We hope that you and your family are well and you are coping during these uncertain times.
The Government and the ATO have just updated their process for applying for the JobKeeper payment.
In this email we will update you on the changes, explain what you need to do to claim the payment and also highlight how we can assist you to claim the maximum amount.
Firstly, let’s start with an refresher of what the JobKeeper Payment is.
JobKeeper Payment Overview
JobKeeper is a Federal Government subsidy paid to eligible businesses effected by COVID-19 to cover the costs of their employee’s wages.
Affected employers will be able to claim a fortnightly subsidy payment of $1,500 less PAYG Withholding Tax per eligible employee from 30 March 2020, for a maximum period of 6 months. This full amount of $1,500 must then be paid to all eligible employees, whether they are full time, part time or casuals.
Here is a brief summary of how the JobKeeper payments are made:
- They are paid by the ATO within 14 days of month end
- Monthly employer payroll reporting is required to trigger the payment by the ATO – using Single Touch Payroll (STP) or by manually entering into ATO online services
The first payment will be approximately mid May 2020.
The eligible payroll periods are every 14 days, commencing 30 March 2020.
The employer will continue to receive the subsidy payments for eligible employees while they are eligible for the payments. While the program is expected to run for 6 months, payments will stop if the employee is no longer employed by the business.
Business Participation Entitlement
Sole traders and some other entities (such as partnerships, trusts or companies) may be entitled to the JobKeeper Payment scheme under the business participation entitlement.
A limit applies of one $1,500 JobKeeper payment per fortnight for one eligible business participant. Eligible business participants include sole traders, one partner in a partnership, one beneficiary of a trust, and one director or shareholder of a company.
The Value of JobKeeper to You
The below calculation gives an guide of what a business could expect to receive if eligible to receive the JobKeeper payment for all eligible employees for the entire 6 month period.
This is obviously a huge assistance to you during these difficult times.
Obligations and Risks for You
The key risks to you as the employer include:
- The employer certifies the facts provided to the ATO and the JobKeeper claim made.
- An employee ceases to be eligible if they cease employment during the life of this JobKeeper scheme.
- The employer receives significant JobKeeper payments over a 6 month period. For example, an employer with 10 employees would receive $195,000, and an employer with 20 employees would receive $390,000.
- If the employer makes a mistake, a wrong claim, or is found to be ineligible by the ATO (for example, its turnover is not down by 30%), then they may have to repay all amounts received back to the ATO plus penalties and interest.
- Also, the ATO requires you to keep all records in relation to your JobKeeper claim for a 5 year period.
How We Plan to Help You
The ATO has specific actions that MUST take place within tight time frames for an employer to receive the JobKeeper payment.
- Turnover is already down by 30%, or you anticipate that it will be down by 30% by the end of the month, we will need to action Steps 1-4 THIS WEEK.
- Realistically expect that your turnover will reduce by 30% for the June 2020 Quarter, we may be able to enrol you this month, however we will require a meeting first to discuss this and see if you’re eligible.
- Business is not showing signs of a downturn just yet, but you experience the 30% drop in turnover in a later month (eg. June 2020) you can still apply for the JobKeeper Payment. However, you will only be eligible for 3-4 months compared to the full 6 months of payments if you were eligible in April 2020.
This is because the JobKeeper Payments from the government end on the 27th of September 2020.
Here’s how we can help you if you are eligible this month:
1) Employer Eligibility Assessment – This Week!
- Review ATO requirements for the business
- Document the fall in turnover % in case of future ATO audit
- Review ATO requirements for employees
- Review ATO requirements for Business Participation Entitlement – Sole Trader, Partnership, Company or Trust
2) Identify Eligible Employees – This Week!
- Prepare list of eligible employees
- Prepare JobKeeper employee nomination notice for all eligible employees and ensure all notices are signed
3) Make Correct Wage Payments to Eligible Employees – This Week!
- Ensure your payroll software is correctly set up to record JobKeeper “top up” payments
- Continue to pay the minimum $1,500 to employees in every subsequent fortnight until 27 September 2020
Pay the minimum $1,500 before tax to each eligible employee each fortnight (starting with the fortnight 30 March to 12 April) to be able to claim the JobKeeper payment for that fortnight
4) Enrol for JobKeeper – This Week!
- Enrol for JobKeeper using ATO online services from 20 April 2020
- Provide employer bank account details for receipt of JobKeeper payment
- Confirm if applicant is entitled to a “Business Participation Payment”
- Specify the number of employees who will be eligible for one period and the number eligible for two periods
- Get confirmation that all employees the employer plans to nominate are eligible and the employer has notified them and has their agreement
5) Apply for JobKeeper Payments – FROM THE 4th OF MAY 2020
- Apply to claim the JobKeeper payment using ATO online services between 4 May 2020 and 31 May 2020
- Update your accounting system Chart of Accounts to ensure JobKeeper payments are coded correctly
- Ensure all eligible employees have been paid $1,500 per fortnight
- Identify the eligible employees from a STP pre-fill or by manually entering into ATO online services
6) Monthly JobKeeper Declaration Report – DUE BY THE 7TH OF EACH MONTH
- Using ATO online services, report to the ATO using their Monthly JobKeeper Declaration Report on the following:
- Reconfirm that your reported eligible employees have not changed
- Input current GST Turnover for the reporting month
- Input projected GST Turnover for the following month
- Notify if any eligible employees have changed or left your employment
We fully understand that times are tough at the moment, and like your business, our team’s wages and other operating costs need to be paid.
There is going to be a lot of work that we need to do to help you receive the maximum JobKeeper benefit (if eligible). Being a compassionate team, we wish we could help everyone at the same time, but unfortunately right now this is not feasible.
Given our limited resources vs. the demand and urgency we have been receiving from clients, we will now be helping clients on a “first paid, first served” basis.
Simply, this means that those who pay for the services up front will be prioritised.
How will it work?
- Prior to completing your work, we will send you an invoice for payment
- Once we receive payment, we will put you in the queue to commence your work
- For ongoing work (eg. Monthly JobKeeper Declaration Reports) we will invoice you at the beginning of each month prior to submission
- Once we receive payment, we will lodge your report with the ATO for processing.
NOTE: If you have any additional outstanding payments, you will need to pay them before we commence of any work.
Below we have included a diagram showing how we’ve worked out our pricing for the JobKeeper services.
Since we pride ourselves on transparency, you will see that we have tried to keep our pricing as “skinny” as possible so it’s affordable.
Can we pay in installments?
We are currently setting up an arrangement with Moula Pay, where they pay us immediately for our work and you pay them back through installments.
For the first 3 months, repayments are interest free meaning that you’ll occur no interest if you pay them within that time. However you can also pay them off over 6 or 12 months out of your cashflow.
This is a great win-win situation where you get the work you need from us now and you can pay it off over time.
We have VERY limited time to enroll you for JobKeeper and to make your first Application for JobKeeper Payments (starting on 4 May 2020).
Therefore, please let us know ASAP if you’d like us to immediately start the above work for you.
That way we can send you your invoice for upfront payment and get things underway.
We hope you are all staying safe and look forward to hearing from you soon.
The Team @ Knox Taxation and Business Advisory