Australia’s JobKeeper stimulus package: what you need to know
Australia’s ‘JobKeeper’ stimulus package is now law – it is designed to assist Australian businesses that have experienced a substantial decline in turnover due to the COVID-19 pandemic, in particular, by subsidising wages of their employees.
The JobKeeper payment is a pre-tax AUD1,500 fortnightly payment available for qualifying employers. Those employers will then be required to ensure that they make a payment to the relevant eligible employee of at least AUD1,500 per fortnight before tax.
The key considerations for employers in respect of the JobKeeper payment will be:
- the eligibility of their business and employees for the payment; and
- their employment and tax obligations (including managing cash flows, State taxes and record keeping requirements) in respect of such payments.
Please see below our further guidance on these matters.
For assistance on the JobKeeper payment and related measures, please contact a member of our Tax and Employment teams listed below.
What is it?
Payments of AUD1,500 per fortnight from the Government to qualifying employers. While in receipt of this government payment, employers will have an obligation to meet a minimum payment obligation to pay at least AUD1,500 per fortnight (before tax) to eligible employees.
When is it available?
Between 30 March 2020 and 27 September 2020.
Who can be eligible?
The current eligibility requirements are as follows:
| Employers | Employees |
| For eligibility as a participant in the JobKeeper scheme:
Aggregated annual turnover includes the turnover of the employer, its affiliates and associates. Thus, a small business that is part of a larger group (i.e. with aggravated turnover of AUD1 billion or more) must have a 50% decline in turnover. There is no ‘causation’ test – the entity does not need to demonstrate that the turnover decline was directly caused by COVID-19. The Commissioner may also issue alternative turnover tests, for certain groups of entities where there was no reasonable comparative period in 2019 (e.g. entities affected by drought in 2019 or recently established entities).
In addition to the above, to be eligible for the JobKeeper payment with respect to an eligible employee:
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Specific rules apply to employees on parental leave or receiving workers compensation. JobKeeper payments may also be available in relation to eligible business participants (i.e. shareholders, directors, partners of a partnership) who are actively engaged in the business of an entity.
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What are the next steps for employers?
- Register your interest with the ATO online. The JobKeeper payments are available only prospectively (i.e. after registration), except for March 2020 payments (for which employers must register by 30 April 2020).
- Confirm your eligibility as an employer, especially whether you satisfy the turnover reduction test – this requires a consideration of both your:
- annual “aggregated turnover” (i.e. including affiliates and connected entities – e.g. holding companies and subsidiaries) to determine the relevant turnover decline percentage required, and
- “GST turnover” in the current and relevant previous period.
- Identify eligible employees within the workforce, including any currently stood down, and obtain a nomination notice (in a form to be approved by the ATO) from eligible employees.
- Collate relevant information and notify ATO and eligible employees (employees must be notified within seven days of their details being passed to the ATO for the purposes of obtaining a JobKeeper payment). Be aware of tax secrecy and record keeping implications, as certain information will be retained by the Government.
- Consider the potential employment and tax impacts of the JobKeeper payments, such as on:
- Employment obligations in industrial instruments and contracts of employment – please see our insights on the Fair Work Act 2009 (Cth) implications;
- Cash flow impacts of the JobKeeper payments and existing employee and tax payments;
- Income tax implications of the JobKeeper payments and subsequent on-payment to employees, including the impact on any carried forward tax losses; and
- Employer related tax obligations such as PAYG, superannuation and payroll taxes. e.g. South Australia has announced it will exempt JobKeeper payments from payroll tax, while all States & Territories have announced general payroll tax concessions as a response to COVID-19.
- Consider on-going reporting and notification obligations (i.e. to ATO and eligible employees).
Our Tax and Employment teams would be pleased to assist you with any of the items above or any other queries you may have in respect of the JobKeeper stimulus package.
