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JobKeeper – The Finer Details

written by Josh McMullen

Late on Friday, explanatory materials were released by Treasury in relation to the JobKeeper payment that has now been passed into law. The explanatory material clarifies many key aspects of the regime.


On 30 March 2020, the Federal Government unveiled their largest economic response to the Coronavirus, a $130-billion government wage subsidy known as the JobKeeper payment.

Under the JobKeeper, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.

Establishing a Fall In Turnover

Employers with a turnover of less than $1 billion will be eligible if their turnover has fallen by more than 30%.

The comparison period is for either:

(a) any monthly period from April 2020 to the end of September 2020 or

(b) a quarterly period, either April 2020 to June 2020, or July 2020 to September 2020.

……. compared to the same monthly or quarterly period in 2019.

Importantly, once this test is met for either a monthly period or a quarterly period, there is no requirement to re-test in later months or quarters.

For example, if a business assesses that its turnover will fall by 30% in April 2020 compared to April 2019, then it retains its eligibility until the JobKeeper payments stop at the end of September 2020. This is irrespective of its turnover in the months subsequent to April 2020.

Where an entity does not qualify in the month of April 2020 for example, or the April to June quarter, it can re-test in later months or quarters, but will only be eligible for the JobKeeper payments from the period of qualification (i.e. the payment won’t be backdated to the commencement of scheme).

Alternative Tests

The explanatory material acknowledges that comparing monthly or quarterly periods from April 2020 and onwards to April 2019 and onwards may not always be possible or may lead or unfair outcomes. To this end, where the ATO is satisfied that there is no such period in 2019 or it is not an appropriate relevant comparison period, the ATO Commissioner may, by legislative instrument, determine an alternative decline in turnover test.

The two examples cited in the explanatory materials relate to:

  • businesses that were not in existence for the whole of the comparison period in 2019. In the explanatory materials, the business is permitted to average its actual turnover from October 2019 when it came into existence to March 2019, and compare that average it to its estimated turnover in April 2020.
  • businesses that were impacted by a natural disaster during the 2019 comparison period. In the explanatory materials, the business is permitted to go back to 2017 (the most recent year when its turnover was not impacted by drought) and compare its turnover to the same eligible quarterly period in 2020.

The Commissioner retains flexibility to apply other alternative tests and take into account other unique circumstances (aside from natural disaster and start-up businesses) confronted by a business should the 2019 comparison period not be reflective of typical turnover. Treasury, in a separate fact sheet Supporting Business to Retain Jobs, has stated that these alternative tests may include, for example, eligibility being established as soon as a business ceases or significantly curtails its operations.

Repayment of JobKeeper?

There is provision in the legislation for repayments of the JobKeeper payment by employers who are not otherwise entitled. However the circumstances are not set out. The explanatory materials are silent on whether an employer will be required to repay JobKeeper amounts should their actual turnover be down by less than the required 30% (noting that the amounts would have been already paid to the employee, and therefore unreasonable to recoup).

We note though that Treasury, in its Supporting Business to Retain Jobs fact sheet, states that “There will be some tolerance where employers, in good faith, estimate a greater than 30% (or 50%) fall in turnover but actually experience a slightly smaller fall.”

By the time the ATO sets up its online architecture to apply for JobKeeper, most employers should be well-placed to make a “good faith” estimate of April turnover to determine whether the 30% downturn benchmark is met.

Business Owner Eligibility

Recognising that not all impacted individuals are employees of a business (and therefore not typically entitled to JobKeeper payments), the legislation extends eligibility to certain business owners who are actively engaged in the business carried on by the entity. To qualify, the individual must be actively engaged in the operations and activities of the business for the period in which a JobKeeper payment relates to.

Further, depending on the type of entity the business is, the individual must have a particular role within the business. In the case of an entity that is a:

  • 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, and
  • company — either a director or shareholder in the company.

Note that only one eligible business owner per entity may apply. It is up to the business to determine which individual is nominated as the eligible business participant.

Additionally, as at 1 March 2020, the business owner must have been aged 16 years or over and satisfy the Australian residency requirement.

Super and PAYG

The explanatory material provides welcome clarification on an employer’s superannuation guarantee obligations in relation to the JobSeeker payment.

Employers will only need to make superannuation contributions for any amount payable to an employee in respect of their actual employment, disregarding any extra payments made by the employer to satisfy the wage condition for getting the JobKeeper payment. For example, if the work actually done by an employee over a period entitled them to be paid $1,000, but the employer instead paid them $1,500 to satisfy the wage condition for a JobKeeper fortnight, then the employer will only be required to make superannuation contributions in relation to $1,000.

An employer will still be required to make the same superannuation contributions for an employee whose pay exceeds the JobKeeper payment. For example, if an employee is entitled to be paid $2,000 for their work, the employer will continue to be required to make contributions in relation to that amount, irrespective of whether they were eligible to receive the JobKeeper payment in relation to the employee.

An employer will not be required to make superannuation contributions for an employee who is stood down. This is because employers have no obligation to pay stood down employees. If an employer pays a stood down employee $1,500 to satisfy the wage condition for receiving the JobKeeper payment, then the entire amount will be disregarded for superannuation guarantee purposes.

In regards to PAYG, tax must be withheld on the $1,500 fortnightly JobSeeker amount, and also any amount required in respect of an HECS-HELP loan.

Casual workers

To recap, employees employed by an eligible business as at 1 March 2020 may be eligible. This includes full time and part time employees, including stood down employees.

Where a casual employee has been with their employer for at least the previous 12 months they will also be eligible, provided they have been employed during this time on a ‘regular and systematic’ basis. The explanatory materials state that this will be the case where the employee a “recurring work schedule or a reasonable expectation of ongoing work”.   

Josh McMullen is a Senior Tax Writer at PT Partners

Image credits: 7news.com.au


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