Tony Rule, Partner, TAG Financial Services
In a bold move Scott Morrison and the Australian Government have announced the shot in the arm that Australian business was calling for to battle the impact of the Coronavirus. The JobKeeper Payment will help many employers retain employees over the next six months to keep business and the economy primed and ready to take off in a hopefully post COVID-19 Spring. For some businesses however, this incentive will be too little too late.
Businesses with a turnover of less than $1b that suffer a 30% or more decline in sales relative “to a comparable period a year ago (of at least one month)” will be eligible to receive $1,500 per fortnight for each eligible employee for that month. The business must then pay at least $1,500 per fortnight to each eligible employee (defined as full-time, part-time or long-term casual employees of the business as at 1 March 2020) for a maximum of six months.
To receive the JobKeeper Payment, employers must:
- Register with the ATO that they have or will experience a 30% decline in turnover (or a 50% decline if turnover is more than $1b),
- Provide information to the ATO on eligible employees including the number of employees at 1 March 2020 and the current number of employees through Single Touch Payroll,
- Ensure each eligible employee receives at least $1,500 per fortnight (before tax) which includes topping up those employees that were earning less than $1,500,
- Notify eligible employees that they are receiving the JobKeeper Payment, and
- Continue to provide monthly information to the ATO on the number of eligible employees employed by the business.
Eligible Employees will be:
- Currently employed by the employer (even if stood down or re-hired),
- Were employed by the employer at 1 March 2020,
- Are full-time, part-time or long-term (more than 12 months) casual employees,
- Are 16 years or older,
- Are Australian citizen, a permanent visa holder, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder living in Australia for more than 10 years or a Special Category Visa Holder, and
- Not in receipt of a JobKeeper Payment from another employer.
The key points of the JobKeeper Payment are:
- The receipt of the JobKeeper Payment amounts will be treated as income in the business and payments to employees will be treated as wages expense. The JobKeeper Payment amounts will not represent a loan from the government.
- The payment will be made to employers monthly in arrears with the first payment occurring from 1 May 2020 and will be available for a maximum period of six months.
- Employees that earn less than $1,500 per fortnight will be increased to $1,500 per fortnight under the scheme and employers will have the choice of whether to pay more than $1,500 per fortnight to employees that are normally earning more than that amount.
- The eligibility is determined by a 30% drop in revenue (if under $1b) based on a comparable period (of at least one month) from a year ago.
- This announcement should help most business owners to survive even if in “hibernation” for the next six months.
This program is estimated to be worth $130b – the biggest ever announcement of its type in Australia and whilst we expect that we (as a country) will be paying for this expenditure for many years to come, it is a move that will get as many businesses as possible through the next six months.
If you have any questions, please contact us on 03 9886 0800 or via email.
Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).