JobKeeper Payment Subsidy

The ATO recently announced that the incorrect allocation of the higher tier rate for JobKeeper payments is an area of particular focus for their compliance investigations.

Since 28 September, the JobKeeper payment rate depends on which tier applies to each eligible individual.

The higher Tier 1 rate applies if the individual satisfies the 80-hour threshold test.

The ATO will be monitoring entities that claim the higher rate. They may ask them to:

• verify how they assessed the individual as meeting the 80-hour threshold
• provide documentation to support their assessment.

Examples of suitable documentation for employees may include:

• employment records, such as payroll data or time sheets and other attendance records
• employment contracts
• business diaries, appointment books and logbooks
• records of store trading hours.

If they do review your assessment of employees to the higher tier, they will generally agree to maintain it if you can show that you have:

• considered the JobKeeper Rules or their website guidance
• made a reasonable and genuine attempt to work out the 80-hour requirement based upon the business records available to you from the reference period

had, where applicable, applied the Commissioner’s Legislative Instruments in good faith.

CLICK HERE to view the Keeping JobKeeper fair – extension focus areas page.

It is worth noting that if an employer has a legitimate reason to use an alternative reference period for an employee (e.g. the employee was on unpaid parental leave in both of the relevant reference periods, and those periods do not reflect their usual work pattern) then that should still be documented in line with ATO and Treasury requirements. CLICK HERE for further information.

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Last week the ATO updated their guidance on the 80 hour threshold to provide more information around banked hours taken for working additional hours.

We know, employees are classified Tier 1 if, in their 28 day reference period, the total of the following is 80 hours or more:

• actual hours they worked (including overtime hours)
• hours they were on paid leave
• hours they were paid for absence on a public holiday.

If your eligible employee satisfies the 80 hour threshold, you can claim the tier 1 (higher) payment rate for them. If they do not meet the 80 hour threshold, you can only claim the tier 2 (lower) payment rate for them.

Where employees have an arrangement of Rostered Days Off (RDO) or time off in lieu (TOIL), employers should include the additional hours actually worked as part of the 80 threshold.

Because of the inclusion of RDO and TOIL hours at the time of accrual, the 80 hour threshold does not include hours employees have taken off as compensation for them working overtime or additional hours, such as:

• hours of time off in lieu (TOIL) – taken by an employee instead of overtime pay
• rostered days off – that is, full days of time off when the employee works additional time on other days to accrue enough hours to take the day off.

CLICK HERE to view the latest 80 hour threshold update.

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We are still waiting for the ATO to release detailed rules about how JobKeeper 2.0 will actually work. Below is a summary of the guidance that has been announced by the ATO so far. As soon as the ATO provide more information we will be running a free JobKeeper Webinar for TAPS members.

The existing JobKeeper scheme runs until 27 September 2020. The Government has announced that the JobKeeper scheme will be extended from 28 September 2020 until 28 March 2021.

There are two separate extension periods. For each extension period, an additional actual fall in turnover test applies and the rate of the JobKeeper payment is different.

Alternative tests for determining turnover and payment rates may be available in some circumstances. The ATO is yet to publish more information.

The extension periods are:

Extension 1: from 28 September 2020 to 3 January 2021

• Tier 1: $1,200 per fortnight (before tax)
• Tier 2: $750 per fortnight (before tax)

Extension 2: from 4 January 2021 to 28 March 2021

• Tier 1: $1,000 per fortnight (before tax)
• Tier 2: $650 per fortnight (before tax)
• Employers can be eligible for JobKeeper Extension 2 even if they were not eligible for JobKeeper Extension 1.

CLICK HERE to read the full ATO announcement.

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Last week we advised that the Treasurer had announced further changes to JobKeeper. In particular, that the reference date for eligibility was changing from 1 March 2020 to 1 July 2020 effective 3 August. Consequently there would be some employees, that were not previously eligible for JobKeeper, who would become eligible from FN10. This was welcome but we were yet to have any information regarding “catch-up” options.

