Covid-19 Update: Economic Response Package (Payments and Benefits) Rules 2020

 

Recently we provided an explanation of the new legislation for the JobKeeper Payment. However, the new legislation required the Treasurer to develop rules concerning the eligibility, amount, timing and obligations for the JobKeeper payment. These rules have now been published. Below is a review of the JobKeeper rules.

Division 2 – Entitlement Based on Paid Employees

An employer becomes eligible for the JobKeeper payment for an individual employee if in a JobKeeper fortnight:

  • the employer qualifies for the JobKeeper payment;
  • the individual employee is eligible for the JobKeeper payment;
  • the employer has fulfilled the wage condition;
  • the employer has notified the Commissioner of Taxation (the Commissioner) in the approved form that the employer wants to receive the JobKeeper payment:
    • if the employer wants to receive the JobKeeper payment in the first or second JobKeeper fortnight, by the end of the second JobKeeper fortnight; or
    • if eligible in any other JobKeeper fortnight, by the end of that JobKeeper fortnight;
  • the employer provides information about their entitlement to the JobKeeper payment and the eligible individual employee to the Commissioner. An employer is required to notify the employee within seven days of providing their information to the Commissioner; and
  • the employer has not notified the Commissioner that the employer no longer wishes to receive the JobKeeper payment.

JobKeeper Fortnight

A JobKeeper fortnight is the fortnight beginning on Monday 30 March 2020 and each subsequent fortnight until Sunday 27 September 2020. For example:

  • The first JobKeeper fortnight is between Monday 20 March 2020 and Sunday 12 April 2020.
  • The second JobKeeper fortnight is between Monday 13 April 2020 and Sunday 26 April 2020.

Employer Qualifies for JobKeeper Payment

An employer qualifies for the JobKeeper payment if:

  • on the 1 March 2020, the employer carried on a business in Australia or a non-for-profit business that pursued its objectives principally in Australia; and
  • satisfied the decline in turnover test.

Employers exempt from eligibility are:

  • employers who have a Major Bank Levy Act 2017 levy imposed on them or another member of the employer’s consolidated group;
  • Australian government agencies;
  • local governing bodies;
  • entities wholly owned by an Australian government agency or local governing body;
  • sovereign entities;
  • companies that have a liquidator or provisional liquidator appointed; or
  • individuals where a trustee in bankruptcy has been appointed over their properties.

Decline in Turnover Test

To satisfy the decline in turnover test, the employer’s projected GST turnover compared to the employer’s current GST turnover creates a shortfall of:

  • 15% for charities registered with the Australian Charities and Not-for-profit Commission;
  • 50% where the employer’s aggregated turnover for the previous or current income year is likely to exceed $1 billion; or
  • 30% for all other eligible employers.

To make the shortfall assessment, the comparison must be between the:

  • turnover test period, being either:
    • a calendar month between 1 April 2020 and 30 September 2020; or
    • a quarter starting either 1 April 2020 or 1 July 2020; and
  • relevant comparison period being a corresponding period in 2019.

When calculating GST turnover and projected GST turnover the new rules make no mention of GST turnover calculated on a cash accounting basis. It is the view of PCC Employment Lawyers (PCC), that employers should assess eligibility and apply for the JobKeeper payment using the same method of calculating GST turnover that they use for reporting in their Business Activity Statements, whether they calculate on an accrual or cash basis.

If an employer is not eligible based on their GST turnover for April 2020, but anticipate a more serious decline for May and/ or June, employers may consider applying based on the quarter from 1 April 2020. To do so, they must expect to be able to satisfy the decline in turnover test for the quarter as a whole, even if they are unable to satisfy the test in April. This will involve careful projection of revenue, and there is some degree of risk. However, the apparent advantage of this method is that the JobKeeper allowance will be paid for the entire quarter (including April) if the quarter ultimately satisfies the test, even if April does not satisfy the decline in turnover test as a standalone month.

Eligible Employee

For an employee to be eligible, the employee must satisfy four requirements:

  • employed during the specific JobKeeper fortnight being claimed;
  • meet the 1 March 2020 requirement;
  • meet the Nomination requirement; and
  • not excluded from eligibility.

