This newsletter contains information regarding the following 3 items:
- JobKeeper Payment
- Moratorium of Rental Evictions
- JobSeeker Payment – Change to the income allowed for partner
To register interest in JobKeeper payment on ATO website (click here)
Who is eligible
Employers who have been adversely affected by COVID-19 including:
- Self-employed individuals
- Not for Profit businesses
Eligible Employers whose turnover is reduced relative to a comparable period (of at least a month) a year ago by 30%.
Eligible individuals are:
- Currently employed by the eligible employer
- Were employed by the eligible employer but as at 1 March have been retrenched then are re-hired
- At least 16 years old
- Not receiving JobKeeper payments from another employer
- An Australian citizen, permanent residents or holder of certain visa types (subclass 444)
- Employed full-time or part time
- Casual employees with more than 12 months regular service
- Self employed
Rate of JobKeeper payment
A flat rate subsidy of $1,500 per eligible employee per fortnight for a maximum of 6 months
This amount applies both for employees who earn more than this amount, and for those who do not.
How and When will employers receive the Subsidy?
- The ATO will pay the JobKeeper amounts to the employer
- Payments will commence in early May, backdated to March.
- ATO will make payments fortnightly
Tax status of JobKeeper Payment
- The JobKeeper payment is taxable income for the employee
- The employer is NOT required to make super contributions in respect of the subsidy it receives.
- It must continue to make super contributions on any wages the employee is entitle to under the employment agreement for the work s/he does
How to receive the Subsidy
Employers are required to:
- Register their interest in JobKeeper payment on ATO website (click here)
- Provide information on their eligible employees to the ATO (incl number of employees engaged as at 1 March and those currently employed, stood down and rehired
- The ATO will use Single Touch Payroll data to assist in this process by pre-population
- Ensure all eligible employees receive at least $1,500 per fortnight before tax, even if their previous income was less than that amount
- Notify eligible employees that they are receiving the Subsidy
- Continue to provide ATO with relevant information monthly (including number of eligible employees employed by their business)
See below for some ATO examples:
Example 1: Employer with employees on different wages
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;
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.
Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees. In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment.
Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
Example 2: Employer with employees who have been stood down without pay
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 should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.
Example 3: Sole trader who is self-employed
Melissa is a sole trader running a florist. She does not have employees. Melissa’s business has been in operation for several years. The economic downturn due to the Coronavirus has adversely affected Melissa’s business, and she expects that her business turnover will fall by more than 30 percent compared to a typical month in 2019.
Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.
Moratorium of Rental Evictions
It was announced that there is a Moratorium of rental evictions for six-months. This will prevent landlords from evicting tenants if they are unable to pay rent due to financial distress as a result of the COVID-19 pandemic.
Scott Morrison said communication between landlords, tenants and banks was key, with all parties needing to work cooperatively.
Tenants and landlords who haven’t been caused financial distress by the pandemic are still expected to honour the leases and rental agreements.
Banks are expected to help carry the load by deferring mortgage repayments to home-owners, investment property landlords, and small to medium businesses, for six months.
JobSeeker Payment – Change to the income allowed for partner
JobSeeker Payment is subject to a partner income test, and today the Government is temporarily relaxing the partner income test to ensure that an eligible person can receive the JobSeeker Payment, and associated Coronavirus Supplement, providing their partner earns less than $3,068 per fortnight, around $79,762 per annum.
The personal income test for individuals on JobSeeker Payment will still apply.