comes to that conclusion.
No, provided the eligibility tests are met. It should be noted that a Significant Global Entity might need to have a 50% decline in turnover to be eligible for JobKeeper, although this is not necessarily the case.
Yes, but as the JobKeeper payment will be equal to or less than the amount actually paid to the employee the JobKeeper payment will be offset by the allowable deduction created by the payment to the employee. Further, the JobKeeper payments are assessable income to the employee.
Employers are required to continue to meet their PAYGW obligations during the JobKeeper scheme period. The JobKeeper payments are before tax amounts and therefore tax should be withheld and remitted as appropriate.
All details are on the ATO website. Refer to https://www.ato.gov.au/general/jobkeeper-payment/employers/enrol-for-the-jobkeeper-payment/.
The government has chosen to use two concepts in the GST law to determine decline in turnover. Whether a entity is registered for GST or not has no bearing on the meaning of these terms. These terms are “current GST turnover” and “projected GST turnover”. “Current GST turnover” and “projected GST turnover” are defined in sections 188-15 and 188-20 of the GST Act respectively (amended by the Rules such that the definitions only apply to the “test period”). Entities should use these definitions to determine their decline in turnover, regardless of whether they are registered for GST or not.
Some government information has indicated that there will be some tolerance where employers, in good faith, estimate a 30 per cent or more or 50 per cent or more fall in turnover but actually experience a slightly smaller fall. However, the JobKeeper rules and related legislation do not contain any such statement. Further, currently, the Commissioner is not given any discretion in relation to such things as “honest mistakes” or “inadvertent errors”, which is a feature of other legislation. By the strict letter of the law, where a business is not entitled to JobKeeper payments, the business will need to repay the amount with General Interest Charge.
A “turnover test period” must be (a) a calendar month that ends after 30 March 2020 and before 1 October 2020; or (b) a quarter that starts on 1 April 2020 or 1 July 2020.
What is the situation for service entities where the service entity itself does not meet the decline in turnover, but the entities to which the services are provided do meet the decline in turnover?
The rules have been amended to allow an employer entity to possibly qualify for the jobkeeper where it supplies employee labour services to one or related entities. However, the employer entity must be a member of a consolidated group, consolidatable group, or GST group. Further, the employer entity must not supply employee labour services to entities that are not members of the group. The decline in turnover test is modified for the employer entity so that it refers to the current and projected turnover of each test member of the group (being those entities that receive labour services from the employer entity) rather than using its own turnover.
Can an entity, in April, estimate projected GST turnover for July and satisfy the decline in turnover test now?
No. The decline in turnover test needs to be satisfied before an entity becomes eligible for the JobKeeper payment. The JobKeeper scheme operates on a prospective basis only. Entitlement only arises for those JobKeeper fortnights and later fortnights in which eligible employers are registered under the scheme prior to the end of a JobKeeper fortnight. The only exception to this is for the month of April 2020. In April 2020 employers may register prior to the end of April and if they meet the eligibility rules receive JobKeeper payments for eligible employees for JobKeeper fortnights in the two JobKeeper fortnights commencing from 30 March 2020.
With regard to the 1 March 2020 test period, what if the employment contract was signed before that date, but the employee did not commence work until after that date?
If the contract is such that the employee was employed before 1 March 2020, but was simply not required to attend work until after that date, and all other test criteria are satisfied, then the employee should be eligible for JobKeeper assistance.
However if, as is more likely the case, employment was not deemed to have commenced until the employee attended work, and this was after 1 March 2020, then the 1 March 2020 test will not be satisfied and the employee will not be eligible for JobKeeper assistance.
If an employee is on annual leave, long service leave or sick leave is that person still an employee?
Yes.
If an individual supplements his paid employment with another casual position and also from sole trader activities, and the casual work and his sole trader work has dropped off but the paid employment continues, can he still apply for job keeper from either his casual work or his sole trader activities?
