JobKeeper Overview 15 April 2020 - Michael Croker CA Australian Tax Leader Chartered Accountants Australia and New Zealand
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JobKeeper Overview
15 April 2020
Michael Croker CA
Australian Tax Leader
Chartered Accountants
Australia and New Zealand
Employers on the COVID-19 frontline
JobKeeper
Unemployed Employer $
Wage employed
STP employee
$
JobSeeker Data
Tax return
JobKeeper Data match
subsidy
JobKeeper
Fair Work aspects Rule-making power
Administration
JobKeeper Legislation, Legislative Rules and Funds
© Chartered Accountants Australia and New Zealand 2018
The JobKeeper legislation Coronavirus Economic Response Package (Payments and Benefits) Act 2020. Coronavirus Economic Response Package Omnibus (Measures No. 2) Bill 2020 Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 © Chartered Accountants Australia and New Zealand 2018
The Commissioner’s JobKeeper powers
General power of administration
Commissioner is empowered to:
• Design JobKeeper notices, forms
• Apply alternative turnover test
• Pay JobKeeper up front
• Delay payment to verify entitlement
• Seek return of overpaid amounts James O’Halloran
• Waive record-keeping obligations Deputy Commissioner,
JobKeeper Payment Program
• Apply integrity rules
• Share information with others
ATO website will be the key source of JobKeeper guidance
© Chartered Accountants Australia and New Zealand 2018
How long does JobKeeper last?
Starts:
the fortnight beginning on 30
March 2020;
Continues:
for each subsequent fortnight;
Ends: But how long will our
the fortnight ending on 27 community have to endure
September 2020. the COVID-19 emergency?
© Chartered Accountants Australia and New Zealand 2018
ATO’s latest “get ready” instructions
1. Check if you, as an employer, and your nominated employees meet
the eligibility requirements.
2. Notify eligible employees that you (their employer) intend to participate
in the JobKeeper scheme.
3. Send your eligible employees the JobKeeper Employee Nomination
Notice to complete and return to you to confirm that they agree to you
being nominated as the employer to receive JobKeeper payments from.
4. Keep the Employee Nomination Form on file for five years.
5. Pay the minimum $1,500 to each eligible employee per JobKeeper
fortnight. The first fortnight starts on 30 March and ends on 12 April.
Alternatively, you can make one combined payment of $3,000 for the first
two fortnights paid by end of April 2020.
6. Enrol for JobKeeper from 20 April using the Business Portal and
authenticate with myGovID.
7. Subscribe to updates on the ATO website, so we can let you know
when new information is available.
© Chartered Accountants Australia and New Zealand 2018
Pathways to JobKeeper entitlement
Based on
Based on paid
business
employees
participation
© Chartered Accountants Australia and New Zealand 2018
What are the employer eligibility Based on paid
conditions? employees
• Fortnightly testing
• The employee is “eligible”
• The employer entity:
• Satisfies turnover decline test
• Satisfies minimum $1,500 wage condition per employee
• Notifies ATO of JobKeeper participation
• Provides ATO with information (e.g. employee details)
• Has no “double-dip issue” with other employers
• Notifies the employee (7 day rule), and
• Has not advised ATO of JobKeeper opt-out
© Chartered Accountants Australia and New Zealand 2018
Who is an “eligible” employee? Based on paid
employees
• On 1 March 2020, the individual was:
• Aged 16 years or over; and
• Either:
• an employee (other than a casual employee); or
• a “long term casual employee” (12 month rule and
no ‘double-dipping’ with another employer)
• Satisfies residency test (Social Security Act test, or is a tax
resident with a Subclass 444 Special Category visa).
• Provides 1 employer with 1 JobKeeper nomination notice
• Is not in an “excluded” category of employees Rehire?
