With enrolments for the JobKeeper program now open, many practical questions are arising. We share here some of the common questions we are addressing for clients presently.
2. My business isn’t currently registered for Single Touch Payroll (“STP”). How do I identify my employees for JobKeeper as part of the enrolment process?
The ATO has advised that it is still fine-tuning the JobKeeper enrolment and identification process for entities that are not registered for STP.
5. My business is carried-on by an Australian subsidiary of a global group. The Australian subsidiary has a relatively small turnover and well below $1bn, but the overall global group turnover exceeds $1bn. Does my business need to demonstrate a 30% turnover drop or a 50% turnover drop?
6. My business is an Australian business that sells to both domestic and international clients but has no operations outside of Australia. Are all sales, both to Australian clients and international clients, included in my turnover calculations?
7. My current business turnover is significantly below my pre-COVID 19 expectations & projections, but still higher than the equivalent period in 2019 as my business was only starting then. Are there any other turnover comparison methods available?
No – JobKeeper payments are not supplies for GST purposes and are therefore not included in turnover comparisons.
14. I carry-on a business through an entity (e.g., a trust) that does not employ me personally and the entity’s turnover has reduced significantly. I also have a part-time job with an unrelated employer whose business hasn’t suffered significantly and is not claiming JobKeeper for me. Is my trust eligible to claim JobKeeper payments for me as a Business Participant?
No - you cannot be an employee (other than a casual employee) of any employer if your entity wishes to claim a JobKeeper payment for you as a Business Participant. This is irrespective of whether or not your other employment entitles you to JobKeeper payments.
Registration
1. My business turnover hasn’t dropped by 30% yet and may not in the future. If it does, will I be able to enrol for JobKeeper at a later time and make claims for the remainder of the program?
Initially, the announcements for JobKeeper suggested that you could opt in at any time throughout the 6-month period.
Enrolment for JobKeeper opened on 20 April and the guidelines indicate enrolment must be completed by 30 April to ensure you receive JobKeeper payments as early as possible. However, the ATO indicates that enrolments are open until the end of May if you need more time.
It is still unclear whether enrolment will be open for the remainder of the program or whether enrolments will not be allowed after the end of May.
If your business has already suffered a sufficient drop in March or April, or if you are forecasting your April – June quarter will be down by 30% or more, we recommend you enrol before 30 April.
We are hopeful that in the very near future more information will become available to make it clear what the process will be to opt in beyond the end of May. If you have any expectation your business may decline in a future month this clarification will be very important for you to monitor. Please speak to us if this applies to you so we can keep you updated with any recommended action.
They have indicated, however, that entities with less than 40 employees can manually enter each eligible employee for each JobKeeper fortnight by entering their tax file number and date of birth.
As the identification of employees is not required until 4 May 2020, we expect further clarification before that date.
If you are in this position, please contact your Prosperity adviser to discuss this matter. We also have services available that can assist with STP being administered on your behalf which would solve the issue of manual reporting.
Eligibility – turnover drop
3. I have been able to identify a turnover drop of at least 30% but expect my business to return to more normal trading in the coming months. Do I cease to be eligible for JobKeeper once my turnover no longer drops by 30% or more?
No – you only have to establish your eligibility once and then you’re entitled to JobKeeper for the remainder of the program, even if your turnover doesn’t continue dropping by at least 30% in comparison to equivalent periods in 2019.
4. My business did not suffer a turnover drop in March 2020 and suffered only a small drop in April 2020, however, I am expecting significant drops in May 2020 and June 2020 so that my June 2020 quarter will likely be more than 30% below the June 2019 quarter. Am I eligible for JobKeeper for wages paid in April 2020 even though that month did not suffer a sufficient drop?
Yes – you are able to assess your turnover drop on a monthly or quarterly basis. If you project your June 2020 quarter to be likely to suffer a turnover drop of at least 30% in comparison to the June 2019 quarter, you will be eligible for JobKeeper from April 2020 for the entire six month period. You need to act now to register.
