Building my business

JobKeeper Payment: Your Questions, Answered

Clea Harbison Apr / 14 / 2020

The JobKeeper payment package has now passed through parliament. But what does it mean for salons, and how can you access it? We answer the questions on everyone’s minds – plus, give you some real-world examples of how it will work.

What is the JobKeeper Payment?

The government has pledged to support businesses struggling due to COVID-19 to ensure they can continue paying their employees. Under the JobKeeper Payment, businesses who have been impacted by the coronavirus will be able to access a subsidy form the Government on a fortnightly basis from 30 March 2020 for a period of six months.

What does it mean?

The government will pay eligible businesses a flat rate of $1,500 per fortnight for each eligible employee. This payment is intended to be passed on to employees in the form of regular wage/salary. Am I eligible?

Businesses will be eligible for the payments if:

  • You have an annual turnover of less than $1 billion
  • You have seen / will see a decrease in turnover by 30% or more for at least a month (relative to the same period last year)
  • You have staff currently employed who were working with you on 1st March 2020

Are my employees eligible?

Eligible employees are employees who:

  • Are currently employed by your business (including those who have been stood down or re-hired);
  • Were employed at 1st March 2020;
  • Are full-time, part-time, or long-term casuals (had been employed by you for longer than 12 months as at 1st March 2020);
  • Are at least 16 years of age;
  • Are an Australian citizen, a permanent resident, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has lived in Australia continually for 10+ years, or a Special Category (Subclass 444) Visa Holder; and
  • Are not receiving a JobKeeper payment from another employer.

What will I get?

Eligible businesses will be paid $1,500 per fortnight, per eligible employees. You must pass on the full $1,500 per fortnight (before tax) to each employee you receive it for. You can top up this payment. Employees will receive payment as follows:

  • If an employee usually receives $1,500 or more income per fortnight before tax, they will continue to receive their regular income. The JobKeeper payment will assist you to pay their full wage. It will be up to you if you want to pay superannuation on any additional wage paid.
  • If an employee usually receives less than $1,500 income per fortnight before tax, you must pay them at a minimum, the full $1,500 per fortnight, before tax.
  • If you have employees that have been stood down, you will pay them at a minimum, the full $1,500 per fortnight, before tax.
  • If you have employees who were working for you on 1st March 2020 but now don’t, you can choose to re-hire this employee, and receive a JobKeeper payment for them.

Payments will be made monthly in arrears by the Australian Taxation Office (ATO) – the first payments will be made in the first week of May 2020.

How do I get it?

You must register your interest in applying for the JobKeeper Payment via ATO website. You’ll then receive updates on how to apply for the scheme, via an online application. The first payment will be received by employers from the ATO in the first week of May.

You will need to identify eligible employees to the ATO, and provide updates on a monthly basis once you are receiving the JobKeeper Payments. You will also need to ensure that all employees are receiving at a minimum, the full $1,500 per fortnight, before tax.

There is information-gathering you can be doing now, to ensure you have everything the ATO will require once they start processing applications:

  1. Actual turnover information – March quarter and March month 2020
  2. Actual turnover information – March quarter and March month 2019 – use this to check the percentage difference
  3. Projected turnover information – what you forecast, in the current situation, you are going to have as turnover in April 2020 to September 2020 (as a whole, or month-by-month)
  4. Employee information – full name, Tax File Number, employment status (permanent/casual – and length of service if casual), age, and citizenship/permanent resident status
  5. Download the JobKeeper Employee Nomination form and complete the business section, then forward it to each employee to complete and send back to you. You will need to keep this for 5 years – it won’t be sent to the ATO, but they may request it.
  6. Keep paying your employees. You must ensure that all staff are paid the full $1,500 before tax for the period from 30 March 2020 to 26 April 2020 if you are approved. You have until 30 April 2020 to make these payments.

What if I don’t have employees?

Sole traders are eligible for the payments, too – you just need to provide an ABN, a declaration as to your recent business activity and provide your Tax File Number. Payment will then be made monthly into your bank account.

When should I start paying?

Once you as a business, and your employees are approved by the ATO as eligible for the JobKeeper payment, you must begin paying each eligible employee the $1,500 minimum per fortnight. Until then, you must pay employees as normal for the work they are doing (including loadings and penalties and superannuation) and pay all employees as normal for the leave that they are on.

Some Examples:

What if my employees earn different wages?

Adam owns a barbershop with two employees. The business is still operating at this stage, but Adam expects that turnover will decline by more than 30 per cent in in the coming months.

The employees are:

Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and

Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.

Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:

The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;

The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.

Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees. In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

What if my employees have been stood down without pay?

Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.

Zahrah’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three beauticians for up to six months. Zahrah will maintain the connection to her employees, and be in a position to quickly resume her operations.

Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment. If Zahrah’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.

This information is correct as of Tuesday 14 April, 2020. We expect that in the coming weeks, the government will release an update and online application process for the JobKeeper Payment.. We will update this article, and our Shortcuts community, with any more information as it is released.  

For more information, visit the Australian Government Treasury and the Australian Taxation Office.

Clea Harbison
Clea Harbison

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