What's the deal with JobKeeper?
No matter who you are, or what you do, you’ve likely been affected by COVID19. Hopefully, if you’re reading this, your health is still intact and you’ve landed on this blog to get some advice on how to keep your business afloat during these times. As a bookkeeper, I have had an abundance of questions from business owners about the financial care available. I’ve also noticed the similarity across these questions, and how confusing it has felt for some trying to understand eligibility and requirements.
I am going to do my best to answer some of the most frequently asked questions I’ve been receiving, and break down the support that may be available to you.
LET’S START WITH THE J WORD ON EVERYONE’S LIPS – JOBKEEPER
IMPORTANT: At the time of publishing this blog the enrolment for Jobkeeper is OPEN. If around a month ago, you filled out a form with your ABN and email address for the ATO, just note that this was only registering your interest. You must formally enrol either through a registered tax or BAS agent or log in to the ATO online services through myGov or the business portal using your mygovID to receive any payments.
Q: WHAT IS JOBKEEPER?
A: Jobkeeper is a wage subsidy from the government, paid directly to businesses who have been impacted by the coronavirus and enabling them to continue paying their employees for a maximum period of 6 months.
Q: HOW MUCH IS THE SUBSIDY?
A: $1500 per fortnight before tax, to each eligible employee. After tax, this works out to be $654.00 take home per week, per employee. These payments will be made by the Australian Taxation Office (ATO), directly to the employer each month in arrears. In “arrears” basically means he opposite of in advance. The first payments are expected to be paid to eligible employers in the first week of May.
Q: WHAT HAPPENS WITH THE TAX?
A: As a business owner, if you receive this money for your nominated employee’s, you will withhold the tax amount just as you normally would and report it on your business activity statement.
Q: SO, HOW DO I KNOW IF I / MY BUSINESS IS ELIGIBLE?
A: The million-dollar question! This is what we currently know:
Employees: As an employee, you are eligible if you:
Are currently employed by an eligible employer; including if you were stood down or rehired due to the impacts of the coronavirus
Were a permanent or perm-part time employee as at 1st March 2020
A long-term casual employee employed on a regular basis for at least 12 months as at 1st March 2020 and were not a permanent employee of another employer
Were 16 years or older as of 1st March 2020
Are an Australian resident, and are not receiving partner pay or paid parental leave
Employers: As an employer, you are eligible if:
You employed at least one eligible employee as at 1st March 2020
Your eligible employees are currently employed, (including those stood down or rehired)
You were in business on 1st March 2020 with an active ABN
Your business has faced a 30% fall in turnover
*If you’re an employer and are claiming the jobkeeper on behalf of you employees please make sure your employee’s have completed the Jobkeeper employee nomination notice. See below if you have not already got this.
https://www.ato.gov.au/Forms/JobKeeper-payment---employee-nomination-notice/
Q: OKAY, BUT WHAT IF I AM A SOLE TRADER AND I ONLY EMPLOY MYSELF?
A: Sole traders may be eligible for the Jobkeeper subsidy as long as they actively engage in the business operations and meet the other relevant eligibility tests. These include providing information on the decline in revenue (the same 30% applies) as well as being able to show that the business lodged a 2018/2019 income tax report or a business activity statement for the period after 1st July 2019 and ending before 12th March 2020.
Here is a handy link from the ATO about sole traders:
https://www.ato.gov.au/general/jobkeeper-payment/sole-traders-and-other-entities/
Q: HOW CAN I PROVE THAT I HAVE HAD A DECLINE IN TURNOVER?
A: You need to be able to confirm with the ATO at the time you enrol for Jobkeeper that your business has had, or is likely to have, a 30% fall in turn over (for businesses turning over $1 billion or less per year). If you have a business that turns over $1 billion or more, you must be able to confirm a 50% fall in revenue to be eligible for the Jobkeeper subsidy (and fair enough)!
As at the date of this blog’s publishing, the ATO has given businesses three different options for working out and proving their fall in turnover:
GST turnover for March 2020 with GST turnover for March 2019
Projected GST turnover for April 2020 with GST turnover for April 2019
Projected GST turnover for Q4 April to June 2020 with Q4 2019
Q: DO I NEED TO CONTINUE PROVING THE DECLINE FOR MY BUSINESS?
A: No. Once you qualify, then you will remain eligible. The Jobkeeper will not be income tested each month, however it will require monthly reporting for the business to continue receiving payments. This includes lodging single touch payroll events, confirming your employee’s eligibility and reporting your revenue each month to the ATO so they can see how you are tracking under the Jobkeeper scheme.
