On 30 March 2020, the Australian Federal Government announced a third round of stimulus support measures to deal with the deepening economic crisis as a result of the COVID-19 lockdowns. The third round measures, costing $130 billion, now bring the Federal Government’s stimulus spending to well over $300 billion, representing an unprecedented 16 per cent of Australia’s GDP. This is the highest level of Australian Government spending in the nation’s history.
The centre piece of the third round support measures, entitled ‘JobKeeper Payments’ are effectively aimed at providing wage subsidies for employers to retain workers during these difficult times. The $130 billion package is expected to provide wage support to over 6 million workers in Australia over the next 6 months.
Under the JobKeeper Payments package, the Federal Government will provide qualifying employers with a wage subsidy equal to $1,500 per fortnight per worker employed as at 1 March 2020. This payment can be made up to a maximum of six months. The subsidy will start on 30 March 2020 with the first payments to be received by employers in the first week of May 2020.
Charities and not-for-profits can qualify for the subsidy. Interestingly, those who are self-employed and have no employees can also qualify.
To qualify for JobKeeper Payments the main conditions that need to be satisfied are covered under the following headings:
- Significant decline in turnover
- Eligible employees
- Payments to eligible employees
- Registration requirement.
These are summarised below based on the announcement. However, it is important to note that there are a number of elements still to be clarified.
1. Significant decline in turnover
An employer must have had, or is expected to have, a greater than 30 per cent decline in turnover relative to a comparable period a year ago (of at least a month). For larger businesses with turnovers greater than $1 billion the decline must be more than 50 per cent in turnover under this test.
2. Eligible employees
The employer must have eligible employees and the amount of JobKeeper Payments an employer can receive will depend on how many employees the employer has at 1 March 2020.
Eligible employees must satisfy the following conditions:
- were employed by the employer at 1 March 2020
- are currently employed by the eligible employer (including those stood down or re-hired)
- 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) Visa Holder, and
- are not in receipt of a JobKeeper Payment from another employer.
3. Payments to eligible employees
For eligible employees who earn less than $1,500 per fortnight, the employer must pay so much of the JobSeeker Payment to those employees such they receive the minimum $1,500 per fortnight. Eligible employees who currently earn more than $1,500 per fortnight are not entitled to any further payments and the employer is able to retain the relevant $1,500 effectively as a wage subsidy.
For business that have closed as a result of the lockdown measures, employers must pass on the full $1,500 per fortnight to their employees.
4. Registration requirement
Employers must register through the ATO’s website and this can be done from the effective date of the announcement (i.e. from 30 March 2020). An online application form is to be provided to streamline the application process. Employers will be required to provide monthly updates to the ATO.
Businesses with no employees (e.g. those self-employed) will be required to provide an ABN for their business. They will also need to nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity. Monthly updates to the ATO to declare their continued eligibility for the payments will also be required. Payment will be made monthly to the individual’s bank account.
Other considerations of note regarding the JobKeeper Payments include:
- They are expected to be taxable
- Any additional wage paid because of the JobKeeper Payment will not be subject to the super guarantee charge
- They will count towards income tests for certain other welfare assistance
- Employees cannot be entitled to both JobSeeker and JobKeeper payments
- Employers that are major big banks will not qualify if they are subject to the Major Bank Levy.
It will be important for most businesses to determine the impact or expected impact the COVID-19 lockdowns will have. For those businesses that have already shut down or otherwise suffered a significant decline in turnover that qualify for the JobKeeper relief, the registration process with the ATO to obtain this new support should be started immediately. This can be found on the Australian Government’s website.
The Prime Minister has announced that another sitting of Parliament will be organised immediately to fast track legislation relating to these third round measures and clarify how certain parts of the rules will operate. Bentleys will provide further details on these rules once the legislation is released.
The following table summarises the key information to access the JobKeeper Payments.
|EFFECTIVE FROM||CONDITIONS||BENTLEYS COMMENT
|Employer wage subsidy of $1,500 per employee per fortnight||The subsidy will start on 30 March 2020 with the first payments to be received by employers in the first week of May 2020||30% decline in turnover (50% for larger businesses)|
Employees as at 1 March 2020 or self-employed
Passed on to employees earning less than $1,500 per fortnight
Register with the ATO and employees notified
Ongoing reporting requirements to ensure continued eligibility
|For employees earning less than $1,500 per fortnight the package will increase pay to $1,500 per fortnight over a 6 month period.
For businesses that have shut down, the package is intended to incentivise both the employer and employee to remain in contact so that the employer can continue to pay employees $1,500 per fortnight and resume operations post lockdown
For further details, visit: Australian Government: Support for business (external website)
For an overview of all Australian fiscal support measures – at federal, state, and territory levels – visit Bentleys’ COVID-19 tax summary update.
With any questions or for support, contact your local Bentleys advisor.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.