JOBKEEPER PAYMENT APPLICATION PROCESS EXPLAINED

Yesterday, details were released by the Australian Taxation Office (ATO) in relation to the necessary steps which need to be completed for an Eligible Employer to receive the JobKeeper Payment. 

We have prepared the following as a practical step-by-step guide on how to navigate the application process for the JobKeeper Payment scheme, including what information and details you are required to provide, and what your obligations will be as an Eligible Employer.


Step 1 - Register your interest

To ensure you are kept up to date with the most recent information for the JobKeeper payment, ensure you register your interest via the ATO website.  We understand most businesses have completed this step already, but if not, you can still register your interest via the ATO website here.  https://www.ato.gov.au/Job-keeper-payment/  

 

After you have registered your interest with the ATO to participate, if you require any assistance to complete the application form after 20 April 2020, please contact your Lowe Lippmann advisor.


Step 2 - Check You & Your Employees are Eligible

We have previously outlined in detail the requirements to determine if your business is an Eligible Employer and if your staff are Eligible Employees - details of these definitions have been explained in our previous Tax Alert.

Other entities can be eligible for the JobKeeper payment if they are not an employer.  The entities and the one associated individual that could be eligible include:

  • Sole trader-the individual must be the entity
  • Partnership-the individual must be a partner in the partnership
  • Trust-the individual must be an adult beneficiary of the trust
  • Company-either a director or shareholder in the company

How do you determine a "decline in turnover"?

Firstly we must note, whilst a business must satisfy the decline in turnover test in order to be entitled to a JobKeeper Payment, once it is satisfied, there is no requirement to retest in later JobKeeper Payment fortnights.  In other words, the "decline in turnover test" only needs to be satisfied once.

To work out your decline in turnover, you can compare either:


     *     your actual GST turnover for March 2020 with your GST turnover for March 2019;
     *     your projected GST turnover for a relevant month in 2020 (between April & September) with your GST turnover for that month in 2019; or
     *     your projected GST turnover for a relevant quarter in 2020 (quarters starting April 2020 or July 2020) with your GST turnover for that quarter in 2019.

How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier.  You may meet the "decline in turnover test" if your turnover has declined by 30% or 50% (dependent on your aggregated turnover).

The term "turnover" (in this test) needs to take into account the total value of all supplies made, or are likely to be made, by the entity during that period (ie. month or quarter), excluding input taxed supplies (ie. passive rental income), supplies that are not for consideration, supplies that are not made in connection with the enterprise that the entity carries on, and supplies that are not connected to Australia (ie. made and completed outside of Australia).

We note that it is ultimately up to each business to self-assess whether it satisfies the decline in turnover test.  In most cases, businesses will be required to make a reasonable estimate of their turnover for a month or a quarter.  To assist with this process, the ATO (according to Treasury) will be providing guidance in this regard shortly.

In the meantime, we recommend that it would be prudent for businesses to start collating relevant information (ie. interim accounts, monthly sales reports and prior year BASs) to get ready for comparison calculations.  If you require any assistance to start collating the relevant information, please contact your Lowe Lippmann advisor.

If you don't have a relevant comparison period in the 2019 year (for example your business has only recently started trading), the Commissioner can apply an "alternative test" to satisfy the "decline in turnover test", and we have explained this concept in a previous Tax Alert.

 Eligibility for the JobKeeper payment commences at the start of a JobKeeper fortnight.  To ensure you receive a payment for a fortnight, you need to ensure you have applied for the scheme prior to that fortnight as payments will not be made retrospectively.  Note there is an exception for the month of April 2020 (see more at Step 3 below).


Step 3:  Ensure you Pay $1,500 to each Eligible Employee per fortnight

We must note that the JobKeeper payment is a "one in, all in" scheme - ie. if eligible, you will receive the JobKeeper payment for all eligible employees.  You cannot pay your employees less than $1,500 per fortnight and keep the difference.

The JobKeeper Payment is a reimbursement scheme.  As a result, you are required to pay the minimum gross payment of $1,500 per fortnight for each JobKeeper fortnight to eligible employees.

JobKeeper fortnights start on 30 March 2020 and end on 27 September 2020.  We note that you are required to withhold tax from this payment.

If cash flow is an issue and you are unable to pay wages for the month of April (before the first JobKeeper payment is receives in early May), the Government suggests employers in these circumstances should speak to their bank to extend credit until early May (and use the JobKeeper payment as a guarantee of repayment).