This also means, if you are not eligible in the first month, then make sure you are aware of your future turn over reports, as you may become eligible in a later.
Q: WHAT IF I HAVE ONLY JUST STARTED MY BUSINESS OR MY LAST YEARS FIGURE ARE NOT COMPARABLE?
A: After much waiting, the ATO finally released information on “alternative testing” for businesses that are in this position and fail the “basic test” (your revenue decline in 30%). These are the scenarios that the ATO will consider for the alternative testing:
New businesses/start ups
Business restructure
Business had substantial increase in turnover
Businesses with irregular income
Business Acquisition or Disposal
Businesses affected by drought or natural disaster
Sole traders/partnerships that saw sickness, injury or leave
If you fall into any of these categories, it is worth reaching out to a bookkeeper or accountant to run some reports that will help you decide which alternative testing is most suitable for your business. There are a few different ways to calculate an average comparable month/income period so you may be eligible for Jobkeeper and not even know it!
Here are 3 examples of businesses I work with who fall into these scenarios:
New business (under 3 months old)Kate had opened her own beauty salon on the 1st Jan. As Kate does not have any financials for the same time last year, we needed to calculate an average turnover to compare too.
In January, the business turnover was $6,000 and in Feb it was $9,000. We add these two amounts together and divide by two (being that it had been two full months of Kate in business before COVID19 changed everything). This has now given Kate and average comparable monthly figure of $7,500.
In March, her sales were severely impacted, and due to government restrictions, she had to close her doors on the 20th March. Her turnover for March was only $4,000.
This is a 46% decline in revenue and therefore makes Kate eligible for Jobkeeper.
Similar testing applies for businesses that commenced before 30th November 2019.
New business (under 6 months old but over 3 months old)
Emma is a graphic designer and started her own business on the 7th September 2019. Being that she’d been in business for more than 3 months, we than calculate her average monthly turnover by calculating the 3 months before 1st March 2020.
Emma’s turnover was as follows:
December $4,000
January $6,000
February $6,000
This totals $16,000 which we divide this by 3, giving us a monthly comparable turnover of $5,333.
In March, Emma’s turnover was $3,500 which results in a 34% decline in turnover and makes Emma eligible for Jobkeeper.
Business with a substantial increase in turnover
Mark is a plumber and over the past 12 months his business has seen significantly grown. Mark fails the basic income test as last March his turnover was $20,000 and March 2020 it was $60,000.
However, as Marks business over the last 12 months had growth over 50% we can now calculate a more comparable monthly average in line with this increase.
Mark company’s income last quarter (Jan – March 2020) is $150,000. Divide this by 3 and this gives us $50,000 for his monthly average. In April Marks turnover was only $30,000 which is a decline of 40% compared to the monthly average we just calculated which makes him eligible for Jobkeeper.
Businesses that have had substantial growth need to be able to show a 50% increase in the last 12 months, or 25% in the last 6 months, or 12.5% over the past 3 months.
I chose to use the 50% increase in the example above.
Want more info? Try these links for information on alternative testing, and eligibility for employers and employees.
https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Applying-the-turnover-test/
https://www.ato.gov.au/general/jobkeeper-payment/employers/eligible-employers/
Q: WHAT IF MY SALES PICK UP AFTER I ENROL IN JOBKEEPER? DO I NEED TO CANCEL?
A: No. You only need to satisfy the decline in turn over once to be able to keep receiving the payments. This is even if during the scheme your business recovers or starts to excel.
This time is teaching us a lot about our businesses. Some lessons are good, others have been harder; and even if for those not in business, this crisis has been a great reminder of the importance of having a contingency plan. You mightn’t have though something like this would happen to you, but as it turns out, emergencies don’t discriminate.
So, whether you have no work, less work, more work than ever, just know that we have all felt the gears crunch on this crazy 2020 rollercoaster. And the only way out, is through. I hope this information has been useful to you, and if you need any further clarification, please don’t hesitate to reach out. My inbox is always open!
IN THE MEANTIME, HERE FOR A FEW MORE GENERAL TIPS FOR MANAGING YOUR MONEY, MY QUARANTINE GIFT TO YOU:
Always have a savings account for emergencies – pop in 5-10% of your wage every time you get paid and let it build up
Keep track of your accounts and books so admin doesn’t compound your anxiety when a crisis arises
Look for opportunities in everything – use this downtime to get on top of your business admin, do something creative or brainstorm new and better ideas for the future
Look closely at your business structure and whether it truly supports you and your employees in the best way possible