Stimulus Package – JobKeeper

On 30 March 2020, the Federal Government announced a wage subsidy of $1,500 per fortnight for employees of eligible businesses. This also extends to sole trader businesses. 

Eligible Employers 

Employers will be eligible for the subsidy if their business has a turnover of less than $1 billion and their turnover has fallen by more than 30 per cent (of at least a month).

To demonstrate that a business has faced a 30% fall in their turnover, most businesses will compare their performance of the relevant month or quarter (in line with their activity statement reporting period) relative to the same period a year ago.

What if my business was not operating a year ago?

Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable) the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business has ceased or significantly curtailed its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30% fall in turnover but actually experience a slightly smaller fall.

Sole traders

Self-employed individuals and not-for-profit entities that meet the declining turnover tests may also be eligible.

Eligible Employees

Eligible employees requirements:

  • are currently employed by the eligible employer (including those stood down or re-hired)
  • were employed by the employer at 1 March 2020
  • are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020)
  • are at least 16 years of age
  • are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder are not in receipt of a JobKeeper Payment from another employer

Payment Process and Timing

The subsidy starts on 30 March 2020 with the first payments to be processed in the first week of May. Amounts of the payment are as follows:

  • Employee ordinarily earns more than $1,500 per fortnight before tax: they continue to receive their regular income (i.e. the amount per their agreement)
  • Employee ordinarily earns less than $1,500 per fortnight before tax: their employer must pay the employee $1,500 before tax per fortnight
  • Employee has been stood down: their employer must pay the employee $1,500 before tax per fortnight
  • Employee was employed on 1 March 2020, subsequently ceased employment with their employer and then is re-engaged by the same eligible employer: the employee will receive, at a minimum, $1,500 per fortnight, before tax

Action Points

The first action point is to register your interest in the JobKeeper payments via the ATO. Once the online application becomes available you will be required to submit additional information. We would be more than happy to assist with this process.

Please note that the JobKeeper Payment is not yet law and as such we need to monitor the situation for any developments.

Links for further information:

This document contains general advice only and is prepared without taking into account your particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should speak to a licensed financial advisor who should assess its relevance to your individual circumstances.  While Davenport Taylor believes the information is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the corporations Act 2001.