• Was employed by the entity at any time in the fortnight
© Chartered Accountants Australia and New Zealand 2018
Ineligible employees Based on paid
employees
Paid Parental Leave Act 2010:
• parental leave pay is payable for that fortnight
• paid dad and partner pay
Individual is:
• totally incapacitated for work throughout the
fortnight; and
• Workers’ comp is payable to the individual; and
• the amount is payable in respect of a period that
overlaps with, or includes, the fortnight.
© Chartered Accountants Australia and New Zealand 2018JobKeeper Employee Nomination Based on paid
Notice employees
https://www.ato.gov.au/assets/
0/104/300/387/d1aab7f2-fbe8-
44b8-9ec1-4885ded1088e.pdf
© Chartered Accountants Australia and New Zealand 2018Employee’s moving intra-group, Based on paid
takeovers employees
1 March 2020 test
Continuity of employment Parent Co
satisfied where individual was
earlier employed by: 100%
• Another entity in the same
wholly-owned group; or
Sub 1 Sub 2
• Employer entity changes
hands.
✓
Eligible
© Chartered Accountants Australia and New Zealand 2018Testing the employer’s Based on paid
eligibility in detail employees
1 March 2020 Test Time
• Entity carried on a business in Australia, or was a non-
profit body that pursued its objectives principally in
Australia
Eligible employer
Turnover Decline Test Satisfied
• Basic test
• Alternative test
© Chartered Accountants Australia and New Zealand 2018Ineligible employers Based on paid
employees
The big banks (Major Bank Levy)
Australian government agency
Local council
Entity wholly owned by government agency or local
council (e.g. council run waste recycling business)
A sovereign entity (e.g. business run by a foreign gov’t)
Company: liquidator or provisional liquidator appointed
Individual: a trustee in bankruptcy appointed
© Chartered Accountants Australia and New Zealand 2018Basic Turnover Test Based on paid
employees
Entity’s projected GST turnover for test period falls short of
the entity’s current GST turnover for comparison period (the
comparison turnover); and
That shortfall, expressed as a % of the comparison turnover,
equals or exceeds:
• 15% - ACNC registered charity (excludes non-gov’t schools)
• 50% - Applicable where entity’s aggregated turnover for
the income year in which the test time occurs is likely to
exceed $1 billion (or does exceed $1bn in prior year)
• 30% - Other entities
© Chartered Accountants Australia and New Zealand 2018What’s the turnover test period? Based on paid
What’s the comparison period? employees
Turnover Test Period Comparison Period
• A calendar month that The period in 2019 that
ends after 30 March corresponds to the
2020 and before 1 turnover test period.
October 2020; or
• A quarter that starts on
1 April 2020 or 1 July
2020
Compare
Current COVID19 turnover Pre-COVID19 trading
trading conditions conditions in 2019
© Chartered Accountants Australia and New Zealand 2018Turnover Based on paid
employees
GST turnover Aggregated turnover
• A GST law concept, • An income tax law
modified for JobKeeper concept
purposes • Includes the ordinary
• Limited to the employer income of connected
entity’s expected or entities and affiliates
actual turnover for GST (both Australian and
purposes occurring in foreign).
the turnover test period
• Disregard GST
grouping
© Chartered Accountants Australia and New Zealand 2018Alternative Turnover Test Based on paid
employees
Employer entity can also satisfy the decline in turnover test if:
(a) an alternative decline in turnover test determined by the
Commissioner applies to the entity; and
(b) the entity satisfies that alternative test.
Relevant to recent start-ups, businesses with ‘lumpy’ $ inflows
The Commissioner may, by legislative instrument,
determine that an alternative decline in turnover test applies
to a class of entities, if the Commissioner is satisfied that
there is not an appropriate relevant comparison period for
the purpose of an entity in the class of entities satisfying the
decline in turnover test under the Basic Turnover Test.
