Archive for category: Tax

From 20 April 2020, you can enrol with the ATO for the JobKeeper payment using the Business Portal and authenticate with myGovID.  You must do this by the end of May to claim JobKeeper payments for April.  Payments will start being made to businesses in May.

Summary of important updates to this article as of 29 April to the below since originally published on 20 April:

• Due date for registration to apply from 30 March is now extended to 31 May (was 26 April, then 30 April)
• Due date for top up of April fortnightly wages to $1,500 is now 8 May (was 30 April)
• One-in-all-in – confirmation from the ATO that all eligible employees must be offered JobKeeper for businesses to be eligible for JobKeeper payments
• Alternative test for turnover eligibility has been released by the ATO
• Alternative test to be released soon for Service Entities
• Clarification on Cash Basis and Accruals Basis when applying the turnover test

The steps below outline the process involved so that you do not miss out.

1. Register for Business Portal

If you have not already registered for the Business Portal, this will be required in order to lodge monthly reports with the ATO and claim the JobKeeper payments.
If you have not registered, please advise your accountant who the authorised contact person(s) should be for your business.

If you use the ATO Business Portal, you will need a myGovID linked to your ABN in relationship Authorisation Manager (RAM). To set up the Business Portal for your business, you can find detailed steps on how to set this up here.

Your registered tax agent can also enrol on your behalf (further information below).

2. Check you are an Eligible Employer

Check that you meet the eligibility requirements for JobKeeper, essentially:

• On 1 March, you carried on business in Australia;
• Your business has faced a minimum 30% decline in turnover (more information below).

More information on qualifying as an eligible business can be found here.

3. Apply the Turnover Test

The turnover test requires a self-assessment of the eligibility requirements.  These rules are complex and we recommend obtaining advice if there is any uncertainty.

Identify the turnover test period and relevant comparison period:

To work out your decline in turnover to be eligible for JobKeeper for the first fortnight starting 30 March 2020, under the rules outlined as the “Basic Test” you can compare either:

• 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.

You can choose to test your decline in turnover on either a monthly or quarterly basis, regardless of how you report for your Business Activity Statement purposes.

To qualify at a later time you can rely on the turnover test for the months of May, June, July, August, and September, or the July to September quarter.  Note that in relying on this future date, eligibility will be deferred until the start of that period.

If you work out that you qualify for the JobKeeper payments for the first fortnight because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover for following months.

There may be situations where the turnover in the corresponding period in 2019 does not provide an appropriate relevant comparison. In these situations, you will need to consider the alternative test, which has recently been released by the ATO.

The Alternative Test can apply in some of the following circumstances:

• the entity commenced business after the relevant comparison period (the business did not exist in that period)
• the entity acquired or disposed of part of the business after the relevant comparison period (the business is not the same business in that period as it is now)
• the entity undertook a restructure after the relevant comparison period (the business is not the same business in that period as it is now)
• the entity’s turnover substantially increased by:
  • 1. 50% or more in the 12 months immediately before the applicable turnover test period; or
    2. 25% or more in the 6 months immediately before the applicable turnover test period, or
    3. 12.5% or more in the 3 months immediately before the applicable turnover test period.
• the entity was affected by drought or other declared natural disaster during the relevant comparison period
• the entity has a large irregular variance in their turnover for the quarters ending in the 12 months before the applicable turnover test period, excluding entities that have cyclical or regular seasonal variance in their turnover, or
• the entity is a sole trader or small partnership where sickness, injury or leave have impacted an individual’s ability to work which has affected turnover.

We are awaiting further updates from the ATO with respect to Service Entities and the alternative test that can be relied on to access the JobKeeper payment.

Calculate GST Turnover:

You need to determine:

• for the turnover test period – what your projected GST turnover will be
• for the comparison period – what your current GST turnover was in 2019.

In some circumstances the definition of GST turnover can be complex. More information can be found here.

If your eligibility requires a forecast of your projected GST turnover, we recommend this forecast is backed up with appropriate documentation that should be held for a period of 5 years.

Cash or accruals basis:

You can use accrual basis of accounting to calculate the current GST turnover and projected GST turnover.

If you prepare your BAS on a cash basis, you can also rely on the cash basis.  Recently updated ATO rules appear to show that the Cash Basis can now be relied on by all businesses.  You must apply the same basis to the current GST turnover and the projected GST turnover.

More information on the Basic Test for turnover test can be found here.

