JobKeeper Explained For Business Owners Without Employees
What is the JobKeeper payment?
JobKeeper is a wage subsidy being a fixed payment of $1,500 per fortnight for fortnights starting 30 March 2020 and ending 27 September 2020. The subsidy is to be paid to an eligible business which is then passed on to an eligible employee. The JobKeeper scheme recognises that certain participants in a business, such as a sole trader, a partner in a partnership, a beneficiary of a trust and a director or shareholder in a company are also affected by the economic downturn caused by the Coronavirus. Accordingly, in order to provide a benefit to such business participants, the Jobkeeper scheme has been extended.
Is my business eligible for a JobKeeper payment?
To be entitled to a JobKeeper payment as a business participant has four of the same basic requirements for businesses that have employees. These are:
1. The fortnight is a JobKeeper fortnight
A JobKeeper fortnight is a fortnight starting on or after 30 March 2020 and ending on or before 27 September 2020;
2. The business qualifies for the scheme on or before the end of the fortnight
To qualify the following conditions need to be met:
a. On 1 March 2020 a business is carried on in Australia. A business is defined as “including any profession, trade, employment, vocation or calling, but does not include occupation as an employee”
b. before the end of the fortnight, it met the decline in turnover test. Once this test is satisfied there is no requirement to retest in later months. If a business does not qualify for the month of April 2020 because its turnover has not been sufficiently affected, it can test in later months to determine if the test is met. This allows businesses that only become affected part way through the six month period of operation of the JobKeeper scheme to continue to monitor for any decline in turnover until they qualify for the scheme in a later period. The Rules specify two ways in which a business can satisfy the decline in turnover test: the basic test and the alternative test.
i.) The basic decline in turnover test works by comparing the projected GST turnover of the business for a period (the turnover test period) with its current GST turnover as calculated for a relevant comparison period (the comparison turnover). In effect this compares a month or quarter in the period the JobKeeper scheme applies with the corresponding period in 2019. A business will generally satisfy the test where the GST turnover in the turnover test period falls short of the comparison turnover and the shortfall is 30% or more.
The periods for the turnover test period being compared by can be periods of one month or three months. Monthly test periods start March 2020 and conclude September 2020, while quarterly test periods are for the quarters starting 1 April 2020 and 1 July 2020.
Projected GST turnover includes the value of all the sales that a business has made or is likely to make in the period which are subject to GST. However, it excludes the GST itself.
ii.) Satisfying the alternative decline in turnover test where the projected GST turnover can’t be compared to the same period in the prior year. The alternative test is determined by the Australian Taxation Office (ATO) and it may be that the alternative comparison period is the average of the actual GST turnover in all of the months in which the business was being carried on prior to the turnover test period.
3. The payment is for an eligible business participant
A business owner will be eligible where:
a. They are not employed by the business at any time in the fortnight (that is, they are a nominated business participant not an employee of the business).
b. They are actively engaged in the business being carried on at any time in the fortnight. Further, depending on the type of entity the business is, the individual must have a particular role within the business. In the case of an entity that is a:
sole trader—the individual must be the entity;
partnership—the individual must be a partner in the partnership;
trust—the individual must be an adult beneficiary of the trust; and
company—either a director or shareholder in the company.
c. They were actively engaged by the business as at 1 March 2020 and were:
i.) Over the age of 16 years
ii.) An Australian Resident or holder of a Subclass 444 Visa
Furthermore they must agree to be nominated by the business as the eligible business participant and have not agreed to be nominated by another business.
A person is not an eligible business participant for a fortnight if parental leave pay is payable to the person, the person is paid dad and partner pay, or the person is incapacitated for work and an amount is payable to the person in accordance Australian workers’ compensation law.
4. The business must notify the ATO of its election to participate in the JobKeeper scheme and the details of the nominated individual.
Are there any other requirements that I must meet to eligible for JobKeeper?
The JobKeeper payment for a business in respect of business participants is intended to support active businesses only. Therefore only entities that had an ABN on 12 March 2020, or such later time that the ATO allows (these circumstances will be limited), are eligible.
In relation to a business that has an ABN, it is additionally required that:
a. an amount was included in the income tax return as assessable income for the business for the 2018-19 income year and the ATO had notice on or before 12 March 2020 (or a later time allowed by the ATO) that the amount should be so included; or
b. the business made a taxable supply in a tax period that applied to it that started on or after 1 July 2018 and ended before 12 March 2020 and the ATO had notice on or before 12 March 2020 (for example in a business activity statement),or a later time allowed by the ATO, that the business had made the taxable supply.
My business has another family member working in it, will they be eligible for JobKeeper too?
A business is only entitled to a JobKeeper payment one individual. If a business has more than one eligible participant, the business can only be entitled to receive the JobKeeper payment in relation to one of the individuals. It is up to the business to determine which individual is nominated as the eligible business participant.
Similarly, an individual can only create an entitlement for one entity. A business is not entitled to a JobKeeper payment for an individual if another business is also entitled for the same individual.
Will I be eligible for JobKeeper if I am receiving paid parental leave or workers’ compensation?
A person is not an eligible business participant for a fortnight if parental leave pay is payable to the person, the person is paid dad and partner pay, or the person is incapacitated for work and an amount is payable to the person in accordance Australian workers’ compensation law.
When will payment be made?
Payments will be made monthly in arrears with each payment being made within 14 days of the end of the month.
How will payment be made?
The ATO will make the JobKeeper payment into the bank account that they have on file for activity statement refunds for the business. If there is no bank account on file then the payment will be made to the bank account nominated on the most recent income tax return for the business. If the ATO does not have bank account details on file then they will not make payment until they have been provided.
However, the ATO may direct that payment be made in a different way. No details have been provided as yet as to what this may be.
Are there any other requirements to participate in the JobKeeper scheme?
A business that is entitled to a JobKeeper payment for a fortnight must notify the ATO, on a monthly basis, of:
its current GST turnover for the reporting month; and
its projected GST turnover for the following month.
The report must be made within 7 days of the end of the month.
The information provided as part of this report does not affect an businesses eligibility, including in respect of the decline in turnover test (which only needs to be satisfied once). It is also not intended to verify whether the projection given as part of the decline in turnover test was accurate. Rather, it is intended to ensure that there is good information on which to assess the economic impact of the Coronavirus on a monthly basis across Australia.
Furthermore, you must keep records for five years to substantiate any information that the business provided to the ATO in relation to the payment before and after the business received the JobKeeper payment.
What if I receive a JobKeeper payment that I am not entitled to?
A business that receives an overpayment of the JobKeeper payment is required to repay the overpaid amount and a general interest charge to the ATO. Interest will apply from the date of the overpayment until the date of repayment.
Where can I find out more?
Legislation: Coronavirus Economic Response Package (Payments and Benefits) Act 2020
Rules: Coronavirus Economic Response Package (Payments &Benefits) Rules 2020
Explanatory Statement: Coronavirus Economic Response Package (Payments & Benefits) Explanatory Statement 2020
Fact Sheet: JobKeeper Payment – Information for employers
Fact Sheet: JobKeeper Payment – Protecting Integrity
Frequently asked questions: FAQ
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Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.