Jobkeeper: How It Works

The JobKeeper payment is the government’s cornerstone stimulus initiative. Eligible businesses will receive $1,500 per fortnight per employee to ensure they remain commercially viable and their employees are protected throughout the COVID19 crisis.

The JobKeeper legislation passed parliament recently in April and although we now have certainty around eligibility requirements, many questions still remain around the reporting obligations and the delivery mechanism of the payment. Here are the main points.

To be eligible, a business with turnover less than $1billion must estimate their GST turnover has fallen or will likely fall by 30 per cent or more relative to a comparable period.

Taking the latter part of the requirements first, a comparable period will likely mean a comparison to the relevant month or quarter (depending on the BAS reporting of that business) in the prior year – meaning the March 2020 BAS sales compared to the March 2019 BAS sales.

Other requirements include:

• You carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia on 1 March 2020.
• You employed at least one eligible employee on 1 March 2020 (note there are different tests for sole traders or unpaid business founders).
• Your eligible employees are currently employed by your business for the fortnights claimed for (including those who are stood down or re-hired).

If you don’t meet the requirements for the basic turnover test described above a full list of alternative tests is as follows:

• Business commenced after June 2019 – therefore cannot compare March, April, May or June 2019. Most new startups should go for this which allows you to take the 3 month average turnover (before the test period) for a comparison period.
• Business acquisition or disposal – if there was an acquisition or disposal that significantly changed the entities turnover.
• Business restructure that changed the entity’s turnover – there was a restructure, or part thereof, after the relevant comparison period and before the applicable turnover test period.
• Business had substantial increase in turnover –
  • (1)          An entity applies the alternative test under this section if the entity had an increase in turnover of:
  • (a)          50% or more in the 12 months immediately before the applicable turnover test period, or
  • (b)          25% or more in the 6 months immediately before the applicable turnover test period, or
  • (c)          12.5% or more in the 3 months immediately before the applicable turnover test period.
• Business affected by drought or natural disaster
  •    An entity applies the alternative test under this section if:
  • (a)          the entity conducted business or some of the business in a declared drought zone, or declared natural disaster zone, during the relevant comparison period, and
  • (b)          the drought or natural disaster changed the entity’s turnover.
• Business has irregular turnover
  • An entity applies the alternative test under this section if:
  • (a)          for the quarters ending in the 12 months immediately before the applicable turnover test period, the entity’s lowest turnover quarter is no more than 50% of the highest turnover quarter, and
  • (b)          the entity’s turnover is not cyclical.
• Sole trader or small partnership with sickness, injury
  • (1)          An entity applies the alternative test under this section if:
  • (a)          the entity is a sole trader or small partnership that has no employees
  • (b)          the sole trader or at least one of the partners did not work for all or part of the relevant comparison period due to sickness, injury or leave, and
  • (c)          the turnover of the sole trader or partnership was affected by the sole trader or partner not working for all or part of that period.

Eligible employees can fall under any of the following categories:

• Are currently employed by the eligible employer (including those stood down or re-hired);
• Were employed by the employer at 1 March 2020;
• Are full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020);
• Are a permanent employee of the employer, or if a long-term casual employee, not a permanent employee of any other employer;
• Are at least 16 years of age at 1 March 2020;
• Are an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
• Were a resident for Australian tax purposes on 1 March 2020; and
• Are not in receipt of a JobKeeper Payment from another employer.

Monthly reporting to the ATO occurs via way of self reporting current & projected turnover as well as whether there has been any change to the number of eligible employees.

In terms of monitoring a fall in revenue, the tax office’s main metric will be figures disclosed in the BAS, reported on either monthly or quarterly depending on the business – i.e. has there been a 30% decline in revenue in the March 2020 BAS compared to the March 2019 BAS.

The tax office will be relying on Single Touch Payroll information to ensure firstly that employees remain employed by the business and secondly that the full $1,500 per fortnight is being passed on. Severe penalties will apply to businesses that falsely claim JobKeeper payments or do not pass on the full sum to employees.

Businesses must also notify their employees that they are receiving the JobKeeper payment if indeed they are, to avoid double dipping.