Posted 10/4/2020, UPDATED: 15/4/2020
The question of when to pay staff the JobKeeper Payment has been causing concern since the passing of the legislation late Wednesday night.
The short answer is that you start paying the eligible staff the JobKeeper Payment AFTER you, and the employee are APPROVED by the ATO as approved to receive the JobKeeper Payment.
Until the business and the employee is approved by the ATO then the business must – pay all staff as normal for the work they are doing (including loadings and penalties and superannuation) and pay all staff as normal for the leave that they are on.
Why is approval important?
Approval by the ATO is important because, despite a businesses self assessment of eligibility they may not actually be eligible for the JobKeeper Payments. More than this the legislation allows for specific businesses and industries who would ordinarily be eligible for the JobKeeper Payments to be specifically excluded or denied approval from the JobKeeper Program.
What will payment look like once approved?
The Rules have been released, see below for links, and they specifically outline some requirements for the business, particularly around gathering information from the staff and ensuring that once approval occurs the staff receive the minimum $1,500 before tax per fortnight without delay from approval until the approval is removed or the program ends. This means that from approval the business will need to have on hand enough cash to pay all eligible staff the minimum $1,500 before tax per fortnight.
It is understood that this will put a cash flow pressure on many businesses, particularly those who have large numbers of casuals or part time employees who typically earn less than $1,500 before tax a fortnight. Businesses should engage with their Bank to arrange cash flow loans to allow for full compliance with the requirement.
What about the time between 30/3/2020 and when the business is approved?
There are transitional arrangements, to deal with the first two JobKeeper Payment Periods (from 30/3/2020-26/4/2020). For these two periods, and only these ones, the employees may be backpaid to the minimum $1,500 before tax per fortnight, without delay, after approval is received. UPDATE: As long as the employee receives the full payment for that period by 30/4/200
There is not a requirement for the business to have already paid the employee the minimum $1,500 before tax for the transition period (30/3/2020-26/4/2020) in order to access the payments. UPDATE: As long as the employee receives the full payment for that period by 30/4/200
So you should pay staff as normal until you are approved.
What to do right now?
- Make sure your business has registered at – https://www.ato.gov.au/general/gen/JobKeeper-payment/
- Gather your actual turnover information, comparing the March quarter 2020 to the March quarter 2019, as well as the March month 2020 to the March month 2019
- Gather your 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 and on a month by month basis)
- Gather your staff list, including First Name, Last Name, Tax File Number, Status (permanent/casual) and if casual the length of service, Age and Citizenship/Permanent Resident Status
- UPDATE: Download the JobKeeper Employee Nomination Form and complete the business section, then forward to each of your staff, directing them to complete it and forward it back to the business. This will need to be kept by the business for 5 years. This will not need to be sent to the ATO, but will need to be made available to the ATO on request. – https://www.ato.gov.au/Forms/JobKeeper-payment—employee-nomination-notice/
- The ATO will reach out to registered businesses as soon as it is ready and will ask the business to provide evidence of turnover contraction and detailed list of staff and the staff eligibility (see; https://acapmag.com.au/2020/04/jobkeeper-wage-subsidy-details-released/ for more on which staff and businesses are eligible)
- If your business has not been trading for more than 12 months, has transferred staff from another business, has lumpy turnover or has other considerations – these should be discussed with the ATO – they have the discretion to set other criteria for approval
- Once the ATO has assessed the business and the staff the ATO will let the business know that the business and staff are APPROVED and will provide detail on the length of the approval and how the business must behave to comply with the approval
- UPDATE: Ensure that all staff are paid the full $1,500 before tax for the period from 30/3/2020-26/4/2020 by at least 30/4/2020, and for all future periods they are paid $1,500 before tax a fortnight according to your normal pay periods
- More information
- ACAPMA JobKeeper Program Article, the payments and the flexibility, a deep dive into the detail – https://acapmag.com.au/2020/04/jobkeeper-wage-subsidy-details-released/
- Register for the JobKeeper Program
- Employee Nomination Form
- JobKeeper Rules
- Treasury Factsheets
- FAQs – https://treasury.gov.au/sites/default/files/2020-04/JobKeeper_frequently_asked_questions_1.pdf
- For Staff – https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_Info_for_Employees_1.pdf
- For Businesses – https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_Info_for_Employers_1.pdf
Here to Help
ACAPMA is here to help, if you have questions please email email@example.com