© Chartered Accountants Australia and New Zealand 2018Scenarios put to ATO Based on paid Alternative Turnover Test employees Service entity structures • Link employment entity to business entity? Head Company employees • Head company “remunerated” by dividends, interest and \ or management fees from subsidiaries impacted by COVID-19 • Consolidated groups v’s non-consolidated groups Diverse businesses in one entity • Company A operates both a supermarket and a restaurant Timing mismatches mean basic test is not satisfied (yet) Joint venture structures, amalgamations, VAs © Chartered Accountants Australia and New Zealand 2018
Entitlement based on business participation
The 2nd JobKeeper pathway
Based on
business
participation
Entity type The individual is actively
engaged in the business as a…
Sole Trader The sole trader
Partnership A partner
Trust An adult beneficiary
Company A shareholder or director
© Chartered Accountants Australia and New Zealand 2018Entitlement based on business Based on
participation - Eligibility business
participation
• Fortnightly testing
• Entity is not a non-profit body
• Entity satisfies turnover decline test (discussed earlier)
• The individual is an eligible business participant for the
entity
• Entity has notified ATO in the approved form
• No “double-dip issue” with another entity for same person
• 1 entity = 1 individual rule
• Entity must notify individual
• Entity has not advised ATO of JobKeeper opt-out
© Chartered Accountants Australia and New Zealand 2018Integrity rule Based on
business
participation
• Entity must have had an ABN on 12 March 2020 (or a later
time allowed)
• Assessable income arose in entity’s 2018-19 income year
(carrying on a business) and ATO had notice on or before 12
March 2020 (or a later time allowed) of that amount
• The entity made a taxable supply in a tax period that started
on or after 1 July 2018, ended before 12 March 2020, and
ATO had notice of that supply on or before 12 March 2020
(or a later time allowed)
• Assumptions apply for registration, GST-free and input
taxed supplies
© Chartered Accountants Australia and New Zealand 2018Ready, Set, Go!
• Register on ATO website (get updates)
• Establish JobKeeper eligibility
Prep • Develop records (pre and post JobKeeper payment flows)
• Notify ATO (approved form coming)
• 26 April 2020 deadline if 30 March start sought
ATO • Report monthly GST turnover and projected turnover to ATO (on-going)
• Liaise with STP software provider on systems readiness
• Obtain notification \ consent from each employee
HR • Provide employee details to ATO
• Notify employees of each fortnightly claim (7 days)
© Chartered Accountants Australia and New Zealand 2018Timing of JobKeeper payments
• The Commissioner must pay the JobKeeper payment no
later than the later of:
• 14 days after the end of the calendar month in which the
fortnight ends; or
• 14 days after the Commissioner is satisfied if the
employer is eligible
• Direct credit to nominated bank account
• Not offset against tax liabilities unless ATO so directs
ATO’s transitional discretion to pay JobKeeper for first 2 fortnights
The Commissioner can choose to pay JobKeeper for the first two
JobKeeper fortnights if satisfied it is reasonable in the circumstances,
even if he is not yet satisfied the entity is eligible. But the employer could
be required to repay the amount if subsequently found to be ineligible.
© Chartered Accountants Australia and New Zealand 2018Timing of JobKeeper payments
Catch-up wages and re-hiring
““For the first two fortnights (30 March – 12 April and 13 April – 26 April),
we will accept the minimum $1,500 payment before tax has been paid for
each fortnight even if it has been paid late, provided it is paid by the end of
April. This means that they can make two fortnightly payments of at least
$1,500 per fortnight before the end of April, or a combined payment of at
least $3,000 before the end of April.”
