Bluebird News

While Easter was a bit different this year, we were grateful for having the opportunity to provide our undivided attention to our family for the day. No rushing around, no extra chocolate, no kids climbing the walls - just simple family time. We used the time to stop and reflect, reflect on the unusual position and uncertain time we are in, and to find the things we are truly grateful for. We hope to use that gratefulness to move forward with positivity and focus on productive processes and procedures in life and in business.

Luckily this week we received some (but not all! Still more to come) answers about the JobKeeper payment scheme. This welcome relief package for businesses and individuals has been widely discussed as we all try to figure out what it is, who can apply and who it will help.  

To answer all your questions, we’ve created 2 newsletters for you today:

Part 1 – Will focus on what the JobKeeper scheme is and how it affects businesses

Part 2 – Will focus on how JobKeeper affects individual employees and what to be aware of.

What is the “JobKeeper” payment?

The JobKeeper payment is a wage subsidy. It’s been designed to assist businesses that employ staff who have been significantly impacted by the Coronavirus. It’s designed to help those business keep their staff employed and connected from 30 March until 27 September 2020.

The aim of the scheme is to help businesses keep their employees employed so they don’t need to re-hire them in months to come. Likewise, it is designed to support the individual employee to keep their employment. JobKeeper will also help businesses to effectively hibernate their business and encourage social isolation practises while we deal with the pandemic.

The subsidy payment is $1,500 per fortnight, per eligible employee or one eligible business participant. An eligible business participant is a sole trader, partner, company director or shareholder, or a trust beneficiary.

A important fact to note is the payment must be passed on to the eligible employee of the eligible business, the business does not profit from the payment itself.

Business

We know it’s been stressful for businesses trying to work out if you qualify for the JobSeeker scheme and how it all works. Today, we’re going to provide you with clear information that will hopefully answer at least most of your questions.

First things first. Key dates:

• Online enrolments commence 20 April 2020. (Any other application made prior is only an intent to register)
• To be eligible for the 1st fortnight ended 12 April you must complete your enrolment before 26 April 2020.

 Is my business eligible?  

Your business can only be eligible for the scheme if it has eligible employees or an eligible business participant e.g. a sole trader individual or a partner in a partnership.

Further, your business must (in summary in respect of our client base):

• have been carrying on a business in Australia or, be a non-for profit organisation pursuing its objective; on 1 March 2020.
• have and continues to employ eligible employees for the fortnights that you are claiming for, including those who you have stood down or re-hired.
• have a reduced turnover of 30% or greater; and
• not be one of the ineligible categories – more information can be found of the ATO website or by contacting your Bluebird advisor.

For eligible business participants, you must have had an ABN on or before the 12 March 2020.

TIP: You must register for the JobKeeper Scheme before the end of any relevant payment fortnight. The exception is for the 1st fortnight ending 12 April which you’re required to be registered by 26 April.

Reduction in turnover

You’ll need to gather information regarding your current and previous trading periods and make comparisons to determine if your turnover has reduced or is likely to reduce by 30% or more. You’re required to make self-assessments based on reasonable estimates. Examples of comparisons that will need to be made:

•  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 the quarter starting April 2020 with GST turnover for the quarter starting April 2019.

TIP: This is independent on how you report you’re BAS, however working with BAS periods is easier.

You only need to satisfy this requirement once and you don’t need to continue to retest your turnover. However, you will have on-going reporting requirements that have yet to be released.

Please don’t be overwhelmed, this is our domain and we are ready to assist. In some cases, we may have already started collating client files for the online application process.

Eligible employees

As mentioned earlier you can only be an eligible business if you have eligible employees to pay to. If you elect into the scheme you are required to include all eligible employees in the scheme.

 An ‘eligible employee’ is an employee that:

• is currently employed by the business (this includes those that have been stood down and rehired)
• was employed by the employer as of 1 March 2020
• was a permanent full-time or part-time employee at 1 March 2020 OR a long-term casual employee (employed on a regular basis for at least 12 months) as at 1 March 2020
• at least 16 years of age on 1 March 2020
• was on the 1 March:
  • a resident of Australia for social security purposes (eg, Australian citizen, a holder of a permanent visa or a holder of a protected special category visa) or
  • a resident of Australia for tax purposes and was a holder of a subclass 444 visa
• has not given any other employer a nomination notice
• must not be receiving any of the following payments during this period:
• Government parent leave and Dad and partner
• is not receiving payment in accordance with Australian worker compensation law for an individual’s total incapacity for work

Firstly, You must notify all eligible employees that you intend to nominate them, prior to enrolment in the JobKeeper scheme. This is something you can do now.