An individual can only create an entitlement for one entity. A business is not entitled to a JobKeeper payment for an individual if another business is also entitled for the same individual. For example, where an individual is an eligible participant of two businesses – only one of those businesses is entitled to the JobKeeper payment in respect of that individual. Also, for example, where an individual is an eligible participant of a business and is entitled to a JobKeeper payment as an employee of another business–the business is not entitled to a JobKeeper payment in respect of the individual.
An eligible employee must be an Australian resident (within the meaning of section 7 of the Social Security Act 1991), or was a resident of Australia for the purposes of the Income Tax Assessment Act 1936 and was the holder of a Subclass 444 (Special Category) visa as at 1 March 2020.
Employee Nomination Notice templates are available on the ATO website.
Provided the eligibility criteria are met, one non-employee individual from the following entities can be nominated as the eligible business participant:
Can an individual who is receiving workers compensation be an eligible employee?
No, if the following conditions apply.
An individual is excluded from being an eligible employee of an entity for a fortnight if all of the following apply:
Can the JobKeeper assistance be used to fund the operations of the business?
No, the JobKeeper assistance must be passed on to the employee. In fact the payment to the employee will come first, in the JobKeeper Fortnight, and the JobKeeper assistance will be received later.
Practically however, as the Government is picking up part or all of the salary cost, this may free up cashflow to be used in the business operations.
The JobKeeper scheme is an “one in, all in” scheme. If the employer has elected to be part of the JobKeeper scheme, all eligible employees, no matter what they are paid, must be included in the scheme and be paid a minimum of $1,500 per fortnight.
Payment of a dividend or distribution will not impact eligibility to JobKeeper assistance for employees or a nominated eligible business participant, provided the other eligibility criteria are satisfied.
What is the situation for employers who use STP versus those employers who do not use STP?
The ATO have provided the following guidance:
Not using STP: https://www.ato.gov.au/general/jobkeeper-payment/In-detail/JobKeeper-guide—employers-not-reporting-through-STP/
Yes. The components which are aggregated to satisfy the wage condition that an employer pay each participating employee at least $1,500 for each JobKeeper fortnight are:
Integrity Rule – Lodgements due by 12 March 2020
The integrity measures for entitlement based on business participation require that:
a) An amount was included in the entity’s assessable income for the 2018-19 income year in relation to it carrying on a business; and the Commissioner had notice (e.g. a tax return) on or before 12 March 2020 (or a later time allowed by the Commissioner) that the amount should be so included.
or
b) the entity made a taxable supply in a tax period that applied to it that:
In respect of the Commissioner’s discretion to allow further time, the ATO states on its website that circumstances where this may apply include where the entity:
Examples include:
How do you calculate the decline in turnover when your business is paid on a percentage of completion basis?
“Current GST turnover” and “projected GST turnover” are defined in sections 188-15 and 188-20 of the GST Act respectively and modified by the JobKeeper Rules to apply only to a “period”. Entities should use these definitions to determine their decline in turnover, regardless of the accounting treatment of the revenue. The difficulty for a business that invoices on a percentage of completion basis is in determining when supplies have been made. This is a question of fact and can only be determined by looking at each particular business.
However, you should be aware that the ATO has made the following statement in its document “Applying the turnover test”.
”You may use an accruals basis of accounting to calculate both the current GST turnover and projected GST turnovers as both calculations require you to include sales that you have made or are likely to make without any reference to when you are paid.
However, if you prepare your activity statements on a cash basis, the ATO will allow you to calculate both the current and projected GST turnovers on a cash basis. The basis used must be the same for calculating your projected and current GST turnover. Typically, current turnover will equal your GST exclusive sales less your input taxed supplies.”
What JobKeeper assistance is available for business owners who are also employees?
Where a business owner is also a salaried employee of the business can they receive the JobKeeper payment. They will not be eligible for JobKeeper assistance based on business participation as the nominated eligible business participant cannot also be an employee. Therefore the business owner would need to be receiving at least $1,500 for each JobKeeper fortnight and meet the other eligible employee criteria, together with the business meeting the eligible employer criteria, to receive JobKeeper assistance.