The great news is that, for the JobKeeper fortnights commencing on 3 and 17 August 2020 only (FN10 & FN11), the ATO are allowing employers until 31 August 2020 to meet the wage condition for all new eligible employees included in the JobKeeper scheme under the 1 July eligibility test.

Note: To claim JobKeeper payments for the August JobKeeper fortnights, including for new eligible employees included in the Jobkeeper scheme under the 1 July eligibility test, employers must enrol for JobKeeper by 31 August.

The ATO has now provided further guidance to these changes. Here is a detailed summary:

From 3 August 2020, you may be able to nominate new employees as eligible employees for the JobKeeper scheme. These new employees must have been employed by you on 1 July 2020 and meet the other eligibility criteria. This can include employees that:

• you employed after 1 March 2020
• were employed by you on 1 March 2020 but were not eligible employees for fortnights ending on or before 2 August 2020, for example, because they only turned 18 after 1 March 2020.

Before 3 August 2020

Employees must satisfy the 1 March test and other eligibility criteria to be an eligible employee for JobKeeper fortnights ended before 3 August.

From 3 August 2020

Your employee is an eligible employee for a JobKeeper fortnight starting on or after 3 August 2020 if they:

• are employed by you (including those stood down or re-hired) at any time in the JobKeeper fortnight
• didn’t receive any of these payments during the JobKeeper fortnight :- Government parental leave or Dad and Partner Pay- A payment in accordance with Australian workers compensation law for an individual’s total incapacity for work
• agree to be nominated by you and was either an eligible employee for a JobKeeper fortnight ended before 3 August 2020 using the 1 March testor they meet certain conditions at 1 July 2020 (using the 1 July test) they were employed by you as either a:- non-casual employee (whether full-time, part-time, or fixed-term)- long term casual employee (employed on a regular and systematic basis during the 12 month period that ended 1 July) and not a permanent employee of any other employer
• they were 18 years or older (if they were 16 or 17 they can also qualify if they were independent or not studying full time on 1 July 2020)
• were an Australian resident under the Social Security Act 1991, which requires they reside in Australia, 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. Employees who aren’t permanent residents of Australia must notify you of their visa status to allow you to determine if they’re eligible for JobKeeper payments.

For further information please visit:

https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/JobKeeper-tests/Employee-test-requirements/

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The Australian Government has announced additional financial support for employees that don’t have any income while they are required to self-isolate or quarantine at home, in a declared disaster area, because of COVID-19.

This was made available from Wednesday, 5 August 2020. At this stage it only applies in Victoria, which is in a state of disaster. If an individual is eligible, Services Australia will pay them $1,500.

Individuals won’t be eligible if they get:

• any income, earnings or salary from paid work
• any income support payments, ABSTUDY Living Allowance, Paid Parental Leave or Dad and Partner Pay
• JobKeeper payment
• the Victorian Coronavirus (COVID-19) Worker Support Payment.

Is this a one-off payment?

If individuals have to self-isolate more than once, they can claim this payment each time. Individuals have until 4 February 2021 to claim the Pandemic Leave Disaster Payment from Services Australia. This payment replaces the Victorian Government’s $1500 Coronavirus (COVID-19) Worker Support Payment.

If you have employees asking questions on where to claim, please share the following link:

https://www.servicesaustralia.gov.au/individuals/services/centrelink/pandemic-leave-disaster-payment

What other support can people get right now?

Victorian workers can also apply for a $300 Coronavirus (COVID-19) Test Isolation Payment that provides financial support while they self-isolate to wait for the results of a coronavirus (COVID-19) test.

https://www.dhhs.vic.gov.au/employee-isolation-payment-covid-19#can-i-get-multiple-payments-if-i-require-multiple-tests

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The Employee Eligibility reference date has changed from 1 March 2020 to 1 July 2020 – including for the remainder of JobKeeper through to 27 September 2020.  This means that some staff that were not eligible on 1 March 2020, are now eligible for JobKeeper effective 3 August, i.e. FN10.