In turn, they must agree to be nominated by completing the JobKeeper employee nomination notice and returning it to you. You don’t need to submit this but you must keep it on record.

You will need to have paid or pay your eligible employees at least the minimum of $1500 per fortnight before tax (you CANNOT pay your employees less than $1500 and keep the difference), this means you need to re-start or continue to pay the eligible employees. This can be in line with your current payroll cycle example, monthly.

TIP: If you're a sole trader eligible business participant there is no requirement to pay yourself in order to be eligible for the payment.

Below is a summary of the basic steps that need to be taken:

• Step 1: Identify that your business is eligible
• Step 2: Notify your eligible employees of your intent to claim and provided them with a  JobKeeper employee nomination notice
• Step 3: Identify which employees have agreed to be nominated
• Step 4: Ensure all employees have been paid $1500 per fortnight (Fortnights ended 12 April and 26 April 2020) and make top-up payments where required.
• Step 5: Enrol online on between 20 - 26 April.

We understand that you may have some questions and we are ready to discuss with you to help identify if you are eligible and what to do next. We have some Q and A below for some light reading. There will be more to come!!

Q & A’s

Q: I have just started my business this financial year, can I still be eligible?

A: Yes, you may still be eligible. The commissioner will have the discretion to set alternative tests.

Q: Does the business need to keep meeting the decline in the turnover test?

A: No you do not. There is no requirement to retest in later JobKeeper fortnight. This test only needs to be satisfied once, therefore it will continue to meet this requirement even if the turnover subsequently records in later JobKeeper fortnights.

Q: When will the business be paid? 

A: The first payments will be made on the 1st week of May, and will be for the 1st two fortnights. The payments are only made to the eligible business as reimbursement of funds they have paid, they are not paid in advance.

Q: The business turnover doesn’t meet the test on 30th of March 2020, does this mean the business can’t claim for JobKeeper?

A: If the business doesn’t meet the decline in turnover test on the 30 March 2020 the business can apply at a later date for a later fortnight when the decline in turnover test is met. The payment, however, will not be backdated to the 30 March 2020. It is only from the fortnight you apply – it must be by the end of the fortnight you are applying for.

 Q: Are the JobKeeper payments taxed? 

A Yes the payments are assessable income to your business and you will claim the deduction for the payment to the eligible employee. The payment is not subject to GST.

Payments are reported on the employee’s income statement as per normal.

Q: My business is eligible, but I haven’t paid wages to the required amount, am I still eligible? 

 A: The good news is if you haven’t already made the required payment amounts the ATO will accept you paying now and between the end of April. Therefore, all payments that you are claiming must be made by 30 April.

If you have been paying the employees and the amount is less than $1500 you will need to do a ‘top-up’ payment to ensure the employee has been paid at least $1500 per fortnight to be eligible to receive JobKeeper. This means some employees will receive more than their ordinary earnings.

Q: What if the business has already stood down and employee or have been stood down? 

A: Employees that have been stood down from work under the Fair Work Act 2009 without pay may still be eligible employees as long as they were in your employment and met the eligibility requirement on 1 March 2020. You will need to have paid them the minimum of $1500 per fortnight (before tax) in the relevant fortnight you are claiming for.

You can now rectify these payments if you have not paid them to date and make payment before 30 April 2020.

Q What if I have terminated employment or have been terminated?

A: If you have terminated or been terminated after 1 March 2020 you can reengage if they would have been an eligible employee as of 1 March 2020. You need to re-engage, fill in the form and pay them $1500 per fortnight.

 Q Is super payable on the payments?

A: No, there is no requirement to pay superannuation on amounts paid not in respect to actual employment. Simply superannuation is only payable on the component that relates the employees work.

For example, if the employee earns $1000 per fortnight, you must still pay them $1500 per fortnight under the scheme this means superannuation is only payable on the $1000.

Q: Can the business select which employees are covered? 

A: No. Once the business decided to participate it must nominate all eligible employees. It is a ‘one in all in’ scheme and you cannot ‘pick and choose’ which eligible employees will participate.

Q: How do I enrol?

A: Businesses can apply from the 20 April via the ATO business online services, including BAS and tax agent online services.

This means Bluebird Accounting can enrol on your behalf.

Many businesses have already contacted us requesting us to apply for them. We will be in contact with those of you who have to confirm and make arrangements. For those of you who need our assistance now is the time to get in contact with us. The application opens on the 20 April and the first fortnight only has until the 26 April, meaning we need to work very efficiently in this time, we encourage you to provide us relevant details and provide your employees with the nomination form by Friday 17 April.

As always contact us if you have any questions.

Take care and stay safe

 Liz, Julian & the Bluebird team