Employees can register for JobSeeker where they have been stood down or lost their job due to the COVID-19 crisis. However if their employer intends to apply for JobKeeper on their behalf they will need to notify Services Australia as this will impact their eligibility to JobSeeker assistance. A person cannot claim both JobKeeper and JobSeeker payments.
“Current GST turnover” and “projected GST turnover” are defined in sections 188-15 and 188-20 of the GST Act respectively and modified by the JobKeeper Rules to apply only to a “period”. Entities should use these definitions to determine their decline in turnover.
Where an entity’s entire income is excluded from these definitions, such as input taxed supplies (e.g. residential rent), the entity will be unable to demonstrate the appropriate decline in turnover necessary to access JobKeeper assistance.
Compare this to rental of commercial residential premises which will be taxable supplies if leased by an entity which is required to be registered.
The ATO has provided the following example:
Passive income through a trust
Sharon is a beneficiary of her family trust, SN Family Trust. The SN Family Trust was settled in 2005 with a residential property and it subsequently purchased two more residential properties. The properties are managed by a local agent, R.A. Properties, and are intended to generate passive rental income for SN Family Trust. The SN Family Trust has no business activities; rather the properties are capital assets that generate rental income. Sharon receives income through distributions from the SN Family Trust and this is her only source of income.
The SN Trust projects a fall in turnover of 60% for the April 2020 to June 2020 quarter compared to the April 2019 to June 2019 quarter, due to tenants in two of the properties being unable to pay rent.
The SN Family Trust does not qualify for the JobKeeper Payment scheme, as it was not carrying on a business in Australia on 1 March 2020.
If the SN Family Trust also ran a property development business, then it could qualify as an entity under the JobKeeper Payment scheme assuming it met the fall in turnover tests for that business, as it was carrying on business in Australia on 1 March 2020. Sharon must be actively engaged in the business operations of the SN Family Trust to be an eligible business participant. If Sharon does not qualify as an eligible business participant because she is not actively involved in the running of the business, the SN Family Trust would not be able to nominate her in respect of a JobKeeper payment. The SN Family Trust could however nominate another individual if that individual satisfies the conditions as an eligible business participant.
As JobKeeper is a “before tax” payment and therefore payments made to employees under JobKeeper arrangements must have PAYGW withheld where appropriate, are these payments eligible for inclusion in the calculation of the Cash Boost scheme?
Yes, where the other criteria for the Cash Boost assistance are satisfied.
What are the withholding and “on-cost” obligations for payments made to employees under the JobKeeper scheme?
JobKeeper is a “before tax” payment and therefore payments made to employees under JobKeeper arrangements must have PAYGW withheld where appropriate.
Taxpayers should look to any announcements made their State Governments regarding concessions for Payroll Tax, workers compensation payments, etc. as these many vary State to State.
Employers are not required to make superannuation contributions in respect of payments made to satisfy the wage condition.
For example, if an employee normally receives $1,000, but the employer paid them $1,500 to satisfy the wage condition, then the employer will only be required to make superannuation contributions in relation to $1,000.
However, if an employee normally receives $2,000, the employer will continue to be required to make contributions in relation to that amount.
An employer will not be required to make superannuation contributions for an employee who is stood down. If an employer pays a stood down employee $1,500 to satisfy the wage condition for receiving the JobKeeper payment, then the entire amount will be disregarded for superannuation guarantee purposes.
In accordance with the JobKeeper Rules s.12(5), where the individual is a sole trader the nomination form must be given to the Commissioner.
Subsection 9(6) of the Rules provides some flexibility for any changes in ownership of a business and movement of employees within the same wholly owned group and other business sale situations. It means that employees are not disadvantaged if these events, which are ordinarily beyond their control, occur.
A person can therefore be treated as an eligible employee of the same employer even if the business or non-profit body in which the person is employed changes hands after 1 March 2020. It also means that in working out if a person is a long term casual employee of an employer, employment in a business or non-profit body in the 12 month period ending on 1 March 2020 can be counted even if the business or non-profit body changed hands during that period.
For the purposes of qualifying as an eligible business participant, what does the term “actively engaged in the business” mean?