The minimum $1,500 (before tax) payment requirement will operate as follows:

  • If an employee has been receiving at least $1,500 in gross salary income per fortnight since 30 March 2020, they will continue to receive their regular income according to their prevailing workplace arrangements.  In this case, the JobKeeper Payment will effectively subsidise the first $1,500 of the employee's gross fortnightly salary income.
  •  If an employee has been receiving less than $1,500 in gross salary income per fortnight since 30 March 2020, the employer must pay the employee a 'top-up' payment to ensure the employee has been paid at least $1,500 per fortnight to be eligible to receive the JobKeeper Payment.  This means some employees will receive more than their ordinary salary and wages derived from the employer.
  •  If an employee has been stood down without pay after 1 March 2020 their employer must pay the employee a minimum gross fortnightly salary income of $1,500 from 30 March 2020, to be eligible to receive the JobKeeper Payment in respect of the employee.
  • If an employee was employed on 1 March 2020, has subsequently ceased employment with their employer, and then has been re-engaged by the same employer, the employer must pay the employee a minimum gross fortnightly salary of $1,500 under the JobKeeper Scheme.

For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept that the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you by the end of April.  This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.

If you usually pay your employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner.  For example, if you pay your employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight.

Going forward, the minimum payment will need to be strictly made by the end of the relevant fortnight.



Step 4: Notify your Eligible Employees

You must provide notification to your eligible employees in writing that you have elected to participate in the JobKeeper Scheme within 7 days of enrolling with the ATO.  Your employee is required to respond to your nomination agreeing that they wish to be nominated and that they don't receive the JobKeeper payment via another employer.

The ATO have provided a JobKeeper Employee Nomination Notice form that you can complete and provide to each eligible employee.  This ATO form can be found here. https://www.ato.gov.au/Forms/JobKeeper-payment---employee-nomination-notice/

Each eligible employee will need to complete and return their respective sections to you, which you keep for your records.  These forms need to be provided and returned by the end of April 2020 if you plan to claim the JobKeeper payment for April.


Step 5: Apply for the JobKeeper Payment

Application forms for the JobKeeper Payment scheme will be made available on 20 April 2020.  We can assist you with the application process or you can apply via the Business Portal and authenticate with myGovID.  Lowe Lippmann will be issuing instructions to our clients shortly to enable them to utilise the Business Portal with myGovID.

If you wish to claim the JobKeeper payment for the month of April, you must apply by the end of April.

How will you provide details for your eligible employees in your application?

  • Selecting employee details that are pre-filled from your Single Touch Payroll (STP) pay reports if you report payroll information through an STP enabled payroll solution, or
  • Manually entering employee details in ATO online services or the Business Portal if you do not use an STP enabled payroll solution.

How will you know if your application has been approved?

Upon submitting the confirmation of your eligible employees online, you should receive a confirmation email or SMS showing it has been received.


Step 6:  Ensure your bank details are correct

To ensure you receive your JobKeeper Payment, ensure your bank details are correct in the online application process. 

will also need to indicate if you are claiming an entitlement for one eligible business participant (ie. an eligible sole trader, partner, company director or shareholder or trust beneficiary), and we note that we have explained the concept of business participants (or business principals) in a previous Tax Alert.

 


Step 7:  Specify the estimated number of Eligible Employees

If you plan to claim the JobKeeper Payment for the first two JobKeeper Fortnights (30 March – 12 April and 13 April – 26 April) you must specify in the online application process the estimated number of employees you intend to claim the JobKeeper Payment for.


What reporting obligations will you have ?

If you receive the JobKeeper Payment, there are several reporting obligations, which include:

  • Monthly Reporting - you are required to report:
  1. your current GST turnover for the reporting month; and
  2. your projected GST turnover for the following month
  • Report any changes to employees - if your eligible employees change or they leave your employment, you need to notify the ATO in the next reporting period
  • Reporting via Single Touch Payroll (STP) - most of the required employee information is transferred via your STP reporting obligations.
  • However, if you are not yet setup to report via STP (ie. you are a closely-held employer), you can manually enter employee details in ATO online services or via the Business Portal if you do not use an STP enabled payroll solution.

Important factors to consider

  • The JobKeeper payment is a reimbursement scheme to employers - ie. you must meet the minimum wage requirement of $1,500 gross per fortnight to each employee.
  • The JobKeeper payment is a "one in, all in" scheme - ie. if eligible, you will receive the JobKeeper payment for all eligible employees.
  • Once eligible, you are not required to retest your Turnover eligibility - you will continue to receive the JobKeeper payment up until 27 September 2020 for each eligible employee.
  • Applications are prospective, not retrospective - ie. you must apply before the end of a JobKeeper fortnight for the employer to be entitled to a payment for that fortnight.
  • Transitional timing rules apply for the first and second JobKeeper payments (fortnights commencing on 30 March 2020 and 14 April 2020).  You have until the end of the second JobKeeper fortnight (26 April 2020) to apply for the JobKeeper scheme.  In other words, an employer has until the end of the second JobKeeper fortnight to register in respect of the first JobKeeper fortnight.
  • The JobKeeper Payment is assessable income to your business, however the normal deductibility rules apply to the payment to eligible employees.
  • Ensuring you are STP compliant will help with the application process and your reporting obligations under the JobKeeper Scheme. If you are not yet STP compliant, we suggest implementing this as soon as possible.

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. 

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