The Prime Minister and Treasurer announced a new Scheme as part of the Third Stimulus Package. The Scheme is known as the JobKeeper Payment Scheme.

The payment will provide to eligible employers a $1,500 payment (before Tax) per employee engaged as at 1 March 2020 via their employer including those that were recently employed but were terminated or made redundant subsequent to 1 March 2020.

The finer details of the Scheme are yet to be determined and legislation will be passed in the coming weeks with the payments to be flowing from there.

A fact sheet is available and provides a breakdown of the information as follows.

Eligible Employers

To be eligible the employer must:

  • Their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month).
  • 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 JobKeeper Payments.
  • Not-for-profit entities (including charities) and self-employed individuals (including businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.

Eligible Employees

Eligible employees are employees who:

  • 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 basis for longer than 12 months as at 1 March 2020);
  • are at least 16 years of age;
  • are 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 – New Zealanders) Visa Holder; and
  • are not in receipt of a JobKeeper Payment from another employer.

If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper Payment as income.

How it Works

  • The Employer will pay the employees on behalf of the JobKeeper Scheme the full sum of the entitlement of $1,500 (before Tax) per fortnight notwithstanding if their salary was less than this amount.
  • The Scheme will pay Employers on monthly basis in arrears.
  • The payments do not automatically create a superannuation or leave accrual entitlement. However, the Employer may elect to pay these;
  • The Employer may elect to pay more than this amount if the employee continues to work. However, it should be noted that if the employee continues to work it does not defeat the employee’s entitlements under any award or contractual arrangement. In these circumstances the JobKeeper payment is a subsidy to the normal wage costs up to $1,500.
  • There will be ongoing monthly reporting requirements to the ATO – these are yet to be finalised.

Application Process

The steps involved in the process:

  • Register interest with the ATO

Those wishing to have VCP Bookkeeping or Van Cotter Partners as their agent for this purpose please confirm in writing so that we can register your business and act on your behalf.

  • Inform all employees and eligible former employees of your intent to claim;
  • Complete an online application form with the ATO.

Special Process for Self-employed and Businesses without Employees (ie those electing to pay related parties/directors via drawings and loan accounts for end of year tax treatment)

Businesses without employees need to:

  • Provide an ABN for their business;
  • Nominate one individual to receive the payment
  • Provide the individual’s Tax File Number.
  • Provide the individual’s bank account details. Payments will be made to the individual directly.

Again, those wishing to have VCP Bookkeeping or Van Cotter Partners as their agent for this purpose please confirm in writing so that we can register your business and act on your behalf.

Please note that it is still vague on how they will define eligible and treat these employee-less entities but it is still in your best interest to register and let the ATO decide on eligibility at the time of payments.

Whilst this is new and the finer details are still to be legislated, please feel free to contact us with any questions.