This requirement is not clarified other than to note in the Explanatory Statement to the JobKeeper Rules:
If a sole trader is also employed in a business other than their own, can the sole trader get the JobKeeper assistance as an eligible business participant of their sole trader business?
No, if the terms of the employment are not as a casual employee. Where an individual is both a sole trader and a full-time or part-time employee they must seek JobKeeper assistance through their employer.
No. However the normal rules around business v. hobby would apply.
What is the situation where an employee who has been with the employer less than twelve months, moved from casual to permanent?
Provided the individual was an employee (other than a casual employee who is not a long-term casual employee) at 1 March 2020 they will satisfy that part of the eligible employee criteria.
The test is the employee’s status as at 1 March 2020, not what came before that.
Provided the directors meet the criteria as eligible employees, the company will be able to seek JobKeeper assistance on their behalf.
However as employees they will not be able to act as the nominated eligible business participant of the company.
Yes, provided they meet the 15% decline in turnover test, together with the eligible employer and eligible employee tests.
Yes, the ATO has provided checklists on the website to assist employers and businesses through the registration process.
No, however JobKeeper assistance can only be claimed from one employer. Where one job is permanent and one is casual, the employee should nominate the permanent role as the employer from which they will receive JobKeeper assistance.
If the individual is seeking the JobKeeper payment from their business as an eligible business participant, the individual can only be employed by another employer as a casual
Yes, as the Employee Nomination Notice is the employee’s confirmation that they meet all the eligible employee criteria, all employees need to provide an Employee Nomination Notice.
Yes, individuals with one or more full time or part time jobs are free to nominate any one of those full time or part time jobs. Similarly, individuals with multiple long term casual jobs can nominate any one of those casual jobs.
In this case the employer can either (a) increase the employee’s salary to $1,500 per JobKeeper fortnight and receive the JobKeeper assistance as a reimbursement later; or (b) keep the employee on their current salary and bear the entire cost of that salary without Government assistance. However, an employer cannot pick and choose which employees receive JobKeeper. The scheme is a “one in all in” scheme. If the employer wants to bear the entire cost of the salary of one employee, it must also do that for all other eligible employees. That is, the employer will not elect to be part of the JobKeeper scheme.
If a business has closed and terminated all of its employees, it is not eligible to receive JobKeeper payments. If a business has closed, but will reopen at a later time, it is still necessary for its employees to remain “on the books” for the JobKeeper payments to be made to those employees.
Also, an entity does not qualify for the JobKeeper scheme at a time if:
Yes, the periods for determining the decline in turnover can be periods of one month or three months, where:
An entity’s BAS lodgement cycle is irrelevant in determining the decline in turnover. An entity can choose any one of the 9 time periods in which to make the comparison. However, the decline in turnover test must be satisfied within one of the above periods before the employer is entitled to the JobKeeper payment.
Can a business that was established in November 2019 and effectively started trading in January 2020 receive the Cash Flow Boost and/or JobKeeper assistance?
With regard to the Cash Flow Boost, the 30 June 2019 income tax return will not have been satisfied, therefore the requirement to lodge a BAS on or before 12 March 2020 will need to be satisfied. This is probably unlikely.
Nevertheless, the Commissioner has a discretion to permit a later time for the required notification to the Commissioner.
ATO information indicates that businesses in this position should contact the ATO and provide additional supporting documents to establish the business’ eligibility.
With regard to JobKeeper, where an application is being made for an “eligible business participant”, what is said above in relation to the Cash Flow Boost will also be applicable. Also, in relation to JobKeeper, it will be necessary for the business to satisfy the alternative test for the decline in turnover.
No. While an “eligible business participant” who is involved in the daily running of the business can be nominated to receive JobKeeper assistance provided they meet the eligibility criteria, only one person can be nominated.
An entity that is entitled to a JobKeeper payment must notify the Commissioner of:
Eligible ACNC-registered charities and gift deductible recipients must also report the amount of certain donations that they have received or expect to receive.
The report must be made within 7 days of the end of the reporting month.
