Does your employer qualify for JobKeeper?
We finally know a whole lot more about how businesses qualify for JobKeeper refunds for their employees’ wages. But confusion - it has to be said - still reins.
I’ve spoken to many small business owners who just can’t figure out if they’re going to be eligible. They simply can’t afford to pay $1,500 in fortnightly wages per employee without that surety. Indeed, many can’t even cover the cost of the one-month refund lag.
Well, here are the newly released rules in plain English – for your own business or for you to tell your employer if they don’t yet have a grasp on what’s available - and could be paying you a ‘free’ wage.
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Criteria 1: The business has to have been trading on March 1. Non-profit bodies are eligible too.
Criteria 2: Then it has to satisfy a “decline in turnover” test.
If annual turnover is under $1 billion, a business’ turnover must fall by 30 percent. At $1 billion or over, the required drop is 50 per cent. (Charities need only show 15 percent.)
Now, this is where it gets tricky, and there’s been uncertainty.
We now know you can satisfy the test with lower turnover in a period as short as one month, versus the corresponding month last year (you use GST turnover). This can also be projected turnover, say for April.
But if turnover hasn’t dropped sufficiently in April, you can try again with turnover from May, or a subsequent month.
As the explanatory statement on Treasury says: “This allows entities 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.”
What’s more, if your business’s turnover is more volatile, you can use one-of-two quarterly periods, commencing in April or July, versus that same period in 2019.
Importantly, there’s no requirement to re-test in later months. Once you’ve triggered eligibility, it remains for the six-month (scheduled) duration of the program.
Here’s the link for a business to pre-register for JobKeeper, and the full online application will be available from April 20.
The trouble is that the 30 percent-drop rule, rules out eligibility for a lot of businesses: start-ups, businesses that had a low-turnover year last year, businesses that were investing and building up to a good year this year or businesses that have just made a major acquisition.
However, we’ve now been told there is going to be an allowance made for this with some sort of ‘alternative test’ for turnover.
We wait with bated breath for precisely what this will be and know only: “It will be necessary for the affected entity to provide appropriate evidence to the Commissioner that it satisfies the alternative test.”
For sole traders, contractors and the self employed
There’s been a lot of fanfare about these often one-man bands being eligible for JobKeeper. Hairdressers and the like, have seen their livelihoods disappear.
Along with the requisite fall in turnover, an ABN is the crucial qualifier here (and you must have had it on March 12). Then you simply nominate yourself to receive the payment.
For partnerships and family businesses
That thing I just said about nominating yourself to receive the payment is where many family businesses – unfortunately – come unstuck.
This is where both a husband and wife work in a business, as many do in the regions, such as construction, manufacturing or technology.
Where the business is a partnership, only one partner is allowed to nominate for JobKeeper (employees can also receive it but a partner cannot be an employee).
Similarly only one (adult) beneficiary of a trust can be nominated.
And only one company director can receive the payment, along with any eligible employees.
The FAQs on Treasury say: “Only one person in a director capacity may receive the payment and that individual may not receive the payment as an employee.”
The fallback for a spouse who misses out is the lower rate JobSeeker (with an increased cut-off for what your spouse can earn: at nearly $80,000).
But – a head’s up – the application process for benefits when you have a business is incredibly onerous. As a Centrelink rep said to me: our systems are not designed for applicants with companies and trusts (there is an extra 20-page form for every company and trust).
Does your business tick the right boxes?
If your business – or your employer’s – satisfies all that, it will get a refund of $1500 per fortnight per eligible employee.
Eligible employees are full-time, part-time, and casual workers with more than one year’s service. They also have to be an Australian citizen, the holder of a permanent visa, a protected special category visa holder, a non-protected special category visa holder who has been living in Australia continually for 10 years or more, or a special category (subclass 444) visa holder. This last one covers New Zealanders who’ve made Australia home.
And as I said earlier, wage refunds will be backdated to March 30. They will also cover all eligible employees of a business on March 1 (even if they’d subsequently been stood down but were reinstated on the JobKeeper announcement).
If paying in advance is just not manageable for a business – JobKeeper refunds will always be made one month in arrears – both the Australian Bankers’ Association and Prime Minister Scott Morrison has confirmed banks will tide them over for salaries for the month. The promise of the refund will be enough for a bank to give you credit.
Should you be paying your employees now? It could both keep them solvent and keep them in reserve… ready to reboot your business.
Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.
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