1 March 2020 Requirement

On the 1 March 2020, the employee must be:

  • at least 16 years old;
  • employed on either a
    • full-time or part-time basis; or
    • long term casual employee, meaning the casual employee was employed for at least 12 months on a ‘regular and systematic basis’.
  • either an Australian resident (within the meaning of section 7 of the Social Security Act 1991 (Cth)) or resident of Australia who holds a special category visa under subclass 444 of the Migration Act 1958 (Cth).

Nomination Requirement

Employees are required to complete a Nomination Notice for the employer who they wish to claim the JobKeeper payment from. An employee can only complete this notice for one employer. An employee may be found jointly and severally liable for any overpayment if they nominate more than one employer.

Employees who cannot complete a Nomination Notice for an employer are:

  • those ineligible for the JobKeeper payment; or
  • long term casual employees who are employed by other employers on a full time or part time basis.

Excluded from Eligibility

There are certain circumstances that mean an employee is not eligible to receive the JobKeeper payment. These are if the employee:

  • receives the JobKeeper payment from another employer;
  • receives parental leave pay and the employee’s paid parental leave overlaps or includes the specific JobKeeper Fortnight;
  • receives dad and partner pay at any time during the specific JobKeeper Fortnight; or
  • is totally incapacitated for work and receives Worker’s Compensation for the specific JobKeeper Fortnight.

Wage Condition

An employer meets the wage condition for an eligible employee if the following amounts in a JobKeeper Fortnight equal or exceeds $1,500:

  • salary, wages, commission, bonus or allowances paid to the employee;
  • amounts withheld in accordance with section 12-35 in Schedule 1 of the Taxation Administration Act 1953 (Cth);
  • contributions to the employee’s superannuation fund or an RSA if made under a salary sacrifice arrangement; and
  • any other amounts that the employee has agreed that the JobKeeper amount applies to or is to be dealt with by the JobKeeper amount.

If the employer’s pay period is more than a fortnight, then the employer is to allocate, in a reasonable manner, the pay period to the JobKeeper fortnight/s. For example, if an employer pays their employees on a monthly basis, the employer should divide the monthly payment by 2.173 (being the average fortnight in a month).

The Commissioner has the power to treat a particular event as having happened in a different JobKeeper fortnight/s if the Commissioner believes it is reasonable to do so.

Division 3 – Entitlement Based on Business Participation

There are different entitlement requirements for sole traders, partnerships, trusts and directors of companies.

In a JobKeeper fortnight (as defined above), the entity:

  • must not be a non-for-profit;
  • qualifies for the JobKeeper payment;
  • the individual to receive the JobKeeper payment for the entity is the eligible business participant;
  • the entity has notified the Commissioner in the approved form (which currently is not available) that the entity wants to receive the JobKeeper payment:
    • if the employer wants to receive the JobKeeper payment in the first or second JobKeeper fortnight, by the end of the second JobKeeper fortnight; or
    • if eligible in any other JobKeeper fortnight, by the end of that JobKeeper fortnight;
  • the entity has provided details about the entitlement for a JobKeeper fortnight and the business participant to the Commissioner in the approved form (which is currently not available). The entity must notify the business participant within seven days of providing this information to the Commissioner; and
  • the entity has not notified the Commissioner that they no longer wish to receive the JobKeeper payment.

Entity Qualifies for JobKeeper Payment

The entity must fulfil the same requirements as an employer as outlined above to qualify for the JobKeeper Payment. However, an entity must also satisfy the Integrity Rule. The Integrity Rule states that an entity is not eligible for the JobKeeper payment unless:

  • the entity had an ABN on the 12 March 2020;
  • the entity’s assessable income for 2018-19 income year included an amount in relation to carrying on a business and the Commissioner had notice by the 12 March 2020 that that amount should be included; and
  • the entity made a taxable supply between 1 July 2018 and 12 March 2020 and the Commissioner had notice of this by 12 March 2020.

