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Updated 1 April 2020 following amendments issued by Treasury on 31 March 2020
Australia’s wage subsidy scheme, known as the JobKeeper Payment, is the third economic stimulus package announced by the Federal Government in its coronavirus response. Businesses can apply to the Australian Taxation Office (ATO) for financial support to keep their employees on the job. Around 6 million Australians are expected to receive a flat payment of $1,500 per fortnight (before tax) for up to six months through their employer.
The wage subsidies, estimated to cost the Australian Government $130 billion, will be released to employers from early May 2020. Employers must experience a required turnover decline to be eligible to receive wage subsidies.
Even though a business may close its doors during the next six months, the JobKeeper Payment will pay employees to remain on the books and essentially be ready to resume their jobs when the business re-opens. It is the employer’s responsibility to pass on the wage subsidy in full.
Every eligible employee must receive at least $1,500 per fortnight from their employer, before tax. The Australian Government has declared $1500 a full median wage replacement for workers in the accommodation, hospitality and retail sectors. The wage subsidy is 70 per cent of the national median wage.
Employees that were previously earning less than $1500 per fortnight will be topped up to the full wage subsidy.
Employers who remain in business with employees who are receiving JobKeeper Payment should use the payment to subsidise the employee’s regular income according to the prevailing workplace arrangements.
The wage subsidy will be available for up to six months.
The payment will be made to employers to pass on to their employees. The following business entities are eligible if other criteria apply:
Businesses with an annual turnover of less than $1 billion and their turnover has fallen by more than 30 per cent (of at least a month) are eligible.
Businesses with an annual turnover of $1 billion and their turnover has fallen by more than 50 per cent (of at least a month) are eligible.
The activity statement reporting system (monthly or quarterly BAS) will be used by the ATO to assess reduced turnover. In general, the ATO will be assessing reduced turnover relative to turnover in the same period (month or quarter) in the previous year.
The Tax Commissioner has the discretion to assess a business individually:
In addition, the Tax Commissioner has the discretion to:
Businesses subject to the Major Bank Levy are not eligible under the wage subsidy scheme.
Employees who receive the payment can be:
An employee cannot receive the JobKeeper payment from more than one employer. A previous employee who is re-engaged through the JobKeeper Payment, must advise Services Australia if they start receiving income in addition to any income support e.g. JobSeeker Payment they are receiving.
The ATO will release the first payments to eligible businesses in the first week of May as monthly arrears. Businesses will continue to be reimbursed by the ATO from the first week of May.
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.
Businesses are asked to apply for the payment online. The ATO is taking registrations now.
The business must:
For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
Where an eligible employer continues to operate with employees receiving the JobKeeper Payment, the employer will continue paying the superannuation guarantee on the employee’s income where the employee receives their full income. If an employee receives more than their usual income via the JobKeeper Payment, the business must continue to pay the superannuation guarantee on the usual income and has the option to pay superannuation on the additional income (before tax).
Where an eligible employer has stood down employees (e.g. in the case of a beautician that was forced to shut down), the employer can choose whether to pay superannuation on the JobKeeper Payment the employees will receive.
The Australian Government is expected to release more wage subsidy details once the legislation has been passed.
Read the Australian Government’s Fact Sheet: Extension of the JobKeeper Payment
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