Everything You Need to Know About the JobKeeper Payment

Everything You Need to Know About the JobKeeper Payment

The Australian Government has been widely praised for its response to the Covid-19 pandemic.

It has won plaudits for both the public health measures implemented to combat the virus, as well as policy measures intended to limit the economic fall out.

The centrepiece of the government’s economic response is the JobKeeper Payment. In essence, this is a wage subsidy paid to Australian businesses and not-for-profits to help them retain staff through the lock-down period and beyond.

Although generally well received, there have been reports that employers have found the administrative side of the program difficult to navigate.

Responding to these concerns, this post provides a basic outline of the program, including who is eligible and how to apply. Further information can be found on the ATO’s official website.

What is the JobKeeper Payment?

The JobKeeper Payment provides financial support to Australian businesses and not-for-profits significantly affected by the coronavirus outbreak.

The intention is to enable employers to retain as many staff as possible during the lock-down and associated economic downturn.

Administered by the ATO, the program offers eligible employers a payment of $1,500 per fortnight for each eligible employee they nominate. This is paid to employers in arrears, reimbursing them for amounts already paid in wages.

The program is currently set to run between 30 March and 27 September this year. There has been speculation that it may be extended, although the government has consistently denied this.

Who is eligible for JobKeeper?

To be eligible for the JobKeeper Payment, an employer must meet all of the following criteria:

  • It must have been carrying on a business in Australia on 1 March 2020, or a not-for-profit which principally pursued its objectives in Australia;
  • It must have employed at least one eligible employee on that date;
  • It must continue to employ one or more eligible employees for the fortnight(s) the JobKeeper payment is claimed (Notably, employees that were stood down after 1 March, but subsequently re-hired, remain eligible);
  • It must have sustained a 30% fall in turnover (for organisations with an aggregated turnover of $1 billion or less), or a 50% fall in turnover (for organisations with an aggregated turnover of more than $1 billion), or a 15% fall in turnover (for registered charities other than universities and schools); and
  • It must not otherwise be ineligible.

In relation to this final point, you can find the list of ineligible employers here. To summarise, major banks and government bodies are excluded from the program.

The most complicated aspect of determining an employers eligibility is calculating whether it has sustained the required fall in turnover. Generally, this is done by comparing GST turnover for a designated period after the onset of Covid-19 with the same period in 2019. This is known as the ‘basic test’. For some employers, such as those that were only recently established, an ‘alternative test’ is applied.

The criteria for determining whether staff constitute eligible employees can be found here. To summarise, in order to be eligible, staff must have been employed on 1 March on either a full time, part time or fixed term basis. Long term casual staff who were systematically employed over the preceding 12 months are also eligible.

In addition, employees must have been 18 years or older and Australian permanent residents on 1 March. Under certain circumstances, described here, employees aged 16 and 17 are also eligible.

Eligible employees must agree to being nominated by their employer for JobKeeper. They are also required to fill in a JobKeeper Employee Nomination Notice, available here.

How do I apply?

Once you have determined that your organisation is eligible, you can enrol in JobKeeper by following the steps outlined on the ATO website.

The enrolment process has been criticised as overly complicated by many business owners. Notoriously, the government blamed mistakes made by businesses during the enrolment process on a $60 billion dollar reporting error made by Treasury.

Businesses are permitted to have their registered tax or BAS agent enrol on their behalf. Given the difficulties many have experienced, this may be advisable.

What else do I need to know?

Employers need to pay each eligible employee at least $1,500 (before tax) a fortnight to be eligible for the JobKeeper Payment. This amount is then reimbursed by the ATO directly to the employer.

If an employer stops paying this sum to an employee, it ceases to be eligible for the JobKeeper Payment. However, if the staff member is then reinstated, the employer will become eligible once again.