JobKeeper rules released – Does your service and your team qualify?

The ATO have updated their JobKeeper package information page to reflect the rules to be used to administer the package after their release by Federal Treasurer Josh Frydenberg following the passing of the Coronavirus Economic Response Package Act (Payments and benefits) 2020.

 

The rules include eligibility tests for both businesses and employees, payment mechanisms and how the scheme will be administered.

 

The Sector has prepared the following simplified summary to support early childhood education and care (ECEC) services to understand how the legislation and rules apply to the broader ECEC sector. 

 

To review the ATO’s JobKeeper pages please click here. 

 

Editor’s note: Whilst every endeavour has been made to ensure the information in this article is accurate at time of print and that any subsequent updates from Government Departments have been included, readers are encouraged to conduct additional research prior to making business decisions to ensure their specific circumstances are addressed completely.    

 

Key details

• The JobKeeper payment is intended to assist businesses affected by COVID 19 to cover the costs of wages of their employees.
• The JobKeeper scheme started on 30 March 2020 and ends on 27 September 2020.
• An eligible business will receive $1,500 per employee per fortnight but only if they have paid wages of at least that amount in the fortnight.
• Employers must register for the scheme to participate
• The payment is paid shortly after the end of each calendar month, for fortnights ending in that month.
• Applications open on 20 April and close on 30 April.

 

Does my service qualify for the JobKeeper scheme?

Your service will qualify for the JobKeeper scheme if:

1. On 1 March 2020 your service, whether it be for profit or not for profit, operated in Australia; and
2. Your service satisfied the decline in turnover test.

 

What is the “decline in turnover” test?

The decline in turnover test is a calculation that is used to work out whether your business has been impacted by COVID-19 enough to qualify for the JobKeeper payments.

 

How many ‘decline in turnover’ tests are there?

There are actually two. 

One is a basic test, which will apply to most businesses and one is an alternative test which will be applied in cases where the basic test is not actionable. Each will have different calculation methodologies. 

 

What is the ‘basic test’ and how is it calculated?

The ‘basic test’ is:

1. The services projected turnover for a turnover test period is lower than the actual turnover recorded in the comparative period; and
2. The shortfall, expressed as a percentage, equals or exceeds the percentage fall thresholds.

If a service meets these criteria it will satisfy the test. 

 

So what does that mean in practice?

Well, the projected turnover means how much revenue your service expects to make in a month. For services that are receiving the ECEC Relief Package payments it will be all of the payments added up for a particular month. 

The turnover test period is the month that you choose to be your reference period to do the test. 

So if it was April, you would add up all of the ECEC Relief Payments you expect to receive (your projected turnover) for the month of April (the turnover test period).

You would then compare that number to the revenue received (actual revenue) in April 2019 (the comparative period) and if the fall in April 2020 expected revenue is greater than 30 per cent (for a for profit service) or 15 per cent (for a not for profit service) the test is passed. 

Example A: For Profit service

For a for profit service that is expecting to receive $30,000 in ECEC Relief Package payments from the Federal Government in April 2020 their projected turnover would be $30,000. 

Their actual turnover in April 2019 was $60,000. 

The fall in turnover from 2020 versus 2019 is 50 per cent, which is more than the 30 per cent threshold therefore they will qualify. 

Example B: Not for Profit service

For a not for profit service that is expecting to receive $20,000 in ECEC Relief Package payments from the Federal Government in April 2020 their projected turnover would be $20,000. 

Their actual turnover in April 2019 was $25,000. 

The fall in turnover from 2020 versus 2019 is 20 per cent, which is more than the 15 per cent threshold therefore they will qualify. 

 

Do I have to use the month of April? Could I use another month or period?

Yes, you can. 

You could use actual revenues for March 2020 versus March 2019 or projected revenues for April 2020 versus revenue from April 2019 (as above) or you could use projected revenue for the quarter starting April 2020 versus actual revenue from the quarter starting April 2019.

How you chose to project your revenue is up to you and does not reflect how you report revenues for your BAS submissions. 

 

Do I need to keep testing turnover in the months ahead so that I remain eligible?

No. If you work out that you qualify in the initial reference period then you do not need to apply the test again. You will be eligible to participate for the duration of the JobKeeper package. 

 

But what happens if I don’t qualify using the ‘basic” test?

If your service does not qualify for the ‘basic’ test decline in turnover test then an alternative decline in turnover test is available. 

This test does not have any specific thresholds or guidelines at this juncture but states that if there is not an appropriate relevant comparative period for the service concerned under the “basic’ test that the Commissioner, who administers the scheme, can determine an alternative decline in turnover test that is appropriate for the service and can be applied. 

 

So if my service qualifies for JobKeeper how much will I receive?

If you can demonstrate that you are paying your employees more than $1,500 per fortnight payment prior to JobKeeper going live you will be able to apply and receive $1,500 per employee per fortnight. 

