Eligible Employers/Sole Traders
To determine if you are an eligible employer/sole trader, your turnover needs to have dropped by a certain percentage, depending on the size of the business:
- Annual Turnover <$1 billion: turnover fallen by at least 30%
- Annual Turnover >$1 billion: turnover fallen by at least 50%
To determine if your turnover has fallen per the required percentage, you compare your current turnover to a comparable period a year ago (of at least a month). There is currently limited detail for the criteria of fallen turnover and the required comparison period. We will continue to update you with the relevant information when it is made available.
Note: you will not be an eligible employer/sole trader if you are subject to the Major Bank Levy.
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 (i.e. employed by the business on a regular casual basis for 12 months or more 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) Visa Holder; and
- are not in receipt of a JobKeeper payment from another employer
Note: If your employees receive the JobKeeper Payment, this may impact their eligibility for payments from Services Australia (Centrelink) as they must report their JobKeeper Payment as income - see below for further details.
Application Process - Businesses with Employees
- Register your interest in applying for the JobKeeper Payment via the ATO website from 30 March 2020 - see here to register.
- Subsequently after the above, the ATO will provide an online application form - eligible employers/sole traders will need to fill this out to complete the application process.
- You will need to identify your eligible employees for the JobKeeper Payments (i.e. those who are not already receiving the payment through another employer), and provide the ATO with an update each month with the updated total number of eligible employees. This update will be provided to the ATO via Single Touch Payroll (STP) data for most businesses. If you are not using STP, it is likely there will be a lodgement required each month to the ATO.
- You are required to notify each employee that you are claiming the JobKeeper Payment for. Only one employer can be receiving the JobKeeper Payment for each employee. I.e. if you have employees who have multiple jobs, it may be that you will be unable to claim the JobKeeper Payment if their other employer is already receiving the payment.
Application Process - Sole Traders
- Register your interest in applying for the JobKeeper Payment via the ATO website from 30 March 2020 - see here to register. It is anticipated that the application will be via MyGov.
- You will need to provide an ABN for the business, nominate the individual to receive the payment (i.e. yourself), provide your TFN, and provide a declaration as to recent business activity.
- You will need to provide a monthly update to the ATO to declare your continued eligibility for the payments. Payments will be made monthly to the individual's bank account.
Requirements for Employers - Payment to Employees
As an employer who has registered for the JobKeeper Payment, you will receive $1,500 per eligible employee, per fortnight for up to six months. As an employer, you are required to withhold tax from the payment to your employee, like you normally would when paying their normal wage.
Below are examples (provided by Treasury) on how the JobKeeper payment is applied to the employees of your business:
- Employee receives >$1,500 per fortnight and is still currently employed
Anne is a permanent full-time employee on a salary of $3,000/fortnight before tax who continues working for the business.
Anne will continue to be paid $3,000/fortnight before tax by her employer, and the business will receive $1,500/fortnight from the JobKeeper payment to subsidise the cost of Anne's salary.
Superannuation Guarantee is still required to be paid on Anne's income.
- Employee receives <$1,500 per fortnight and is still currently employed
Nick is a permanent part-time employee on a salary of $1,000/fortnight before tax who continues working for the business.
The business continues to pay Nick his $1,000/fortnight before tax salary and pays an additional $500/fortnight before tax, bringing his total wage to $1,500/fortnight before tax.
The business receives $1,500/fortnight from the JobKeeper Payment which will subsidise the cost of Nick’s salary.
The business is required to continue paying Superannuation guarantee on Nick's $1,000 salary. The business has the option to pay Super Guarantee on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.
- Employees have been stood down since 1 March 2020
If you have stood down employees since 1 March 2020, and you are eligible based on the turnover requirements and have eligible employees, you can apply for the JobKeeper Payment for each eligible employee. If you are a Sole Trader, you can register for this payment for yourself, and your employees.
You will receive $1,500 per fortnight per employee (Sole Traders will receive their payment monthly to their nominated bank account).
The $1,500/fortnight payment received per employee needs to be passed on to each employee - i.e. you are required to withhold the relevant amount of PAYG withholding from the payment, and pay the net wage to each employee.
Superannuation Guarantee on this income is optional for the employer.
Is the JobKeeper Payment Taxable?
The JobKeeper payment is taxable to both the Employer and Employee.
- The employer claims a tax deduction for any amounts paid to each employee.
- The employee is taxed on the income like their normal wage. If your current wage is above $1,500 per fortnight (before tax), you will not pay any additional tax on the JobKeeper Payment component of your wage.
- The JobKeeper Payment is classed as income for other Centrelink Benefits, like what the standard wage paid by the employer would have been.
What is the Impact on Other Centrelink Benefits?
If you have applied for or are currently receive other Centrelink benefits that are income tested (e.g. the JobSeeker Payment, Family Tax Benefit, Farm Household Allowance etc), the JobKeeper Payment may count towards your income, as it is a subsidy you are receiving from your employer. The JobKeeper Payment will either be:
- A subsidy towards the current wage you receive - i.e. if you are currently being paid $2,000 per fortnight from your employer, this JobSeeker Payment will not impact your income for Services Australia payments (Centrelink) as it is only subsidising the cash flow impact for your employer.
- A top-up on the wage you currently receive - i.e. if you are currently being paid $1,000 per fortnight before tax, you will now receive $1,500 per fortnight before tax (if you and your employer are eligible). This $500 increase is additional income for income test purposes.
- A replacement wage as you have been stood down - i.e. where you were previously stood down with no pay, the $1,500 before tax payment is income you were not previously receiving. This $1,500 increase is additional income for income test purposes.
For further information on the JobSeeker Payment, please see the below fact sheets:
We suggest our clients register their interest for this JobKeeper Payment, even if you are unsure whether you are eligible based on the reduced turnover criteria. The ATO will assess if you are eligible through the online application process. As a reminder, to register for this payment, please visit the ATO website here.
We will continue to keep you updated on the criteria for the JobKeeper Payment as more information is made available.
If you would like to discuss the above details our team is available to assist you. Please don't hesitate to talk with us on (02) 4229 2211 or you can send us your enquiry online.