If your “aggregated turnover”, which includes the worldwide income or all your global related parties, is more than $1bn, your Australian subsidiary will need to project a 50% turnover drop to be eligible for JobKeeper, even if the Australian subsidiary’s turnover is well below $1bn in its own right.
If you do not have operations outside Australia, all sales to Australian clients and international clients are included in your turnover calculations.
If you have operations outside Australia, sales connected with your non-Australian operations may not be included in the turnover calculations. As there is some uncertainty surrounding this issue, please contact us for further clarification if your business is potentially impacted.
The JobKeeper Rules allow the Commissioner of Taxation to issue alternative decline in turnover tests by legislative instrument. To date, none have been released.
The Explanatory Statement to the JobKeeper Rules provide a few examples where the such legislative instruments may be issued – e.g., farm businesses impacted by drought in 2019, technology start-ups, etc. Please contact us if you believe your business may be eligible for such a determination.
8. I carry-on a medical business and receive payments under the Practice Incentives Program. Are these payments included in the turnover comparisons?
No - these payments are not supplies for GST purposes and are therefore not included in turnover comparisons.
9. I project my business turnover to drop by more than 30% in comparison to the equivalent period in 2019, but the JobKeeper payments received from the Government might result in a net drop of below 30%. Does this exclude me from the program?
Eligible Employees
Business Participants10. Can I pick & choose which employees I claim JobKeeper payments for (e.g., what if I don’t want to pay all my stood-down employees)?
No – all eligible employees must be covered as this is a “one in all in” program.
11. My business pays employees sales commissions rather than fixed wages. Are they eligible for JobKeeper?
Yes – as long as they are legally employees (rather than independent agents) they are eligible for JobKeeper. You will need to pass on $1,500 per fortnight under the JobKeeper rules and will need to separately consider your employment terms as to any other obligations to pay commissions and/or to offset the JobKeeper payments against normal earnings.
12. I hired a casual employee on 1 April 2019, so they are not an eligible employee for JobKeeper purposes on 1 March 2020 as they have not been a long-term casual for 12 months on that date. However, do they become eligible on 1 April 2020 when they reach the 12-month milestone?
Fortnights
No – as long as a payment of at least $1,500 is made in a JobKeeper fortnight, you will be eligible for a claim for that JobKeeper fortnight even if the period covered by the payment doesn’t entirely align with the JobKeeper fortnight.
No – there is only one 12-month testing time for long-term casuals on 1 March 2020. Long-term casuals cannot become eligible for JobKeeper payments if their 12-month anniversary happens after 1 March 2020 while the program is still running.
13. My payment fortnights do not align exactly with the JobKeeper fortnights. Do I need to apportion my claims in the first and/or last fortnight?
For example, assume your fortnight runs from 27 March to 9 April and you made a payment in arrears on 9 April. The first JobKeeper fortnight runs from 30 March to 12 April. Even though the payment relates to a number of days prior to the start of the JobKeeper fortnight, as the payment was made in the JobKeeper fortnight, it is eligible for a JobKeeper claim by the employer.
14. I carry-on a business through an entity (e.g., a trust) that does not employ me personally and the entity’s turnover has reduced significantly. I also have a part-time job with an unrelated employer whose business hasn’t suffered significantly and is not claiming JobKeeper for me. Is my trust eligible to claim JobKeeper payments for me as a Business Participant?
Other
15. My business is fully shut down due to COVID-19, has no income and all employees are stood-down. As I am incurring administration costs in processing payment to employees and claiming JobKeeper, can I hold back a reasonable administration fee from payments to employees?
No – you must pay at least $1,500 to each employee per fortnight. It is illegal to hold back any amounts for administration fees, even if the amounts are reasonable.
As you will appreciate, the JobKeeper program is complex and many issues are emerging on a daily basis. Please get in touch with your Prosperity adviser to assist you through the enrolment and claims process.