 

So which employees are actually eligible? Who can I claim for?

A team member is deemed an eligible employee if:

1. They are employed at anytime in the fortnight period
2. They are over 16 years old
3. They are permanent or permanent part time employees or casuals for more than one year.
4. They are Australian residents or a resident for tax purposes and a Subclass 444 visa holder

There are some instances where team members are deemed not eligible. These include where parental leave pay is payable to an individual in the fortnight, or if any time in the fortnight the individual is paid dad and partner pay or they are incapacitated for work and due to receive workers compensation payments and the amount payable overlaps with a JobKeeper fortnight.

Also any employee that you employed after 1 March 2020 and any employee that left your employment before 1 March 2020 would not be eligible. 

 

Is there anything I need to do with my employees before I enrol to receive JobKeeper?

Yes, you need to notify each eligible employee that you intend to nominate them for JobKeeper and they must agree to be nominated.  

Eligible employees are expected to complete this form that states that:

1. They satisfy the eligibility requirements outlined above
2. They agree to be nominated by the service for JobKeeper payments 

Long term casuals also have to declare that they are committed to your service and not others as well. There can be no “double dipping” for casuals. 

 

Do I need to send these forms to the ATO?

No, the form does not need to be provided to the ATO however employers are required to keep a copy of the completed form as part of their record keeping obligations.  

 

What about team members that I had to let go of since 1 March 2020?

If you terminated an employee after 1 March 2020, you can re-engage them and they will be eligible to receive JobKeeper if they meet the eligibility criteria as at 1 March 2020.

There is a process that needs to be followed for terminated employees that are being reengaged which involves receiving confirmation they want to be re-hired and participate in the scheme after which they will need to complete the employee nomination notice and return it to you as per employed team members detailed above.  

Stood down employees without pay will also be eligible if they were employed by you as at 1 March 2020 with the process for application the same as for reinstated employees. 

 

With regards to long term casuals, what if I just bought the service? Can I still claim?

Yes, if the casuals can demonstrate that they were also employed by the previous owners of your service for a period that extends to 12 months from April 2020. 

So if you bought the service in January 2020 and the casual worked with the previous owner from January 2019, they would be eligible. But if they joined the previous owner in May 2019 and transferred at the acquisition date and still work there, they would not be eligible. 

 

So if my service is eligible and my employees are eligible what do I need to do next?

The key tasks that need to be completed are:

1. The entity must notify the ATO they intend to participate in the JobKeeper scheme
2. The entity must provide the employee details that are being claimed for

These pieces of information can be lodged from 20 April onwards and will be accessed through the ATO Business Portal.  

 

And what about paying the employees? Do I just continue paying them for now?

For employees that are currently being paid, they need to continue to be paid at least $1,500 a fortnight for you to claim the $1,500 from JobKeeper. 

For employees that were terminated and have been reinstated, or employees that have been stood down and reinstated you need to pay them at least $1,500 per fortnight for the duration of the scheme. 

The amounts that you pay your staff members will be matched by receipts of funds from the Government. 

 

What about if a team member receives more than $1,500 per fortnight of regular pay? 

In this instance the ATO suggests that employers should continue to pay them their regular salary but notes that the difference between the JobKeeper payment and their actual salary will not be covered by the Government, it will be covered by the employer. 

 

What about reducing team members hours worked to match the JobKeeper allowance?

As part of the Coronavirus Economic Response Package a number amendments to the Fair Work Act were included to enable a degree of flexibility with regards to rebasing work hours to match the JobKeeper allowance. 

 

What about going forward? Do I need to continually update the ATO?

Yes. 

There will be two things that will need to be done. 

Firstly, the service must report, via a form on the ATO website, what the service’s actual revenue was for the reporting month and their expectation for the next month. This must be done within 7 calendar days after the end of the reporting month. 

Secondly, the service must update their eligible employee numbers at the end of each JobKeeper fortnight. 

 

How and when do I actually enrol for JobKeeper and update going forward?

From 20 April 2020, you can enrol at the ATO Business Portal and authenticate with myGovID. You must do this by the end of April to claim JobKeeper payments for April. This portal will be used for future lodgements also.

 

When will I actually start receiving payments?

The ATO must pay the JobKeeper payments no later than 14 days after the relevant fortnight ends. 

 

What happens if I receive too much? Or, I accidentally overclaim?

In circumstances where an overpayment has been made the ATO will look to claw back the money paid. 

 

When will the scheme end?

The scheme is operational from 30 March 2020 to 30 September 2020. No payments will be paid after that period. 

 

To read the ATO JobKeeper page please click here. 

 

To read the Rules legislation please click here. 

 

Editor’s note: Whilst every endeavour has been made to ensure the information in this article is accurate at time of print and that any subsequent updates from Government Departments have been included, readers are encouraged to conduct additional research prior to making business decisions to ensure their specific circumstances are addressed completely.