Today the government announced a new stimulus measure to assist businesses to retain employees, please see below details of the new scheme.
Today the government announced a new $130 billion wage subsidy package to help businesses to pay their employees over the next six months. They will pay a flat $1,500 per fortnight to an eligible business for each employee the business has on the books.
This payment is available to eligible businesses for their employees. This includes workers who are:
- Full-time or part-time workers
- Casual workers who have been employed for a period of 12 months or more
- Over 16 years old
- An Australian citizen, permanent resident or in special visa categories (these will need to be assessed on a case-by-case basis)
- Not receiving JobKeeper Allowance from another employer
- Sole traders can also qualify for the payment if they pass the eligibility test
An eligible employee must have been on the books prior to the 1st March. So, if the employee was made redundant on the 29th February, they cannot be re-employed and qualify, but if they were made redundant on the 2nd March, they would qualify, and you are free (in fact, encouraged) to rehire them.
Single Touch Payroll Checking
The ATO will be using Single Touch Payroll to assess which employees were employed and any applications for extra employees will be considered by the ATO on a case-by-case basis. The scheme is intended for businesses that are having turnover issues and the ATO has issued strict warnings against attempting to circumvent the eligibility criteria and creating a ‘scheme’ purely designed to take advantage of the new stimulus package.
Amount of the Payment
The amount of the payment received from the government is $1,500 per fortnight per employee as a flat amount, regardless of hours worked or average hours worked previously. However, the total $1,500 must be paid to the employee in full and cannot be retained by the employer. The ATO will be using Single Touch Payroll to ensure that this is occurring. The payment is based on wages accrued from the 30th March 2020 and is reportable to the ATO on a monthly basis, with the first payment being made in arrears on the 1st May 2020 via reporting and activity statement lodgments.
It should be noted that this amount does not contain the superannuation guarantee charge which will be separately payable on amounts you would have paid the employee without the stimulus payment.
Employer with Employees on Different Wage Amounts:
- John has two employees, Jan and Sam. Jan is paid $4,000 a fortnight and Sam is paid $1,000 a fortnight (all before tax). John registers for the JobKeeper Payment for each of them:
- John continues to pay Jan her $4,000 per fortnight plus super, he receives a $1,500 payment from the government at the end of the month towards this.
- John pays Sam the full $1,500 per fortnight. As John would normally pay him $1,000 plus super, John still has to pay super on the $1,000. The extra $500 Sam gets will not have super payable on it.
- Please note that leave obligations continue to accrue on each employee’s base hours (i.e. on the $4,000 for Jan and the $1,000 for Sam (but not on the $1,500).
What if I’ve Stood Down My Employees?
If you pass the eligibility test, you simply inform your employees that you are nominating them for the payment. They will each receive $1,500 per fortnight (before tax) without superannuation (unless you feel generous and want to pay it to them).
What if I Have a Business That Has No Employees?
The government has made sure that these businesses can still gain a benefit. Eligible businesses will simply be required to give their ABN and nominate an individual (with their TFN) to receive the payment.
You may have noticed that this is before tax, hence the PAYG paid will still qualify for the stimulus package! Please note however, there may be Workcover/Payroll Tax obligations that arise and these will need to be taken into consideration.
To be eligible for this, businesses (including NFPs and charities) will need to self-certify with the ATO and:
- Register an intention to apply on the ATO website stating that they have had a turnover decrease of greater than 30% due to the COVID-19 economic conditions
- This is assessed by taking a comparable period from a year ago (hence taking into account seasonal businesses)
- Please note that this is assessed on a monthly basis, so you may qualify in one month only for turnover to improve in the next. You would then not qualify during that month.
- Commit to continue to employ/re-employ employees (even on stand down) and forward on the total amounts.
We will continue to keep this article updated as more information becomes available and please don’t hesitate to reach out with any questions!