In two recent articles, we provided overviews of the Government’s economic response to the COVID-19 pandemic. In this article, we provide an updated overview of the now legislated JobKeeper Payment.
Written and accurate as at: 13 May 2020
As it stands, in terms of COVID-19*, globally, there has been a reported 4,343,269 cases, 296,784 deaths, and 1,547,294 recoveries. And, domestically, there has been a reported 6,988 cases, 98 deaths, and 6,295 recoveries.
Google’s ‘COVID-19 Community Mobility Reports’ provides insights into how COVID-19, and the policies implemented to combat it (e.g. social distancing, isolation and restrictions), have changed our movements.
Whilst there is variation across states and territories, according to the latest Google report^, there is still a widespread change in our movements regarding the following key place categories on 7 May 2020:
- Parks – mobility is -25% compared to the baseline (peaked at -51% on 11 April 2020).
- Residential – mobility is +16% compared to the baseline (peaked at +33% on 10 April 2020).
- Workplaces – mobility is -31% compared to the baseline (peaked at -82% on 10 April 2020).
- Transit stations – mobility is -54% compared to the baseline (peaked at -77% on 10 April 2020).
- Retail and recreation – mobility is -32% compared to the baseline (peaked at -76% on 10 April 2020).
- Grocery and pharmacy – mobility is -2% compared to the baseline (peaked at -55% on 10 April 2020).
When coupled with, for example, the latest ABS reports on Australian household spending, retail turnover and employment, clear economic and financial issues have emerged for individuals, households and businesses.
Below, is an updated overview of some of the key points pertaining to one of these financial resources, the JobKeeper Payment scheme, which has now been legislated (with some changes).
The JobKeeper Payment, available from 30 March 2020 until 27 September 2020, is a wage subsidy.
The payment is paid monthly in arrears by the ATO to an eligible and participating employer affected by the Coronavirus to support them in paying (and retaining) their employees.
The payment is $1,500 per fortnight per nominated, notified and accepting eligible employee. Regardless that an employee’s prior income may have been less than $1,500 per fortnight, an employer must have paid a nominated employee at least $1,500 per fortnight (before tax) to be entitled to receive the corresponding subsidy.
Employers can enrol to participate via the ATO from 30 March 2020, and receive their first monthly payment in the first week of May (backdated to a start date of 1 March 2020). The final monthly payment will be in October and includes the fortnight ending 27 September 2020.
An employer is deemed eligible to participate if all of the following apply:
- Their business is not:
- A government agency, nor wholly owned by a government agency.
- A company in liquidation, or an individual (e.g. sole trader, partnership or trust) that has entered bankruptcy.
- They employed at least one eligible employee on 1 March 2020.
- Their business was not subject to the Major Bank Levy for any quarter prior to 1 March 2020.
- Their business has faced, or is likely to face, compared to the relevant month or quarter a year ago, a:
- 30% or more fall in GST turnover (for an aggregated annual turnover of $1 billion or less).
- 50% or more fall in GST turnover (for an aggregated annual turnover of more than $1 billion).
- 15% or more fall in GST turnover (for ACNC-registered charity, except universities and schools).
Please note: The Tax Commissioner can use discretion regarding applying an alternative decline in turnover test, where a business was not in operation a year earlier or their turnover a year earlier was not representative of their usual or average turnover, or for special purpose service entities. And, where a business is part of a consolidated group for income tax purposes, they are subject to the relevant percentage amount applicable to the consolidated group’s turnover size.
- Their eligible employees are currently employed by their business for the fortnights they claim for (including those who are stood down or re-hired).
- They carried on a business in Australia or were a not-for-profit organisation that pursued their objectives principally in Australia on 1 March 2020.
An employee is deemed eligible to be nominated if all of the following apply:
- They were a resident for Australian tax purposes on 1 March 2020.
- They have not accepted a JobKeeper Payment nomination by another employer.
- They are not in receipt of Parental Leave Pay or Dad and Partner Pay during the JobKeeper fortnight from Services Australia.
- They were an Australian citizen, or the holder of a permanent visa, protected Special Category Visa or Special Category (Subclass 444) Visa, on 1 March 2020.
- If they are in receipt of workers compensation, and they are still working (e.g. reduced hours).
