What is the situation for employers who use STP versus those employers who do not use STP?
The ATO have provided the following guidance:
Using STP: https://www.ato.gov.au/general/jobkeeper-payment/In-detail/JobKeeper-guide---employers-reporting-through-STP/
Not using STP: https://www.ato.gov.au/general/jobkeeper-payment/In-detail/JobKeeper-guide---employers-not-reporting-through-STP/
Can salary sacrifice arrangements continue under the JobKeeper scheme?
Yes. The components which are aggregated to satisfy the wage condition that an employer pay each participating employee at least $1,500 for each JobKeeper fortnight are:
- amounts paid by the employer to the employee in the fortnight by way of salary, wages, commission, bonus or allowances (less PAYG withholding) – generally, this means the employee’s income before tax;
- amounts withheld from payments made to the employee in the fortnight under section 12-35 in Schedule 1 to the Taxation Administration Act 1953 – generally, this means amounts withheld by the employer for income tax or a HECS-HELP loan;
- contributions made in the fortnight to a superannuation fund or an RSA (retirement savings account) for the benefit of the employee, if the contributions are made under a salary sacrifice arrangement (within the meaning of the Superannuation Guarantee (Administration) Act 1992); and
- amounts that, in the fortnight, are applied or dealt with in any way where the employee has agreed for the amount to be so dealt with in return for salary and wages to be reduced – generally, this means amounts forming part of salary sacrifice arrangements.
Integrity Rule - Lodgements due by 12 March 2020
The integrity measures for entitlement based on business participation require that:
a) An amount was included in the entity’s assessable income for the 2018-19 income year in relation to it carrying on a business; and the Commissioner had notice (e.g. a tax return) on or before 12 March 2020 (or a later time allowed by the Commissioner) that the amount should be so included.
b) the entity made a taxable supply in a tax period that applied to it that:
- started on or after 1 July 2018; and
- ended before 12 March 2020; and
- the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the entity had made the taxable supply.
In respect of the Commissioner’s discretion to allow further time, the ATO states on its
website that circumstances where this may apply include where the entity:
- did not have a requirement to lodge its 2018-2019 return until after 12 March
- deferred its lodgment under an extension of lodgment date the ATO initiated.
- Entity’s included in a registered agent’s lodgment program and the your lodgment
due date is after 12 March 2020
- Entity’s that have an automatic ATO lodgment deferral in place because they
have been affected by the Australian bushfires in late 2019/early 2020, and you
are not registered or required to be registered for GST, so will not have lodged a BAS before 12 March 2020.
How do you calculate the decline in turnover when your business is paid on a percentage of completion basis?
“Current GST turnover” and “projected GST turnover” are defined in sections 188-15 and 188-20 of the GST Act respectively and modified by the JobKeeper Rules to apply only to a “period”. Entities should use these definitions to determine their decline in turnover, regardless of the accounting treatment of the revenue. The difficulty for a business that invoices on a percentage of completion basis is in determining when supplies have been made. This is a question of fact and can only be determined by looking at each particular business.
However, you should be aware that the ATO has made the following statement in its document “Applying the turnover test”.
”You may use an accruals basis of accounting to calculate both the current GST turnover and projected GST turnovers as both calculations require you to include sales that you have made or are likely to make without any reference to when you are paid.
However, if you prepare your activity statements on a cash basis, the ATO will allow you to calculate both the current and projected GST turnovers on a cash basis. The basis used must be the same for calculating your projected and current GST turnover. Typically, current turnover will equal your GST exclusive sales less your input taxed supplies.”
What JobKeeper assistance is available for business owners who are also employees?
Where a business owner is also a salaried employee of the business can they receive the JobKeeper payment. They will not be eligible for JobKeeper assistance based on business participation as the nominated eligible business participant cannot also be an employee. Therefore the business owner would need to be receiving at least $1,500 for each JobKeeper fortnight and meet the other eligible employee criteria, together with the business meeting the eligible employer criteria, to receive JobKeeper assistance.
Should employees register for JobSeeker or JobKeeper?
Employees can register for JobSeeker where they have been stood down or lost their job due to the COVID-19 crisis. However if their employer intends to apply for JobKeeper on their behalf they will need to notify Services Australia as this will impact their eligibility to JobSeeker assistance. A person cannot claim both JobKeeper and JobSeeker payments.
Are businesses that only receive passive income entitled to JobKeeper assistance?
“Current GST turnover” and “projected GST turnover” are defined in sections 188-15 and 188-20 of the GST Act respectively and modified by the JobKeeper Rules to apply only to a “period”. Entities should use these definitions to determine their decline in turnover.
Where an entity’s entire income is excluded from these definitions, such as input taxed supplies (e.g. residential rent), the entity will be unable to demonstrate the appropriate decline in turnover necessary to access JobKeeper assistance.
Compare this to rental of commercial residential premises which will be taxable supplies if leased by an entity which is required to be registered.
The ATO has provided the following example:
Passive income through a trust
Sharon is a beneficiary of her family trust, SN Family Trust. The SN Family Trust was settled in 2005 with a residential property and it subsequently purchased two more residential properties. The properties are managed by a local agent, R.A. Properties, and are intended to generate passive rental income for SN Family Trust. The SN Family Trust has no business activities; rather the properties are capital assets that generate rental income. Sharon receives income through distributions from the SN Family Trust and this is her only source of income.
The SN Trust projects a fall in turnover of 60% for the April 2020 to June 2020 quarter compared to the April 2019 to June 2019 quarter, due to tenants in two of the properties being unable to pay rent.
The SN Family Trust does not qualify for the JobKeeper Payment scheme, as it was not carrying on a business in Australia on 1 March 2020.
If the SN Family Trust also ran a property development business, then it could qualify as an entity under the JobKeeper Payment scheme assuming it met the fall in turnover tests for that business, as it was carrying on business in Australia on 1 March 2020. Sharon must be actively engaged in the business operations of the SN Family Trust to be an eligible business participant. If Sharon does not qualify as an eligible business participant because she is not actively involved in the running of the business, the SN Family Trust would not be able to nominate her in respect of a JobKeeper payment. The SN Family Trust could however nominate another individual if that individual satisfies the conditions as an eligible business participant.