Jobkeeper - FAQ

Rod Grosvenor • April 20, 2020

Question 1: Do businesses have to meet the decline in turnover test on an ongoing basis?

The answer is No. Whilst a business must satisfy the decline in turnover test in order to be entitled to a JobKeeper Payment, once it is satisfied, there is no requirement to retest in later JobKeeper Payment fortnights. The decline in turnover test only needs to be satisfied once.

If a business can demonstrate that its turnover has been adversely impacted by at least 30% (or 50%, as the case may be), then it will continue to meet this requirement even if its turnover subsequently recovers in later JobKeeper fortnights.

 

Question 2: What if a business's turnover has not decreased (e.g., by 30%) but it is predicted to do so in the coming month?

An employer can apply for the JobKeeper Scheme where it is reasonably expected that its GST turnover will fall by 30% or more (or 50% where applicable) relative to its GST turnover in a corresponding period a year earlier. Treasury has advised that the ATO will provide guidance about self-assessment of actual and anticipated falls in turnover. Additionally, if a business does not meet the decline in turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment at a later time, once the decline in turnover test has been met.

 

Question 3: Are employers required to continue to pay employees to qualify for the JobKeeper Payment?

The answer is Yes. Employers are required to satisfy the 'wage condition' in respect of an employee for the relevant JobKeeper fortnight in order to qualify for the JobKeeper Payment for that employee. As a reminder, the first JobKeeper fortnight commenced on Monday 30 March 2020 and ended on Sunday 12 April 2020 (i.e., the first JobKeeper fortnight has already ended).

If employers have insufficient cashflow to make such payments, Treasury has encouraged such businesses to speak to their banks about using the upcoming JobKeeper Payment as 'collateral' to seek short-term finance to pay their employees.

Question 4: If employees have been stood down after 1 March 2020 does an employer need to pay them?

  The answer is Yes. As discussed above, employers will need to make payments to eligible employees, including employees who have been stood down. This means the employer must pay the stood down employee a minimum of $1,500 per fortnight (before tax) in the relevant fortnight (subject to the concession in the TIP above).

 

Question 5: Can employers select which of their eligible employees are covered by the JobKeeper Scheme?

The answer is No. Once an employer decides to participate in the JobKeeper Scheme, they must ensure that all of their eligible employees (who have agreed to be nominated for the scheme) participate in the scheme. This applies to all eligible employees (i.e., irrespective of whether they are still working for the employer or they have been stood down). As the scheme is operated on an 'one in, all in' basis, employers cannot 'pick and choose' which eligible employees will be able to participate in the scheme.

 

Question 6: Are the JobKeeper Payments from the ATO assessable income to the business? The answer is Yes. In the absence of any specific exemptions, the JobKeeper Payments received from the ATO by the business would be assessable income under either S.6-5 of the ITAA 1997 (as ordinary income) or S.15-10 of the ITAA 1997 (as a subsidy received by a business). However, salary or wage payments made by the business to their employees are allowable deductions.

Question 7: Are employers required to deduct PAYG withholding from the amounts paid to employees?

The answer is Yes. Broadly speaking, employers are required to make payments of at least $1,500 to each eligible employee every JobKeeper fortnight. To the extent that these payments take the form of salary or wages, they would constitute assessable income to the employees, which means that employers would be required to deduct the appropriate amount of PAYG withholding.

Question 8: Are employers subject to Superannuation Guarantee ('SG') in relation to any extra JobKeeper Payments?

The answer is No. The Government's intention is that employers will only be required to make SG contributions for amounts payable to an employee in respect of their actual employment, which would not include any extra payments made by the employer to satisfy the $1,500 JobKeeper.

Question 9: Can a sole trader who has employees also qualify for the JobKeeper Payment? The answer is Yes. On the basis that the sole trader's business has satisfied all the other requirements to qualify for the JobKeeper Payment, a sole trader can qualify for the JobKeeper Payment in relation to their eligible employees and also qualify for the JobKeeper Payment themselves (i.e., in their own capacity) as an eligible business participant.

Transactional tax issues in the era of coronavirus

By Rod Grosvenor • May 27, 2020
The global economy has suffered a massive hit from the COVID-19 pandemic. The impact of the pandemic will open up opportunities for cashed-up funds and other buyers to take advantage of strategic and investment opportunities presented by the pandemic.

Jobkeeper - Summary

By Rod Grosvenor • April 20, 2020
What is the JobKeeper Payment?