Additionally, there are pre- and post-payment record keeping requirements to enable the Commissioner to verify information provided.
To qualify for JobKeeper assistance is it necessary that a business has lodged a BAS or lodged an income tax return?
Yes, where the JobKeeper assistance is being sought for an “eligible business participant”. If the JobKeeper assistance is being sought for a normal employee/employer relationship, the lodgement of activity statements or tax returns is not required.
Where an entity is seeking JobKeeper assistance in relation to an “eligible business participant”, it is a requirement that:
OR
How do those closely held tax entities that have not had to register for STP yet, go about applying for JobKeeper?
The registration process is detailed on the ATO website. Go here https://www.ato.gov.au/general/jobkeeper-payment/In-detail/JobKeeper-guide—employers-not-reporting-through-STP/
If there is no work for employees and they have been stood down, but are retained on the books, are they entitled to JobKeeper assistance?
Yes. Provided the employees were employed on 1 March 2020 and meet all other requirements.
Can employees that have been with the employer less than 12 months qualify for the JobKeeper assistance?
Yes employees, other than casual employees, who have been with their employer less than 12 months are eligible for JobKeeper assistance provided that they were an employee of the organisation as at 1 March 2020 and satisfied the other “eligible employees” tests.
Does an employer need to be registered for GST to be eligible for JobKeeper?
There is nothing in the legislation or the Rules that requires an employer to hold a GST registration to be eligible for the JobKeeper assistance.
The JobKeeper scheme is “one in all in”. An employer who meets the eligibility requirements cannot select which eligible employees will participate in the scheme. However, an employee can choose not to be involved with the scheme with a particular employer.
Yes, provided they meet the “business participant” eligibility criteria.
According to information in the Explanatory Statement to the JobKeeper rules, GST does not apply in relation to JobKeeper payments made to employers because the payments are not consideration for supplies made by employers to the Government.
What is the situation for a religious institution with revenue from membership fees (30%) and rental income from a tenant (70%)?
The basic decline in turnover test works by comparing the projected GST turnover of the entity for a period (the turnover test period) with its current GST turnover as calculated for a relevant comparison period (the comparison turnover).
If the rent received is residential rent, this is input taxed and is not included in the GST turnover calculations. If it is commercial rent, it will be included.
It is not usual for a religious institution to have membership fees as opposed to gifts made to the religious institution. The membership fees could either be consideration for a taxable supply or consideration for a GST free supply. In either case, they are included in the calculation to determine the decline in turnover. It is noted that there is a special provision in the decline in turnover legislation that deals with entities that are ACNC-registered charities (other than a deductible gift recipient) in relation to gifts made to the entity. Such gifts will be treated as being the consideration for a supply equal to the amount of the gift (if the gift is money) or the market value of the gift (if the gift is not money).
Are employees made redundant before 30 March 2020 and not reappointed eligible for JobKeeper assistance?
No.
Only individuals that were Australian residents (within the meaning of section 7 of the Social Security Act 1991); or a resident of Australia for the purposes of the Income Tax Assessment Act 1936 and a holder of a special category visa referred to in the regulations under the Migration Act 1958 as a Subclass 444 (Special Category) visa, as at 1 March 2020 are eligible employees.
The Rules provides some flexibility for any changes in ownership of a business and movement of employees within the same wholly-owned group. It means that employees are not disadvantaged if these events, which are ordinarily beyond their control, occur. Refer to section 9(6) of the JobKeeper rules.
Can you apply for JobKeeper where your decline in turnover is slightly less than the required percentage decline?
No. The Government has indicated in the FactSheet “JobKeeper Payment: Supporting business to retain jobs” that “there will be some tolerance where employers, in good faith, estimate a 30 per cent or more or a 50 percent or more fall in turnover but actually experience a slightly smaller fall”. However, the business, in good faith, must expect to satisfy the decline in turnover test at the time they apply. Stating that business passes the test when it does not would constitute a false statement subject to sanctions.
