Urgent - Jobkeeper Rules - Turnover Test - Employer Eligibility

15 April 2020

URGENT - JOBKEEPER RULES - TURNOVER TEST - EMPLOYER ELIGIBILITY

Jobkeeper is the potential $1500 per fortnight subsidy payable to employers who pay eligible employees at least $1500 per fortnight. The legislation for Jobkeeper was passed but the eligibility and various other RULES etc came later and separately having been issued by the Commissioner of Taxation.

Many clients are asking about the Turnover tests and the Turnover comparison periods. We have deliberately kept this circular brief and focussed only on small to medium entities, excluding charities etc.

Aggregated turnover (ie; aggregated for this entity and connected entities) is only relevant to determine which test applies (ie; 30% vs 50% reduction for greater than $1bn turnover). So the test for small to medium entities is 30% of their stand alone single entity turnover.

Turnover is GST turnover as is used in BAS (Business activity statements), but excluding input taxed supplies such as residential rent and interest income. Whilst we await confirmation, our understanding is that if you are registered for GST on a cash basis it will be measured as cash turnover, whereas if you are registered on accruals basis, it will be accruals basis turnover comparison.

GST exports are GST free supplies so are counted, but operations of a branch overseas will not count.

Choosing the comparison period:
The decline in turnover test for these entities is 30% as compared to the same period in 2019.
You may choose to compare:
March 2020 month to March 2019 month.
If a drop of more than 30% occurred you will be eligible from 30th March, 2020.

Otherwise you may choose to compare monthly as follows:
Projected April 2020 month to April 2019 month actuals.
Projected May 2020 month to May 2019 month actuals.
And so on each month through to September, 2020. Once you qualify, you can elect into the scheme and you have to notify your employees, and the ATO, and pay employees on that basis.

Otherwise you may choose to compare quarterly as follows:
Projected 1st April to 30th June, 2020 quarter to same quarter 2019 actuals.
Projected 1st July to 30th September, 2020 quarter to same quarter 2019 actuals.

Reminders / Notes:
Once qualified and elect into the program, you stay qualified and are not retested in future months.

Eligibility is not backdated, so if you are not eligible in March or April and become eligible in May, then you receive Jobkeeper only in relation to eligible employees in May onwards. ABN contractors are not employees and so they must apply for Jobkeeper independently as their own business.

Since it is a single entity test, the position for related parties, such as service entities may be difficult. No specific provision has yet been announced for these circumstances. At this time as we understand it, the turnover of the service entity employer must have declined by 30%.

Once eligible and decided to enter the Jobkeeper scheme the employer has to pay employees accordingly and will need documentation in relation to eligible employees and relevant declarations from those employees. There are monthly reporting requirements to the ATO as well as the STP (single touch payroll).

Regardless of future turnover you have to register your interest in the scheme now if you have not already done so.
We have kept this circular intentionally brief to clarify some specific points for you as employer entities.

Below we have provided the link to the ATO materials about the Jobkeeper payment.
https://www.ato.gov.au/General/JobKeeper-Payment/

As you may know this scheme is a reimbursement scheme and employers have to first determine their eligibility and pay employees and are later reimbursed under the scheme. For the month of April the ATO have allowed extra time:

“For the first two fortnights (30 March – 12 April, 13 April – 26 April), we will accept 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.”
Below we have extracted some of the checklists from the ATO materials link above.

Enrol for the JobKeeper payment
(from 20 April onwards except step 1 which should be done now)
You or a registered tax professional can enrol for the JobKeeper payment:

Step 1 – Register your interest and subscribe for JobKeeper payment updates.

Step 2 – Check you and your employees meet the eligibility requirements.

Step 3 – Continue to pay at least $1,500 to each eligible employee per JobKeeper fortnight (the first JobKeeper fortnight is the period from 30 March to 12 April).

Step 4 – Notify your eligible employees that you 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.

Step 5 – Send the JobKeeper employee nomination notice to your nominated employees to complete and return to you by the end of April if you plan to claim JobKeeper payment for April. Keep it on file and provide a copy to your registered tax agent if you are using one.

Step 6 – From 20 April 2020, you can enrol with us for the JobKeeper payment using the Business Portal and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April.

Step 7 – In the online form, provide your bank details and indicate if you are claiming an entitlement based on business participation, for example if you are a sole trader.

Step 8 – Specify the estimated number of employees who will be eligible for the first JobKeeper fortnight (30 March – 12 April) and the second JobKeeper fortnight (13 April – 26 April).

Confirmation of eligible employees you will claim JobKeeper Payment for
(available from 4 May 2020 onwards)
You or a registered tax agent can apply for the JobKeeper payment for your eligible employees:

Step 1 – Apply to claim the JobKeeper payment by logging in to the ATO Business Portal

Step 2 – Ensure you have paid each eligible employee a minimum of $1,500 per JobKeeper fortnight before tax.

Step 3 – Identify your eligible employees in the application form by selecting employee details that are prefilled from your 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, or using a registered tax agent who will submit a report on your behalf through Online services for agents.

Step 4 – Submit the confirmation of your eligible employees online and wait for your confirmation email or SMS showing it has been received.

Step 5 – Notify your eligible employees you have nominated them

Step 6 – We will pay you the JobKeeper payment for all eligible employees after receiving your application.

Step 7 – Each month, you will need to reconfirm that your reported eligible employees have not changed through ATO online services, the Business Portal or via your registered tax agent. This will ensure you will continue to receive the JobKeeper payments from us. You do not need to retest your reported fall in turnover, but you will need to provide some information as to your current and projected turnover. This will be done in your monthly JobKeeper Declaration report.

Step 8 – If your eligible employees change or leave your employment, you will need to notify us through your monthly JobKeeper Declaration report. If you use the ATO Business Portal, you will need a myGovID linked to your ABN in
relationship Authorisation Manager (RAM). You can find out how to set this up at ato.gov.au/mygovid

Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.