ATO scrutiny on car parking fringe benefits

By Rod Grosvenor • March 14, 2020
The ATO has started contacting certain employers that provide car parking fringe benefits to their employees to ensure that all fringe benefits tax (FBT) obligations are being met. Generally, car parking fringe benefits arise where the car is parked on the business premises of the company, used by the employee to travel between home and their primary place of employment and is parked for more than four hours between 7 am and 7 pm, and where a commercial parking station located within 1 km of the premises charges more than the car parking threshold amount. Employers have a choice of three methods to calculate the taxable value of the benefits: 1.       the commercial parking station method, 2.       the average cost method and 3.       the market value method. The method currently under ATO scrutiny is the market value method, which states that the taxable value of a car parking benefit is the amount that the recipient could reasonably be expected to have to pay if the provider and the recipient were dealing with each other under arm's length conditions.

Tax deductibility of donations to bushfire relief

By Rod Grosvenor • February 8, 2020
Australians can claim a tax deduction for a donation of cash of $2 or more made to an organisation that is endorsed by the ATO as a Deductible Gift Recipient (DGR) . There are many different types of DGRs including Public Benevolent Institutions like the Australian Red Cross Society, or organisations established to prevent or relieve the suffering of animals like Wildlife Victoria Inc.

Denying the CGT main residence exemption to “Aussie expats” –– adapting to the new rules, and why “tax residency” is now even more important than ever.

By Rod Grosvenor • February 1, 2020
Under the new foreign resident main residence rules, most non-residents have until 30 June 2020 to sign a contract to sell their former Australian main residence, with the benefit of the MRE (either on a full or partial basis). For any sale contracts entered into after that date, the majority of Australian expats (i.e. non-residents) will not be entitled to apply the MRE at all for any capital gain made on their former Australian main residence.

CGT changes for foreign residents – CGT main residence exemption

By Rod Grosvenor • January 20, 2020
Treasury Laws have now been passed  which removes the entitlement to the CGT main residence exemption for foreign resident individuals . Previously , foreign resident individuals were entitled to access the CGT main residence exemption in the same way as Australian resident individuals. Broadly, an individual taxpayer's capital gain or loss in relation to their dwelling (or ownership interest in it) is disregarded if the dwelling was the taxpayer's main residence throughout the ownership period. Subject to transitional rules, these amendments deny access to the CGT main residence exemption for foreign residents, other than where certain 'life events' occur during the period that a person is a foreign resident where that period is six years or less. Transitional rules provide that the amendments do not apply in relation to a capital gain or loss from a CGT event that happens on or before 30 June 2020. If you believe that these amendment may impact you or you would like further clarification please do not hesitate to contact Rod or your consultant at Grosvenor Business Advisers.

Tax relief and assistance with bushfire recovery

By Rod Grosvenor • January 19, 2020
Tax relief and assistance with bushfire recovery

Instant Asset Write-off- extension and increase

By Steven Dainty • December 14, 2019
Extension and increase of instant asset write-off The instant asset write-off for small business has been extended and increased during the 2018/19 income year, allowing more businesses access to the write-off. The following is a table which will show when the changes to the write-off thresholds have come into effect. These changes apply to small businesses with an aggregated turnover under $10m. Purchase date or date asset first used (or installed ready for use) for a taxable purpose Threshold 1 July 2018 to 28 January 2019 $20,000 29 January 2019 to 2 April 2019 (7:30pm AEDT) $25,000 2 April 2019 (7:30pm AEDT) to 30 June 2020 $30,000   In addition to the above increase and extension of the instant asset write-off, businesses which are medium-sized will have an opportunity to utilise the write-off. Businesses over $10m but under $50m in aggregated turnover will be eligible to write-off assets purchased after 2 April 2019 and costing less than $30,000.

ATO tax debt may affect your credit rating

By Rod Grosvenor • December 14, 2019
ATO debts may affect your credit rating Businesses with tax debts need to be aware that the ATO will now be able to disclose the details of their tax debts to credit ratings agencies, which could potentially affect the ability of the business to obtain finance or refinance existing debt. Generally, only businesses with an ABN and debts over $100,000 and that are not "effectively engaged" with the ATO will be affected. The ATO is planning a phased implementation which will consist of undertaking education efforts before it targets companies, followed by partnerships, trusts and sole traders. The aim of the laws, according to the government, is to encourage more informed decision-making within the business community by making large overdue tax debts more visible, and to reduce the unfair advantage obtained by businesses that do not pay their tax on time. Tip: Are you unsure if you have a tax debt, or perhaps you need help with working out a payment plan with the ATO for your existing debt? We can help you with all of this and more.