Firstly let me preface this email to say, the announcements made today have not yet been passed through parliament, AND the detail around how some of these measures will impact certain business is also missing.

What we have done below is summarise the announcements and details as we have them in the simplest form we can!

If you want a refresher on what has already been announced you can find our previous update here.

JobKeeper

Today the government announced a new payment for employees termed the JobKeeper. It's designed to keep employees connected (ie still employed) and reduce the amount of people flocking to Centrelink for unemployment benefits.

If your business has seen a reduction in turnover by 30% since 1 March the government will pay you $1,500 per fortnight per employee you continue to pay.

That sounds great, what about the fine print?

Eligibility Criteria

To be eligible you must have income less than $1billion (check, we all meet that criteria) AND have turnover that has reduced by more than 30% relative to a comparable period a year ago. Note this comparable period needs to be at least a month.

That means if your income from 1 March has reduced by 30% compared to March last year you are eligible. If you are only NOW starting to see a complete downturn in turnover you would be able to look at April last year and April this year or March and April last year vs March and April this year.

For those of you forced to shut by the government this is an easy scenario as your income is nil. For those of you who have chosen to close the doors already, the same applies. For those of you still open, but with substantial reduction in turnover, again you are eligible.

The next eligibility criteria is about which employees qualify. The employees must have been employed by you on the 1st March. Note if you had already stood people down at that point in time, they would still be eligible as they are technically still employed even if you hadn't been paying them a wage in the last few weeks.

The next criteria is the type of employee. Anyone full-time or part-time along with any casuals that have been employed for more than 12 months at 1 March are eligible employees, as long as they are at least 16, don't get JobKeeper from another employer and are either an Australian Citizen, permanent resident or under a special visa.

Note this starts from the 30th March and will go for a maximum of 6 months.

In summary if your turnover is down 30% and you employed people on 1 March, you are eligible

How much do you get

This really isn't a question of how much you get, but rather how much you need to pay your employees.

To be eligible for the $1,500 per employee, you need to ensure that each employee receives a MINIMUM of $1,500 gross per fortnight in wages.

If the employee normally receives LESS than this amount, you still need to pay them $1,500 a fortnight (gross). If the employee normally receives MORE than this amount in wages, you need to continue to pay them the normal wage they have been getting, you will simply be subsidised the $1,500 per fortnight amount.

Remember that even if you have stood employees down, you will be able to reinstate those employees as of today and they will be eligible for the $1,500 per fortnight payment.

You are still required to pay Super on your employees wages. If your employees normally earn more than $1,500 per fortnight you will continue to pay Super on the gross wages you pay them. If your employees normally earn less than $1,500 per fortnight, you will only be required to pay Super on their normal wages, not the $1,500 per fortnight you will be paying them under this arrangement.

As you can see this isn't simply the ATO paying your employees wages, it's a subsidy.

What about the timing of these payments

This is the important part to note.

Employers will have to pay employees for a month, and then they will be reimbursed by the ATO.

So you will need to pay employees that qualify per the above criteria, a minimum of $1,500 a fortnight from now until the end of April, and you will be reimbursed in early May by the ATO.

How to apply

The 1st step is to register your intention with the ATO to claim JobKeeper payments. Given the strict eligibility requirements we will be in touch with everyone to start this process. NOTE, you do not have to register TODAY in order to be eligible. Your registration will be backdated to today and payments made in May based on the start date of 30 March 2020.

The next step is to provide info to the ATO on who your eligible employees actually are. Remember this is based on who was employed at 1 March and relies on casual employees being employed for at least 12 months. The ATO already has this information when you are lodging Single Touch Payroll so again we will take care of this on your behalf.

You also need to notify your employees that you have applied for JobKeeper payments and what that means to them.

To continue to be eligible you will need to provide info to the ATO each month. We assume this means you will need to show your income is still reduced, however we are waiting the final detail.

Sole Traders

For those of you who are Sole Traders, you will also be eligible for the JobKeeper payments. You will have to meet the turnover reduction of 30% criteria, and will have to nominate the Individual who is to receive the payments. The payments will then be made monthly to the Individuals bank account.

How does this work in practice

There is a lot more of the finer detail that needs to be fleshed out for some scenarios, but in practical terms we need to firstly ensure all employees details are up-to date in Xero. We will then need to add some additional payroll categories and calculate the cashflow impacts on your business.

Some Examples

Treasury have provided some examples :

Example 1

Phoebe is a permanent employee who has already been stood down by her employer under the Fair Work Act with no pay. As her employer you decide to apply for JobKeeper for all employees. You will need to pay Phoebe $1,500 per fortnight (gross) starting from 30 March. You will receive $1,500 per fortnight for Phoebe (and all other eligible employees) from the ATO in May.

Example 2

Sara runs a landscaping company, and employs five full-time gardeners. Sara is paying her employees $1,700 per fortnight before tax. She expects that her turnover will decline by more than 30 per cent over the coming months and that she will either need to lay staff off, or reduce their wages significantly. As a result of the JobKeeper Payment, Sara will be able to keep employing every gardener, and only needs to pay the $200 wage cost per fortnight before tax per employee above the $1,500 per fortnight (before tax) JobKeeper Payment.

Example 3

Adam owns a real estate business 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; Last updated: 30 March 2020 3 • 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.

Example 4

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.

Next Steps

We will be working over the next few days to ensure we are following up the details, including waiting for the final and full legislation to be announced. This is important to ensure you have the correct advice before making decisions rather than the Media spin and limited detail in the published media statements.

We will register you with the ATO (note it's simply an intent to claim process at the moment until everything is passed) if you are eligible, and be in touch to do some calculations on the likelihood of what that means to your business in the coming days.

Please remember none of these payments will be made until May.

Any questions as always just let one of the Growthwise team know.