Things to consider before making changes to payroll during Coronavirus
April 7, 2020
Why employers should lodge FBT Returns, even if it is Nil
April 15, 2021
The JobKeeper scheme was organised so quickly so there was always going to be tricky questions of how it was going to operate and who it will apply to.
When they first announced the Scheme, the Government did not have all the details worked out. So, when businesses and Tax Agents like us, started to ask a lot of questions there was nothing provided except ‘wait and see what we give you when we have worked it out ourselves, and oh, don’t forgot to register for updates so it looks like we are doing something.’
In the last few weeks many people have been working overtime to keep their businesses afloat and trying to get their head around our new world. The Accountants, Lawyers, HR Consultants, IT specialists. The list goes on.
There is one main point in the JobKeeper Scheme that is going to hurt many businesses. The ATO are insisting that $1,500 is paid to all employees before they (The ATO) will pay businesses the “wage subsidy”. If you are still operating at a decent level, then it might be achievable.
But I have a client in the Medical Profession that has completely shut down with 2 staff plus themself. That means the business needs to pay $4,500 this week and another $4,500 in the final week of April (every fortnight). Then in May the ATO will pay him $9,000.
It’s a short term cashflow issue but if you do not have the cash what do you do?
What period will JobKeeper scheme cover?
The JobKeeper scheme will be available for the period 30 March 2020 until 27 September 2020.
Turnover
The ATO have confirmed that it is based on estimated GST turnover. This means the ATO will be looking at your Business Activity Statement and if it is estimated to have fallen or will fall by 30 per cent or more relative to a comparable period.
What does this mean exactly?
Well it means income which is declared on your BAS quarter or BAS income for a month which must be compared to the same period last year.
The test compares the GST turnover of any of the months from March 2020 to September 2020 or the quarters that starts on 1 April 2020 or 1 July 2020 with the corresponding period in 2019, with a business satisfying the test where there is a shortfall of 30 per cent or more.
E.g. a business can make the comparison by comparing the whole of the month of March 2020 with March 2019, or by comparing the quarter beginning on 1 April 2020 with the quarter beginning on 1 April 2019.
Once an entity satisfies the decline in turnover test, it does not need to retest its turnover in later months but you will need to notify the ATO of its current GST turnover for the reporting month and its projected GST turnover for the following month on a monthly basis. This is for their information only.
Which employees are eligible?
Employees can only claim once with one employer. Business owners are confused how to claim for themselves. If you are paid a salary or a wage by your business, you claim as an employee. If you do not get paid a salary or a wage you can claim as a business owner. But you cannot claim both.
In order to claim you should register and pay wages via Single Touch Payroll. Payroll payments should be made using your payroll system and reported to the ATO.
If you do not report through Single Touch Payroll, you can still claim the JobKeeper scheme however, there will be a manual claim process but we have not been given details.
Once you decide to participate in the JobKeeper scheme, all eligible employees must be covered by the scheme and you will have to tell your employees whether you have nominated them as an eligible employee.
How often will the ATO pay me?
The payments will be made by the ATO monthly in arrears. This means you have to pay your employee and then collect from the ATO later. You will have to ensure your cashflow allows this. You could be out of pocket for a number of weeks.
The ATO is aware that this will present cash flow difficulties but has stated that they expect payments to be made to employees before the ATO will make payment to the business. If businesses do not have the cash to make payment they have advised that businesses should talk to their bank to discuss ‘their options’.
The banks have said businesses may be able to use the upcoming JobKeeper scheme as a basis to seek credit in order to pay their employees until the scheme is making its first payments.
We do not believe this is a viable option.
Trying to get a bank to organise finance in the next few days may be almost impossible and at the moment the banks are not picking up the phone as they are so busy working on deferrals and payment holidays.
Employers will need to ‘satisfy payment requirements for their eligible employees in respect of each 14 day period covered by the scheme.
Basically this means the ATO can confirm you have made the payment before paying you which will delay payment even more.
The first period starts on Monday 30 March 2020 and ends on Sunday 12 April 2020. That was three days ago so you need to organise payment in the next week or so.
The final period will start on Monday 14 September 2020 and end on Sunday 27 September 2020.
If I have stood down employees with the intention of keeping them when things get back to normal do I pay them?
Yes, you need to pay them as long as they are not claiming Jobseekers Allowance.
You can claim the JobKeeper scheme for employees that were stood down after 1 March 2020. To be eligible in relation to these employees, you will need to pay them a minimum of $1,500 per fortnight (before tax).
My business was not in existence 12 months ago or my monthly income is not consistent. What happens now?
The Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.
The ATO realise that there will be some businesses that do not have all the information available but will still claim. The ATO has said there will be ‘some tolerance’ where employers, in good faith, estimate a 30 per cent but actually experience a slightly smaller fall.
My Turnover has not gone down 30% yet but I think it will happen later. Can I still claim?
Yes, but you can only apply when you reasonably expect that your GST turnover will fall by 30 per cent. The ATO will provide guidance about self-assessment of actual and anticipated falls in turnover at a later date so we do not know how this will operate at the moment.
If you claim JobKeeper scheme at a later date it will not be backdated to 30 March 2020.
I operate a business but do not pay a salary or wage to myself. Can I claim?
Yes. People who are self-employed will be eligible for the payment provided:
- they were actively engaged in the business;
- are not entitled to another JobKeeper scheme
- are not a permanent employee of any other employer;
What about partnerships?
You can claim but only one partner can be nominated to receive a JobKeeper scheme along with any eligible employees provided.
- they were actively engaged in the business;
- are not entitled to another JobKeeper scheme
- are not a permanent employee of any other employer;
What about Trusts?
Trusts can receive the JobKeeper schemes for any eligible employees.
If you receive a distribution and not a salary one individual beneficiary can be nominated to receive the JobKeeper scheme provided:
- they were actively engaged in the business;
- are not entitled to another JobKeeper scheme
- are not a permanent employee of any other employer;
Technically, a trust that is loss making cannot pay distributions which means a loss making trust cannot claim.
What about company directors?
An eligible business can nominate only one director to receive the payment, as well as any eligible employees provided:
- they were actively engaged in the business;
- are not entitled to another JobKeeper scheme
- are not a permanent employee of any other employer;
I have and Apprentice. Do I get the JobKeepers and the Training Subsidy?
No.
Eligible small businesses can receive the 50 per cent wage subsidy for apprentices and trainees in the Supporting Apprentices and Trainees measure from 1 January to 31 March 2020, and the JobKeeper scheme.
Where small businesses receive the JobKeeper scheme, they are not eligible to receive the apprentice and trainee wage subsidy from 1 April 2020 onwards.
