An Overview by Accountant of the Latest Prompt Measures
Coronavirus is not only a health emergency in the world, but also an economic too. In order to control the spread of this pandemic, different authorities are taking different measures. Authorities have imposed lockdowns to ensure that people stay at home and maintain social distancing, due to the lockdowns businesses are suffering. The Federal Government has declared the introduction of new Jobkeeper payment, for assistance of eligible employers, influenced by COVID-19. This new assistance is a part of Coronavirus Stimulus Package
Overview of JobKeeper Payment
The JobKeeper Payment is a subsidy that will be paid to the workers as well as individuals who are self-employed by the taxation system. This subsidy is also applicable to the entities which are non-profit (like charities). The eligible employers will be capable to claim subsidy of $1500 per fortnight per eligible worker, this condition will be the same for self- employed ones having no employee. This subsidy started on March 30, 2020, the first payment to be received is due in the first week of May. The businesses need to get aware about short-term cash-flow influence that this subsidy will create.
Eligibility of Employer
The eligibility of Employers depends upon the following conditions:
1. The business is having the turnover of fewer than $1 billion and also the turnover will be decreased by more than 30% as compared to the time span of a year ago or
2. The business is having the turnover of $1 billion or more and also the turnover will lessen by more than 50% as comparable to a time span of a year ago.
3. The business is not owed to any big Bank levy.
The freelancers, sole traders or anybody else who qualifies as a self-employed entity and satisfies the above mentioned requirements, stands eligible to get the subsidy.
Eligibility of Employee
The eligible employer can claim the JobKeeper Payment. However, the worker must qualify the following conditions:
1. The employee must be presently employed by eligible employer.
2. The employee was employed by employer as on March 1, 2020.
3. The employee was a full-time, part-time or a long-term casual worker who has been employed on regular basis.
4. The employee must be minimum of 16 years of age.
5. The employee should be holding an Australian citizenship.
6. The employee must not be accepting the JobKeeper Payment from any other employee.
It must be noted that the workers who are having multiple employers, will be required to notify their employer to claim the JobKeeper Payment. Since, only one employer is eligible to get the payment on the behalf of their employee. In many cases, claiming the tax-free threshold will be the sufficient notification that the employer is the primary employer of the employee.
Registration for JobKeeper
On the ATO website, the eligible businesses must register their intention to apply. While registration, the businesses will be required to provide the supporting information to the ATO. This information will show the downturn in the turnover of the business and should report the number of eligible employees that are employed by the business. For showing this information, the business owners can seek the help of professional accountants.
The businesses which are without employees, will be required to:
1. Provide the Tax File Number of the nominees.
2. Provide declaration of recent activity of business.
3. Provide ABN for business.
4. Nominate individual to receive payment.
5. Provide updates on monthly basis to ATO to declare eligibility for payments.
The compliance, ATO and Single Touch Payroll
The ATO will use the data obtained from Single Touch Payroll (STP) to regulate the system and assure that employers receive the subsidy for employees who are eligible. According to the current scenario, it is clear that the businesses must keep their workers registered through STP, to receive and distribute the payment. It is also contemplated that businesses will be required to be up-to-date with tax lodgements and BAS and payment obligations to receive the stimulus on time.
The Illustrations given by the Government
The examples provided by the authorities have been slightly modified to exemplify that how the JobKeeper Payment is expected to apply:
Illustration 1st: Employer affected by Coronavirus with multiple employees
XYZ company owns a business with two employees. The business is still operational at this phase, but it expects the turnover to get declined by more than 30% in upcoming months.
The employees of XYZ company are:
- Kim, is a permanent full-time worker on a salary of $3,000 per fortnight before tax and continues working for the business; and
- Ken, is a permanent part-time worker on a salary of $1,000 per fortnight before tax and continues working for the business.
XYZ company is eligible to receive $1500 of JobKeeper payment for each employee per fortnight which will have the following advantages for the business and its employees:
- The business continues to pay Kim her full-time salary of $3,000 per fortnight before tax as well as superannuation guarantee support on this income. In this case, the JobKeeper payment partly subsidies the cost of Kim’s salary.
- The business continues to pay Ken his $1,000 per fortnight salary before tax as well as superannuation guarantee support on this income – plus an additional $500 per fortnight before tax, resulting in a total gross salary of $1,500 per fortnight. In this case, the JobKeeper payment fully subsidises the cost of Ken’s salary. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Ken under the JobKeeper payment.
Illustration 2: Self-employed affected by Coronavirus with no employees
- Den is a sole trader running a florist without any employees.
- The economic downturn due to the Coronavirus has adversely affected Den’s business and he expects that his business turnover will fall by more than 30% compared to a typical month in 2019.
- On this basis, Den will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight (before tax) which will be paid to him on a monthly basis in arrears.