MELBOURNE, 31 March 2020 – The Government yesterday released details of its much-anticipated wage subsidy scheme. This is a bold scheme and assuming it is administered efficiently and effectively by the ATO it should be welcomed by both businesses and their workers.
The key purpose of the subsidy is to keep employees connected to their employers so when the economy wakes up from its coronavirus induced “hibernation”, businesses can hit the ground running without having to rehire new staff. This $130B wage subsidy scheme has been dubbed the “JobKeeper Payment”.
We outline below some of the key aspects of the scheme.
Employers are to receive a $1,500 subsidy per fortnight per employee. This payment is then to be passed onto their employee.
The payments to employers should commence from May 2020, with the payment backdated to the date of the announcement (30 March). The payments will cover the next six months which indicates the length of time the Government anticipates businesses and employees being impacted.
An employer will be eligible where:
- For a business with turnover of less than $1B, it will need to prove a 30% drop in turnover to a comparable period a year ago (of at least a month)
- For a business with turnover of greater than $1B, it will need to prove a 50% drop in turnover to a comparable period a year ago (of at least a month)
- The employer had an employment relationship with the employee as at 1 March 2020 and confirms that each eligible employee is currently engaged in order to receive JobKeeper Payments.
The JobKeeper Payment will be paid in respect of eligible employees which include:
- Those currently employed by the employer (including those stood down or re-hired);
- Those that were employed by the employer at 1 March 2020;
- Full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- Being at least 16 years of age;
- Australian citizens, the holders of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
- Not receiving a JobKeeper Payment from another employer.
Amounts Paid to Employers & Employees
The proposed mechanics of the JobKeeper Payment requires employers to:
- Ensure that each employee receives at least $1,500 per fortnight (before tax). For employees that were already receiving this amount from the employer then their income will not change ie. for employees on an annual salary of $39,000.
- Top up the amount paid to an employee up to $1,500 before tax, for employees that have been receiving less than this amount.
- To pay stood down employees at a minimum of $1,500 per fortnight.
- Top-up the amount paid to employees who earn more than $1,500 before tax – the JobKeeper Payment in this case subsidises part of the amount paid to the employee.
- To advise the relevant employee that they are being paid the JobKeeper Payment.
Administration of the Scheme
Other relevant aspects of the JobKeeper Payment scheme include:
- Amounts will be paid monthly in arrears.
- That the 9.5% Superannuation Guarantee Levy is not required to be paid on any additional amounts passed through to the employee ie. on amounts above their usual salary.
- Self-employed persons and Not-for-profit entities being eligible to apply.
The ATO will be responsible for administering the scheme. Employers will need to apply to the ATO with relevant details outlining the downturn in their business and the number of eligible employees – employee details should be pre-populated based on data obtained from Single Touch Payroll. They will be required to report to the ATO on a monthly basis with employee details. The full details to be included as part of the application process are not yet available although employers can register their interest: https://www.ato.gov.au/general/gen/JobKeeper-payment/
As always, this scheme needs to be legislated and approved by Parliament. We will update you with any further details of this scheme and documentary requirements to support an application to the ATO.
For more details, please refer to the Treasury : https://treasury.gov.au/coronavirus
Should you have any queries in the meantime, please reach out to your Slomoi Immerman Partners adviser, contact our office on 613 8376 1600 or e-mail : firstname.lastname@example.org