“If an employee has been stood down after 1 March, and your client re-
engages them, they must pay their eligible employee at least $1,500 per
fortnight before tax. They will only be eligible to claim for the fortnights
after they have re-engaged their employee within the pay period.”
https://www.ato.gov.au/general/jobkeeper-payment/tax-professionals/
Accessed 15 April 2020
© Chartered Accountants Australia and New Zealand 2018Superannuation aspects of JobKeeper
• Employers will still have to pay SG on employees’ Ordinary
Time Earnings
• For those employees:
• paid more than the $1,500 fortnightly JobKeeper
payment – employer will owe SG on the OTE amount
(including the JobKeeper amount)
• paid the $1,500 fortnightly JobKeeper payment (but
were paid OTE more than the $1,500 per fortnight) –
employer will owe SG on the JobKeeper amount
• ordinarily paid less than the $1,500 fortnightly
JobKeeper payment – an employer can either pay SG
on the normal OTE or on the $1,500 amount
© Chartered Accountants Australia and New Zealand 2018What’s your JobKeeper tax technology strategy? © Chartered Accountants Australia and New Zealand 2018
What can a tax agent do for their client?
Enrol on behalf of your client
Step 1 – Enrol for JobKeeper on your client’s behalf from 20 April 2020
using the ATO Online services for agents and authenticate with
myGovID
Step 2…
Apply on behalf of your client
Step 1 – Apply to claim the JobKeeper payment for your client by
logging into the ATO Business Portal/Online services for agents
between 4 May 2020 and 31 May 2020
Step 2…
https://www.ato.gov.au/General/JobKeeper-Payment/Tax-professionals/
Accessed 15 April 2020
© Chartered Accountants Australia and New Zealand 2018ATO & Tax Practitioners Board warning to agents
“As you know, the intent of the Government’s relief measures is to help
the economy withstand and recover from the economic impact of
COVID-19 by supporting businesses to manage cash flow challenges
and retain employees.
Some advisors may be grappling with the tax consequences associated
with the stimulus payments, and wondering what will attract our
attention. We also know that some businesses are already making
changes to their business structures and employment arrangements
following the stimulus announcements.
We ask that tax agents and businesses be mindful that it is not
acceptable to backdate or artificially change a business structure or
employment arrangements, including changing the characterisation of
payments, in order to obtain a benefit or payment that would not
otherwise have been paid. The ATO and TPB will take firm and swift
action should this be the case.” (6 April 2020)
© Chartered Accountants Australia and New Zealand 2018Temporary changes to the Fair Work Act
Employer JobKeeper
JobKeeper
qualifies for enabling
enabling stand
JobKeeper, for directions to
down direction
employee employees
• Minimum payment
But limits apply, such as:
guarantee
• Reasonable & responsive
• Directions trump existing • Employee cannot usefully be
terms in employment employed for their normal hours
contract, award, or • Consult employee (keep records)
enterprise agreement • Communicate in writing (3 day)
• Broad discretion over • Commit to continued flow-thru of
work hours, timing of work, JobKeeper payments
work location, taking of • No reduction in rate of pay for
annual leave and task hours actually worked
• 2nd job or training requests
allocation
• Lapses on 28 September 2020
© Chartered Accountants Australia and New Zealand 2018Michael Croker
Australian Tax Leader
Check out CA ANZ’s COVID-19 hub
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Join myCA to connect, share, learn and collaborateThis publication is intended to provide general information and is not intended to provide or substitute legal or professional advice. This publication has been prepared so that is current as at the date of writing. You should be aware that such information can rapidly become out of date. You should not act, or refrain from acting, or rely on any statement, view or opinion expressed in this publication. You should make and rely on your own inquiries in making any decisions or giving any advice. No warranty is given as to the correctness of the information contained in this publication, or of its suitability for use by you. To the fullest extent permitted by law, Chartered Accountants Australia and New Zealand (CA ANZ) is not liable for any statement or opinion, or for any error or omission contained in this publication and disclaims all warranties with regard to the information contained in it, including, without limitation, all implied warranties of merchantability and fitness for a particular purpose. CA ANZ is not liable for any direct, indirect, special or consequential losses or damages of any kind, or loss of profit, loss or corruption of data, business interruption or indirect costs, arising out of or in connection with the use of this publication or the information contained in it, whether such loss or damage arises in contract, negligence, tort, under statute, or otherwise. © Chartered Accountants Australia and New Zealand 2018
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