Employers are able to receive JobKeeper subsidies at the rate of $1,500 per fortnight from FN10 through to FN13 for each eligible employee. An employee is eligible if they:

• Were a full time, part time or fixed term employee as at 1/7/2020, or a long term casual employee, employed on a regular and systematic basis, with at least 12 months service with the business as at 1/7/2020, and
• Were aged 18y or over as at 1/7/2020, (or were 16/17y and financially independent and not undertaking full time study), and
• Were an Australian Resident (as per Social Security Act 1991), or, were an Australian Resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category VISA as at 1/7/2020).

All other eligibility criteria remains in unchanged.

Employees who are now eligible, due to the new reference date, will need to be provided with, and return, a JobKeeper Employee Nomination Notice, before payments can commence. CLICK HERE for this form.

CLICK HERE for more information and an updated Fact Sheet.

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On 29 July 2020, the Fair Work Commission issued determinations varying the Aged Care Award, the Nurses Award and the Health Professionals and Support Services Award.

The determinations insert a temporary Schedule Y, which applies from the first pay period on or after 29 July 2020 until 29 October 2020.

Schedule Y provides up to 2 weeks paid pandemic leave for eligible residential aged care employees for each time they can’t work because of circumstances relating to coronavirus.

Schedule Y applies to:

• employers and employees covered by the Aged Care Award
• employers and employees covered by the Nurses Award who work in the aged care industry
• employers and employees covered by the Health Professionals and Support Services Award who work in the aged care industry.

Important note: Paid pandemic leave applies to full-time, part-time and eligible casual employees. To be an eligible casual employee, a casual needs to have been employed on a regular and systematic basis.

Paid pandemic leave doesn’t affect other paid or unpaid leave entitlements and counts as service for entitlements under awards and the National Employment Standards.

CLICK HERE for more information

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On 21 July 2020, the Australian Government announced their intention to extend the JobKeeper scheme until 28 March 2021. The current scheme will remain in place until 27 September 2020, i.e. FN13. Whilst officially called the “JobKeeper extension” it was almost immediately labelled “JobKeeper 2.0”.

What’s new in JobKeeper 2.0? 

Businesses that are currently eligible for the JobKeeper scheme will need to requalify to continue receiving JobKeeper from 28 September 2020 and again in early January 2021. Obviously, if the employer is no longer eligible neither are their employees.

The eligibility criteria for employees remains the same, however there are now two tiers of payment determined by the average hours worked per week in February 2020. Employees who worked less than 20 hours a week on average in the four weekly pay periods ending before 1 March 2020 will receive the lower payment rate.

The rates are:

• 28 September 2020 to 3 January 2021: $1200 full rate per fortnight. $750 Less than 20hrs worked per fortnight rate
• 4 January 2021 to 28 March 2021: $1000 full rate per fortnight. $650 Less than 20hrs worked per fortnight rate

What has remained the same?

• The eligibility rules for employees remain unchanged and will be the same as the current JobKeeper scheme.
• Employers are still required to make payments to employees equal to, or greater than, the amount of the JobKeeper Payment (before tax), based on the payment rate that applies to each employee.  Also known as the ‘wage condition’, the JobKeeper Payment will continue to be made by the ATO to employers in arrears.

CLICK HERE for more details of the government’s extension to JobKeeper.

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The Minister for Education has recently announced that the government will cease JobKeeper payments for employees of a Child Care Subsidy approved service and for sole traders operating a child care service from 20 July.

At the same time,  the government’s free childcare scheme, announced in April in response to COVID-19, will end on 12 July.

In place of JobKeeper, the government will allocate $708 million to pay child care services a changeover payment of 25 per cent of their fee revenue from 13 July until 27 September.

