JobKeeper Payment Update
JobKeeper Payment Update
We in the dental industry have been significantly affected by COVID-19. In order to assist employers and prevent large scale layoffs and redundancies, the Federal Parliament has now passed the JobKeeper Payment legislation pledging $130 billion in wage subsidies to employers to help them pay their employees during the COVID-19 outbreak. Under the new legislation eligible employers will be reimbursed a fixed amount of $1,500 per fortnight for each eligible employee over the next 6 months for the period 30 March 2020 until 27 September 2020.
Who is an eligible employer?Of relevance to the dental profession, an employer will be eligible for the JobKeeper Payment if their business has an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their GST turnover has fallen or will likely fall by 30 per cent or more.
Self-employed individuals (businesses without employees) will be eligible to receive the JobKeeper Payment where they meet the same criteria.
To establish that a business or not-for-profit has, or is likely to, face the relevant fall in their turnover, most would be expected to establish that their turnover has or will likely fall in the relevant month or quarter (depending on their Business Activity Statement reporting period) relative to their turnover in a corresponding period a year earlier. Turnover is calculated as it is for GST purposes, and is reported on Business Activity Statements.
Where a business or not-for-profit was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition or they were newly established) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of COVID-19.
Who is an eligible employee?
Employers will only be able to claim the JobKeeper payment for eligible employees that were in their employment on 1 March 2020, and continue to be employed while they are claiming the JobKeeper payment.
An eligible employee is an employee who:
- is currently employed by the eligible employer (including those stood down or re-hired);
- is a full-time or part-time employee, or a casual employed on a regular and systematic basis for longer than 12 months as at 1 March 2020;
- was aged 16 years or older at 1 March 2020;
- was an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
- was a resident for Australian tax purposes on 1 March 2020; and
- is not in receipt of a JobKeeper payment from another employer.
In summary - eligible employees include:
- employees who are retained,
- employees stood down without pay after 1 March 2020 but remain employed, and
- employees let go after 1 March 2020 and re-hired.
How much does an employer have to pay an employee to qualify?
The employer must pay the employees at least $1,500 (before tax) during each fortnightly payment cycle (unless the payment cycle is monthly). However, the Commissioner of Taxation has a discretion to treat payments made in other periods to be made in the relevant fortnight if it is reasonable to do so (there are no guidelines yet on what situations would be reasonable).
The $1500 per fortnight minimum amount is to be paid even if ordinarily the employee earns less than this amount per fortnight.
The employer has the obligation to withhold income tax as appropriate from the $1500 per fornight payment.
What about an employer’s superannuation obligations?
Where an employee is paid more than $1,500 per fortnight, the employer’s superannuation obligations will not change. Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper Payment, it will be up to the employer if they want to pay superannuation on any additional wages paid by the JobKeeper Payment.
How does an employer make a claim for the JobKeeper Payment?
The JobKeeper payment is administered by the ATO. Employers can register their interest in applying for the JobKeeper Payment via www.ato.gov.au
From 20 April 2020, employers can enrol with us for the JobKeeper payment using the Business Portal and authenticate with myGovID. This will need be done by the end of April to claim JobKeeper payments for April.
In addition, in order to qualify for the JobKeeper Payment employers must notify their eligible employees that they are intending to claim the JobKeeper payment on their behalf and check they aren’t claiming JobKeeper payment through another employer or have nominated through another business. Employers must then send and eligible employees must complete the following form:
When and how will an employer receive the JobKeeper Payment?
Employers should expect to receive the first payment from the first week of May. This will payment will be made to the employer’s nominated bank account.
The payment will then be made on a monthly basis in arrears.