Yes, provided that the directors were employees of the company on 1 March 2020, have been receiving at least $1,500 per JobKeeper fortnight and satisfy the other eligible employee criteria. Note that as employees of the company the directors cannot also be eligible business participants of the company. Additionally, if the directors are also employees of another business they must nominate which employer they wish to see JobKeeper assistance through.
If the directors fees constitute salary and wages for the director and are treated as such by the company, and the director meets the other eligible employee criteria, the director may be eligible for JobKeeper assistance as an employee. Note that the employer will also need to meet the wage condition and the other eligibility criteria. Alternatively, if the directors fees do not constitute salary and wages for the director, but the director meets the eligible business participant criteria, the company may be eligible for JobKeeper support based on business participation.
Do employees who were aged 16 or 17 years on 1 March 2020 and not financially independent and/or full-time students, satisfy the age test when they turn 18?
No. The employee will remain ineligible for the entire period of the JobKeeper scheme as they did not meet the eligibility criteria on 1 March 2020.
In determining its decline in turnover, how should a business choose between the Basic Test and the Alternative Test?
The business should look to the Basic Test first. If there is an appropriately comparable period in 2019 and the business has not met the decline in turnover test, the business will not qualify for JobKeeper assistance under the Basic Test. If it is considered that there is no appropriately comparable period in 2019, the business should work through the Alternative Decline in Turnover Test Rules to see if the business is of a class defined in those Rules.
Yes, provided that: They are different individuals; The eligible business participant is not an employee (other than a casual employee) of another entity and satisfies the other eligible business participant criteria; The employee meets the 1 March 2020 requires together with the other eligible employee criteria; The trust satisfies the employer entitlement requirements.
If a business satisfies the Basic Test for its decline in turnover should it also consider the Alternative Tests?
No. If a business satisfies the Basic Test there is no requirement to additionally consider the Alternative Tests.
Where a business was registered prior to 1 March 2020 (but after the relevant comparison period), but did not start trading until after 1 March 2020, will the business be able to use an alternative decline in turnover test?
Section 6 of the Alternative Decline in Turnover Test Rules provides for business that commenced before 1 March 2020 but after the relevant comparison period. However, the entity must first meet the test of carrying on a business on 1 March 2020. Guidance as to when the ATO considers an entity is carrying on a business can be found in Taxation Ruling 2019/1 “Income tax: when does a company carry on a business?”
What is the appropriate alternative decline in turnover test and appropriate comparison period where the turnover of a sole trader or partnership was impacted by the absence of the sole trader or a partner?
Section 12 of the Alternative Decline in Turnover Test Rules provides for sole traders or partnerships impacted by the absence of the sole trader or a partner.
Are employees who have returned from maternity leave eligible for JobKeeper assistance, even if there is no actual work for the employee to do?
Yes, provided they meet the “eligible employee” test for each employee. Also note that employees who are currently on maternity leave with paid parental leave from their employer may also be eligible for JobKeeper assistance. However if the employee receives paid parental leave or dad and partner pay under the Paid Parental Leave Act 2010 and the person’s paid parental leave period overlaps with or includes a fortnight in respect of which a JobKeeper payment may be paid, the person is not an eligible employee for JobKeeper for that fortnight.
If an employee is on unpaid maternity leave prior to the commencement of the JobKeeper scheme and then switches to parental leave pay under the Paid Parental Leave Act after the JobKeeper scheme commences, does the employee have an entitlement to JobKeeper support?
Where an employee is on paid or unpaid maternity leave from their employer, provided they meet the eligible employee criteria, the employer will be able to claim JobKeeper assistance on the employee’s behalf. However, where an employee in a JobKeeper fortnight received parental leave pay under the Paid Parental Leave Act the employee is excluded from being an eligible employee for that fortnight.
Is an “eligible business participant” required to be paid a minimum of $1,500 per JobKeeper fortnight to be eligible for JobKeeper assistance?
No. Unlike for an employee, there is no “wage condition” to be satisfied for an eligible business participant. The entity that receives the $1,500 on behalf of the individual can choose to do what it likes with that amount.
No, however the normal rules around business v. hobby would apply.
