JobKeeper payments will start rolling out from the first week of May, but many small business owners are still trying to understand what the scheme means for their own unique circumstances.
To help answer your (and our) most pressing questions, we spoke to Joanne Wynne from RSM Australia – a leading professional services firm delivering expertise on business best practice, technology and innovation in the financial and advisory sectors.
- How do businesses prove they have had a 30% downturn to a comparable period last year – especially those that aren’t ‘cash and carry’?
In order to be eligible to receive the JobKeeper payment for all fortnights from 30 March 2020, business owners must assess whether they meet the reduction in turnover. You can do this by comparing:
- GST turnover for March 2020 against GST turnover for March 2019;
- GST turnover for April 2020 against GST turnover for April 2019; or
- GST turnover for the quarter starting April 2020 against GST turnover for the quarter starting April 2019.
You can obtain your GST turnover for the 2019 comparable period from your accounting records (if you can’t easily locate these, ask your accountant to provide you with them). You can assess your turnover reduction on a monthly or quarterly basis – your turnover assessment period does not need to match your BAS period.
If you have not suffered the required reduction in turnover from March to June 2020 you may still be eligible for the JobKeeper payment in other months from July to September 2020.
We recommend you continue to review figures during these months to ensure you don’t miss out on any entitlements you may be eligible for.
- Is JobKeeper accessible for companies that have had to cut the hours of their employees – or is it only available to companies that have had to lay off/stand down staff entirely?
JobKeeper is accessible to all businesses that meet the eligibility criteria – it doesn’t matter whether you’ve had to cut your employees’ hours.
The critical points are that a) the employee is still employed by the business when JobKeeper is being claimed, and b) the employee was employed on 1 March 2020 and meets other eligibility criteria, such as being long-term casuals or residency requirements.
- Do employed staff have to work any specific hours to receive the JobKeeper payment?
There is no minimum number of hours an employee must work to be eligible for the JobKeeper payment.
- Should business owners be paying their staff out of their own pocket until the ‘backpay’ JobKeeper payments come in? If so, what can they do if they are already in the red?
Yes, it is a requirement that employers pay their employee the $1,500 per fortnight prior to being reimbursed by the Government, even if you’re unsure if your business will receive the JobKeeper payment. While many businesses will struggle with this, the Government is allowing up to 8 May to make any catch up payments.
If your business is struggling for cash flow, you are encouraged to speak to your bank to arrange finance. Treasurer Josh Frydenberg recently announced that banks have agreed to set up a hotline for this very purpose. The hotline will be used to help businesses who need finance to fund the JobKeeper payment and the applications for such finance will be fast-tracked.
- Should sole traders be applying for JobKeeper or JobSeeker? If it depends on their circumstances, what are the main considerations?
Sole traders can apply for either JobKeeper or JobSeeker, however they can only receive one of the payments.
If, for example, your JobKeeper application is successful, then you need to advise Services Australia so you don’t receive the JobSeeker payment as well.
- Can an employer get an exemption from the 12-month casual ruling for one of their staff members (e.g. someone who had been employed for 11 months as at 1 March 2020)?
Unfortunately not. There is no discretion on this eligibility requirement.
- What if staff are working fewer hours than usual now – do they still get the full $1,500 amount or less?
Staff are to receive the full $1,500 per fortnight before tax. Even if they work fewer hours, they must still be paid the $1,500 JobKeeper payment.
Employers cannot keep the difference for themselves.
- Can we expect the JobKeeper payments to continue beyond the initial six-month period?
At this point there has been no discussion about extending the JobKeeper payment beyond the initial six-month period.
- Can employers use JobKeeper for just one or two employees, or do they have to include all eligible staff?
Employers must nominate all eligible staff. You cannot pick and choose who is able to claim the JobKeeper payment in your business.
- If an owner uses an independent contractor for ongoing work, can they use JobKeeper to pay them?
As an independent contractor is not an employee, they cannot qualify for the JobKeeper payment via their clients. As a result, if a business engages independent contractors, they will not receive the JobKeeper payment to assist in paying contractor fees.
An independent contractor, however, may qualify for the JobKeeper payment through their own contracting entity as an a ‘eligible business participant’, which includes sole traders, partnerships, trusts and companies.
Thank you to everyone who read our previous article on the JobKeeper payment scheme and posted questions and comments on our social channels. Hopefully some of the above answers have added clarity to your circumstances however, if you are still unsure about elements of the JobKeeper scheme, you can find a broader FAQ at the ATO’s Knowledge Base.