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GOVERNMENT ANNOUNCES NEW JOBKEEPER PAYMENT

The Federal Government announced yesterday another assistance program to help businesses and employees who have been (or will be) impacted financially by the COVID-19 pandemic.

 

The JobKeeper Payment will be made available to businesses, in the form of a subsidy from the Government, to assist them to continue paying their employees.  For employees, this should mean they can keep their job and earn an income, even if their hours have been cut.

 

The JobKeeper Payment is a temporary subsidy program (for up to 6 months) open to businesses and the self-employed, and will provide $1,500 per fortnight per employee. 

 

The program will be managed by the Australian Taxation Office (ATO) and details will be verified via the Single Touch Payroll (STP) payroll reporting system.


 


Eligible Employers

Employers will be eligible for the subsidy if:

  • 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),  

         or

  • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month), and
  • The (large) business is not subject to the Major Bank Levy.

 

The Employer must have been in an employment relationship with eligible employees as at 1 March 2020, and the Employer will need to confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.

 

Not-for-profit entities (including charities) and self-employed individuals (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 (ie. 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) Visa Holder; or
  • 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 (such as Centrelink) and those employees will need to report their JobKeeper Payment as income.



Payment Process

Eligible employers will be paid $1,500 per fortnight per eligible employee.  Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.

 

Where employers participate in the scheme, their employees will receive this payment as follows.

  • If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements. The JobKeeper Payment will assist their employer to continue operating by subsidising all or part of the income of their employee(s).
  • If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
  • If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.

 

If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight, before tax.

 

In circumstances where an employee has been retrenched since 1 March 2020 and is now being re-engaged by their Employer, the parties may need to consider if any leave entitlements etc. were paid out, and an adjustment or reversal may need to be made in this regard.

 

The JobKeeper Payment does include a superannuation guarantee component.  It will be up to the employer if they want to pay superannuation on any additional wage paid (above the $1,500 per fortnight) JobKeeper Payment.

 

Payments will be made to the employer monthly in arrears by the ATO, and the first payment will be back-dated to 1 March 2020 for all eligible employees and should be paid by the ATO in the first week of May 2020.



Timing

The subsidy will start on 30 March 2020, with the first payments to be received by Employers in the first week of May 2020.   All payments will be made to the employer monthly in arrears by the ATO.

Businesses will be able to register via the ATO website (www.ato.gov.au) from today to participate in the JobKeeper Payment program.

 

Businesses with employees will need to take the following steps to access the JobKeeper Payment program, and the eligible Employers will need to:

  • Register their interest via the ATO website from today.
  • Apply for the program by means of an online application.
  • Identify eligible employees for JobKeeper Payments and provide monthly updates to the ATO.
  • Ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.
  • It will be up to the Employer if they want to pay superannuation on any additional wage paid (above the $1,500 per fortnight) JobKeeper Payment.

 

Businesses without employees (such as the self-employed), will need to take the following steps to access the JobKeeper Payment program, and will need to:

  • Register their interest via the ATO website from today.
  • Provide an ABN for their business, nominate an individual to receive the payment, provide that individual's Tax File Number (TFN), and provide a declaration as to recent downturn in business activity (ie. turnover reduced by more than 30%).
  • Provide a monthly update to the ATO to declare their continued eligibility for the JobKeeper Payments, and any payment from the ATO will be made monthly to the individual's bank account.

Eligible businesses can apply for the payment online and are able to register their interest via the ATO website (www.ato.gov.au) today.  After you have registered your interest with the ATO to participate, if you require any assistance to complete the registration application, please contact your Lowe Lippmann advisor.

 

We expect more specific details will become available shortly, as the announcement was only made yesterday.  We will bring you more details as soon as they become available.

 

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.