Eligible Business Participant

Only one business participant per entity is eligible for the JobKeeper payment. An eligible business participant is an individual who:

  • is not employed by the entity during the specific JobKeeper Fortnight;
  • meets the Business Participation requirements;
  • meets the 1 March 2020 requirements;
  • meets the Nomination requirements; and
  • is not excluded from eligibility.

Business Participation Requirements

To be eligible, a business participant for an entity must be actively engaged in the business of the entity and be either: 

Entity Type

Eligible Business Participant

Sole trader

The entity

Partnership

One partner

Trust

One adult beneficiary of the trust

Company

One shareholder or director of the company.

1 March 2020 Requirements

The business participant must be an individual who was on the 1 March 2020:

  • at least 16 years of age; and
  • either an Australian resident (within the meaning of section 7 of the Social Security Act 1991 (Cth)) or resident of Australia who holds a special category visa under subclass 444 or the Migration Act 1958 (Cth).

Nomination Requirements

The business participant is to provide a Nomination Notice. The set form of the Nomination Notice for a business participant is currently not available.

A business participant may be held jointly and severally liable for any overpayment if they provide a nomination notice with more than one entity.

Excluded from Eligibility

A business participant is ineligible to receive the JobKeeper payment for a JobKeeper fortnight if the business participant:

  • receives the JobKeeper payment from another entity;
  • receives the JobKeeper payment as an employee of another entity;
  • receives parental leave pay and the business participant’s paid parental leave overlaps or includes the specific JobKeeper fortnight;
  • receives dad and partner pay at any time during the specific JobKeeper fortnight; or
  • is totally incapacitated for work and receives Worker’s Compensation for the specific JobKeeper Fortnight.

Division 4 – Payment

The amount of the JobKeeper payment for a fortnight is $1,500.

If the Commissioner is satisfied that an employer or entity is entitled under the Rules to a JobKeeper payment for a fortnight, the Commissioner must pay the JobKeeper payment to the entity. For the first two JobKeeper fortnights, a transitional rule may apply. The Treasurer has specified that the fact that the Commissioner pays a JobKeeper payment to an employer or entity does not mean that the employer or entity is entitled to payment.

The Rules for overpayment in sections 9 to 11 of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) (the Act) will apply when an employer or entity was not eligible to receive a payment.

Payment must be made no later than the later of:

  • 14 days after the end of the month in which the fortnight ends; or
  • 14 days after the Commissioner is satisfied that an entity is entitled to a JobKeeper payment for a fortnight.

Under section 8 of the Act, the Commissioner will make payment to the financial institution account nominated by the employer or entity under the Taxation Administration Act 1953 (Cth), that is generally the account where tax refunds are received.

Division 5 – Administration

Eligible employers and entities are subject to monthly reporting. When an employer or entity is entitled to a JobKeeper payment for a fortnight that ends in the month, the entity must notify the Commissioner in the approved form within seven days of the end of the month of the following:

  • the entity’s current GST turnover for the reporting month; and
  • the entity’s projected GST turnover for the following month.

This report is merely informative, and it is not intended to affect an entity’s eligibility.

Employers’ and entities’ record keeping requirements prior to payment and post-payment are defined in sections 14 to 18 of the Act.

Regarding notice of the decision from the Commissioner, section 17 of the Rules provides that, in some circumstances, the Commissioner is taken to have given notice of a decision by making payment. If the Commissioner pays an amount that is not consistent with being satisfied that the employer or entity is entitled to a JobKeeper payment for each individual about whom the Commissioner was notified, section 18 of the Rules requires the Commissioner to give an employer or entity notice of a decision about that employer or entity’s entitlement.

An employer or entity who is dissatisfied with a decision made by the Commissioner under the framework may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953 (Cth).

The Commissioner must not make any JobKeeper payments after 30 September 2021.

Any entitlement to JobKeeper payment may be cancelled, revoked, terminated, varied or made subject to conditions by or under later legislation.

If you have any questions about the JobKeeper payment or confused whether you or your employees are eligible, please contact our office on 02 8436 2500 or at This email address is being protected from spambots. You need JavaScript enabled to view it.