- They were employed by their employer (including those stood down or re-hired) on 1 March 2020, and are still employed with the employer at the time of the claim.
- They were aged 16 years or older on 1 March 2020.
Please note: Applied prospectively, those aged 17 years and younger are required to be financially independent or not undertaking full-time study to be eligible from 11 May 2020).
- They were a permanent full-time or part-time employee, or long-term casual (a casual employed on a regular and systemic basis for at least 12 months) with their employer on 1 March 2020.
Other important considerations
- Under the ‘one in, all in’ principle, an eligible employer must notify and offer to nominate all eligible employees.
- There is some tolerance by the ATO, where an eligible employer, in good faith, estimates a fall of 30% or more, or 50% or more in GST turnover, but actually experience a slightly smaller fall.
- An eligible employee may have their eligibility for payments from Services Australia (e.g. JobSeeker Payment) affected, as the payments from their eligible employer must be reported as income.
- An eligible employer can’t claim the Supporting Apprentices and Trainees wage subsidy for any period from 1 April 2020 where they participate in the JobKeeper Payment for the same Australian apprentice or trainee.
- A sole trader, partnership or trust can be eligible to participate in the JobKeeper Payment. However, there are additional (varied) eligibility criteria to above. For example, a business without employees will be eligible to receive one payment, and a business with employees can receive one payment in addition to the payments for their eligible employees:
- Sole trader: One owner can be nominated.
- Partnership: One partner can be nominated.
- Trust: One individual beneficiary (not a corporate beneficiary or paid as eligible employee) can be nominated.
- An eligible employer must pay an eligible employee at least $1,500 per fortnight (before tax). For example, if the eligible employee:
- Is ordinarily paid less than $1,500 in income per fortnight (before tax), the eligible employer must pay them, at a minimum, $1,500 per fortnight (before tax).
- Is ordinarily paid $1,500 or more in income per fortnight (before tax), they will continue to be paid their regular income according to the prevailing workplace arrangements. The JobKeeper Payments will subsidise part or all of their income.
- Has been stood down, the eligible employer must pay them, at a minimum, $1,500 per fortnight, (before tax). Alternatively, if they were employed on 1 March 2020, and subsequently ceased employment and then were re-engaged by the eligible employer, they will receive, at a minimum, $1,500 per fortnight (before tax).
Please note: Where an employee’s usual wage would have been less than $1,500 per fortnight prior to JobKeeper Payment, it’s at the eligible employer’s discretion if they want to pay super guarantee on any additional wage paid as a result of the JobKeeper Payment.
- Amendments to the Fair Work Act, which will cease on 28 September 2020, enable an eligible employer to temporarily vary working arrangements for their eligible employees – JobKeeper Enabling Directions. These variations must not be unreasonable or hazardous, and also must be in writing and in consultation with their eligible employees. These variations may include, for example:
- Working a reduced number of hours (including nil hours).
- Not working on particular days they would ordinarily work.
- Working on different days and times, they would ordinarily work.
- Working for a lesser period than they would ordinarily work on particular days.
- Working somewhere other than their usual place of work (including their home).
- Performing any work-specific duties within their skill, competency and qualification.
- Taking annual leave at full pay (provided they retain at least 2 weeks of annual leave).
- An employee’s hourly rate of pay can’t be reduced by a variation.
- All applicable penalty rate or other allowances apply for the hours worked by an employee.
- An employee directed to perform duties that would ordinarily attract a higher rate of pay, must be paid that higher rate of pay.
- A JobKeeper Enabling Direction will remain in effect until revoked or replaced by an employer, or until the amendments cease on 28 September 2020.
- An employee that works enough to be entitled to be paid more than the minimum, $1,500 per fortnight (before tax), must be paid this full amount (inclusive of any applicable penalty rates, allowances, loadings or leave payments).
If you would like to discuss anything mentioned above, and its relevance to your financial situation, goals and objectives, please contact us.
*Center for Systems Science and Engineering (CSSE). GIS Dashboard: Coronavirus COVID-19 Global Cases by Johns Hopkins CSSE.
^Google LLC. (2020). Google COVID-19 Community Mobility Reports: Australia, May 2020.