If an employer pays more than $3,000 per employee per month do they meet the wage condition?
The wage condition requires that each eligible employee receive a minimum of $1,500 per JobKeeper fortnight.
However if an employer’s ordinary arrangement is to pay its employees less frequently than fortnightly the Rules allow for the payment to be allocated between fortnights in a reasonable manner. For example, if an employer’s ordinary arrangement is to pay an employee every four weeks, it may be reasonable for the purposes of satisfying the wage condition if the employee is paid at least $3,000 for every four week period.
Where a business has closed is it still required to pay its employees $1,500 per JobKeeper fortnight?
Where a business has closed due to the COVID-19 crisis but has not entered liquidation or bankruptcy in the case of an individual, the business may still be eligible for JobKeeper assistance. However one of the conditions for eligibility is that the business pay each of its eligible employees $1,500 per JobKeeper fortnight (see special conditions for April 2020 below).
How does the wage condition apply to April 2020?
The wage condition requires that each eligible employee be paid a minimum of $1,500 in each JobKeeper fortnight.
However, for April 2020 employers have until 8 May 2020 to ensure each eligible employee has been paid a minimum of $3,000 for the two JobKeeper fortnights spanning the period 30 March 2020 to 26 April 2020. Where this is achieved the wage condition for the first two JobKeeper fortnights will be deemed to have been met.
Thereafter each eligible employee must be paid a minimum of $1,500 in each JobKeeper fortnight.
Can a business apply for JobKeeper support for an eligible business participant but choose not to also register eligible employees for JobKeeper?
No. The JobKeeper scheme is an “one in, all in” scheme. If the employer has elected to be part of the JobKeeper scheme, all eligible employees, no matter what they are paid, must be included in the scheme and be paid a minimum of $1,500 per JobKeeper fortnight.
If an individual supplements his paid employment with another casual position and also from sole trader activities, and the casual work and his sole trader work has dropped off but the paid employment continues, can he still apply for job keeper from either his casual work or his sole trader activities?
An individual can only create an entitlement for one entity.
A business is not entitled to a JobKeeper payment for an individual if another business is also entitled for the same individual. For example, where an individual is an eligible participant of two businesses – only one of those businesses is entitled to the JobKeeper payment in respect of that individual.
Also, an individual who is an employee (other than a casual employee) of an entity cannot also be an eligible participant of that entity or any other entity.
What is the situation for employers who use STP versus those employers who do not use STP?
The ATO have provided the following guidance:
Not using STP:
Is a business that has not lodged a BAS because it is not registered for GST and has not yet lodged its 2019 tax return as it is under an agent’s lodgement program, eligible for JobKeeper assistance?
The integrity measures for entitlement based on business participation require that:
- 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.
- 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.
The Commissioner has discretion to allow further time (QC 62190), but only in limited circumstances, and this includes if the entity:
- did not have a requirement to lodge its 2018-2019 return until after 12 March 2020
- deferred its lodgement under an extension of lodgement date the ATO initiated.
- Entities included in a registered agent’s lodgement program and the lodgement due date is after 12 March 2020
- Entities that have an automatic ATO lodgement deferral in place because they have been affected by the Australian bushfires in late 2019/early 2020, and entities that are not registered or required to be registered for GST, so will not have lodged a BAS before 12 March 2020.
Where businesses have not met the 12 March 2020 lodgement requirements they should confirm with the ATO that they have the Commissioner’s discretion to use a later time.
Once an entity satisfies the decline in turnover test does it need to retest its turnover in later months.
If an individual is on annual leave, long service leave, sick leave or unpaid leave is that person still an employee?
Yes, the individual is still an employee and may qualify for JobKeeper if the satisfy the other eligibility criteria.
However, it must be noted that an individual is excluded from being an eligible employee in a JobKeeper fortnight where:
- the individual is totally incapacitated for work throughout the fortnight;
- an amount is payable to the individual under, or in accordance with, an Australian workers’ compensation law in respect of the individual’s total incapacity for work;
- the amount is payable in respect of a period that overlaps with, or includes, the fortnight.
If a contractor becomes an employee after 1 March 2020 are they eligible for JobKeeper assistance?
If the individual held a contract position with the employer on 1 March 2020, but the contract was such that the individual was an “employee” as defined in s.15 of the Fair Work Act, if the other eligibility criteria are met the employee may be eligible for JobKeeper assistance.
However if the individual was an independent contractor on 1 March 2020 they will not satisfy the criteria to be an eligible employee.
How do you determine if a casual employee is a “long term casual”?
Subsection 9(5) of the Rules provides the meaning of ‘long term casual employee’ as a person who has been employed by the employer on a regular and systematic basis during the period of 12 months that ended on 1 March 2020. This definition is based on the same term in the Fair Work Act 2009, with adjustments to ensure it can be applied to all employees (not just ‘national system employees’). A casual employee is likely to be employed on a regular and systematic basis where the employee has a recurring work schedule or a reasonable expectation of ongoing work.
No further guidance on what is a regular and systematic basis has been provided.
Can an employee choose which employer they want to apply for JobKeeper assistance through?
Yes, by way of the nomination notice requirement, an employee (other than a casual employee) can choose to be involved or not be involved with the scheme with a particular employer. However, when choosing the employee should consider with which employer they meet the eligible employee criteria.
Where can Employee Nomination Notices be found?
Employee Nomination Notice templates are available on the ATO website (QC 62163).
Is the decline in turnover test calculated on a cash or accruals basis? Does the employer get to pick which to use or does it depend on how you lodged your last tax return or GST reporting basis?
In our view, that question is not relevant (however, see below ATO information). This is because the GST legislation, when referring to projected and current GST turnover, refers to the value of supplies made, or likely to be made in the period. The process is:
- Determine what supplies have been made or are likely to be made during the period.
- Determine the value of those supplies and sum the values.
The question of whether the amounts should be accounted for on a cash or accruals basis does not arise in the above process.
Despite what we have said above, the ATO document entitled “Applying the turnover test” (QC 62132 – 8th May 2020) states the following:
“The turnover calculation requires you to include sales that you have made, or are likely to make, in the relevant month or quarter. The calculations are based on the time you make the sales.
There are different ways of calculating turnover that may be reasonable in your circumstances.
As a practical matter, we expect that you will use the GST accounting method that you normally use. In other words, you may use a cash or accruals approach to determining the value of your sales in the relevant month or quarter. If you do this, typically, turnover for the relevant period will equal your GST exclusive sales less your input taxed supplies.
If you use GST calculations to determine turnover, don’t forget to include GST-free sales.
If you normally account for GST on an accruals basis, but seek to calculate on a cash basis (or vice versa), we may seek to understand your circumstances to ensure that the calculation achieves an appropriate reflection of your turnover.
If you aren’t registered for GST, we would expect you to use the same accounting method you use for income tax purposes.
Importantly, whichever basis you use must be used consistently in comparing the month or quarter in 2020 with the comparison month or quarter in 2019.”