4. Determine who your Eligible Employees are

Your employee is eligible if they:

• Are employed by you;
• Were part-time, full-time or long-term casual (employed on a regular basis for at least 12 months) as at 1 March 2020;
• Were at least 16 years of age on 1 March 2020;
• Were an Australian resident as at 1 March 2020 and are one of an Australian citizen, the holder of a permanent visa, or a Protected Special Category Visa Holder.
  ~ Your employee can also be an Australian tax resident who is a Special Category (Subclass 444) Visa Holder.
• Were not in receipt of these payments during the JobKeeper fortnight:
  ~ Government parental leave or Dad and partner pay, or, payment in accordance with Australian worker compensation law for an individual’s total incapacity for work;
• agree to be nominated by you (further information below)

You cannot claim for any employees who:

• were first employed by you after 1 March 2020, or
• left your employment before 1 March 2020, or
• have been, or have agreed to be, nominated by another employer.

More information can be found here.

5. Nominate your Eligible Employees (must be finalised by 31 May)

Before you enrol to receive JobKeeper payments, you need to notify each eligible employee that you intend to nominate them as employees under the JobKeeper scheme.

You must tell those employees that you have nominated them as an eligible employee to claim the JobKeeper payment.

They must agree to be nominated by you by completing the JobKeeper employee nomination notice and returning it to you for your records.

This must be received, signed back from your employees by the end of May for the payments to apply from 30 March.

The nomination 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 under the law.

If an employee is currently receiving an income support payment, they must notify Services Australia (Centrelink) of their new income to avoid incurring a debt they will have to repay.

All eligible employees must be nominated for the business to be eligible for the JobKeeper.  This includes any employees who have been stood down.  You must not pick and choose which employees you would like to receive the JobKeeper as this will exclude the business from being eligible.

6. Paying Employees

You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 per fortnight.

You should pay your employees for each JobKeeper fortnight you plan to claim for (this period depends on the above eligibility timing).

The first fortnight is from 30 March – 12 April and each JobKeeper fortnight follows after that.

For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you before 8 May.

This means that you can make a combined payment of at least $3,000 per employee before 8 May.

If your eligible employees earn more than $1,500 per fortnight, you should continue to pay them their regular salary or wages. However, you will only receive $1,500 for each eligible employee.

Any amount you pay above $1,500 per fortnight is not subsidised by the JobKeeper payment.

Tax and Super Consequences

• All JobKeeper payments are assessable income of the business
• The normal deductibility rules apply to salaries and wages paid to the employees
• No super is required on the additional payments made to employees as a result of JobKeeper (ie, on any top up to $1,500)

For further information, a guide from the ATO for Paying Employees.

7. Enrol for the JobKeeper Payment (required by 31 May if claiming from start)

You only need to complete this step once.

• Log in to the Business Portal using myGovID.
• Select ‘Manage employees’ then the link for the JobKeeper payment.
• Fill in the JobKeeper enrolment form by confirming the required fields.

Required responses:

• Fall in turnover
• Month
• Expected number of employees
• Eligible business participant (further information below)
• Contact details
• Bank account details

8. Identify and Maintain your Eligible Employees

You or your registered tax or BAS agent can:

• identify each eligible employee that you will claim the JobKeeper payment for, and
• maintain their details each month

You can identify your eligible employees in one of the following ways:

• Directly into your payroll software by 30 April 2020, providing your software has been updated with JobKeeper functionality
• Through the Business Portal – 200 employees or less
• Through the Business Portal – more than 200 employees

9. Make a Business Monthly Declaration

Each month, you must reconfirm the eligibility of your business and your reported eligible employees.

You must also provide information as to your current and projected GST turnover.

This is not a retest of your eligibility, but rather an indication of how your business is progressing under the JobKeeper Payment scheme.

You or your registered tax or BAS agent can make the business monthly declaration.

Each month you must:

• Ensure you have paid your eligible employees at least $1,500 per eligible employee per fortnight
• Log in to the Business Portal to
  • review the number of eligible employees for each JobKeeper fortnight
  • update your eligible employees if any of your eligible employees change or leave your employment
  • provide your current and projected GST turnover
  • reconfirm your contact and bank details for payment.

More information can be found relating to steps 7 – 9, here.

10. Eligible Business Participant:

For business owners who are not receiving a salary, however are remunerated via share of profits, distributions or dividends, then the JobKeeper payment may apply to one individual who is considered to be an eligible business participant.

There are some complexities on how this rule applies, particularly for Unit Trusts and Discretionary Trusts, and we recommend obtaining advice specific to your circumstances.

More information:

The rules regarding the JobKeeper payment are regularly being updated and there are some time critical deadlines to be met.

We will continue to keep this article updated.
The ATO is posting regular updates at this website.

Should you have any questions regarding this stimulus package, eligibility requirements or any other questions, please do not hesitate to contact us on (08) 6212 7200 to discuss.

Updated 29 April 2020.