According to the press conference, the last two payments scheduled for September will be brought forward to help child care services with cash flow.

Child care providers will need to meet a number of conditions to qualify for the transition payment, including capping child care fees at the level they were at between 17 February and 1 March.

They will also need to guarantee employment levels to protect staff who will move off the JobKeeper Payment.

The Minister for education was unable to provide the clear difference between replacing the JobKeeper payment with the new transition payment, but stated that it would be a “tiny bit less” than the current JobKeeper scheme.

To view the Minister’s press conference released on 8th June 2020, please visit:

https://ministers.dese.gov.au/tehan/return-child-care-subsidy

https://ministers.dese.gov.au/tehan/minister-education-dan-tehan-press-conference-0

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New ‘clearer’ rules now confirm that employers are not subject to additional Superannuation Guarantee obligations as a result of participation in the JobKeeper scheme.

These rules were presented early last week in the Superannuation Guarantee (Administration) Amendment (Jobkeeper Payment) Regulations 2020.

The regulations set out that superannuation payments will only be required to be paid to an employee for the performance of work including the taking of leave.

The regulations recognise that employees may in some cases receive an amount greater than their usual salary or wages because of the JobKeeper payment, including where the employee has been stood down.

Employers are not required to make superannuation contributions in relation to these additional amounts paid.

The regulations also provide further clarity in relation to salary sacrifice arrangements, confirming that amounts paid under an effective salary sacrifice arrangement will count towards the $1,500 per fortnight, however, do not reduce employer superannuation requirements.

The Explanatory Statement has a number of examples, including further information regarding when an employee’s earnings for the performance of work are less than $450 per month but the employee received an additional payment due to JobKeeper. This was a very popular helpline question.

An example contained from the Explanatory Statement shows an employee’s earnings for the performance of work are less than $450 for a calendar month:

Nelson is a long term casual employee who earns $400 in April 2020 for the performance of work. To satisfy the wage condition for JobKeeper payment for Nelson, his employer pays him $400 for the month, plus an additional $2,600, totalling $3,000 before tax for that month.

His employer is entitled to JobKeeper payment for him.

The additional payment of $2,600 is excluded from being salary or wages because it is not an amount that is required to be paid to Nelson for the performance of work.
The remaining $400 is also excluded from being salary or wages under subsection 12A(3) of the Regulations because his earnings in relation to the performance of work during the calendar month is less than $450.

Therefore, Nelson’s salary or wages and ordinary time earnings for the month of April are nil. This means his employer is not required to make a superannuation contribution in respect of Nelson for that month in order to avoid a superannuation guarantee charge liability.

The Amending Regulations commence on 3 June 2020, however, they apply in relation to JobKeeper fortnights beginning on or after 30 March 2020, being the commencement of the JobKeeper scheme.

To view the amended regulations in full, click here.

More detailed examples can be found within the Explanatory Statement, click here.

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The current COVID-19 pandemic has impacted the timetable for the Fair Work Commission’s annual wage review decision.

Each year, the wage review decision sets the national minimum wage and the minimum wages set out in the modern awards, effective from the first pay period on or after 1 July that year.

Usually, the Fair Work Commissioner’s decision is handed down in May each year. However, this year the Fair Work Commissioner has extended its timetable due to the impacts of the COVID-19 pandemic.

At present, final consultations for the annual wage review decision are due to take place on 10 June 2020.

To view the Fair Work Commission’s timetable for the Annual Wage Review, please visit:

https://www.fwc.gov.au/awards-agreements/minimum-wages-conditions/annual-wage-reviews/annual-wage-review-2019-20/timetable

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A question on the minds of many people who deal with payroll tax is whether the Commonwealth JobKeeper subsidy payments are liable for payroll tax?

This is a complex situation, as there is no consistent approach across the states, but here is a quick summary.

In NSW, VIC, QLD, ACT and NT:

• JobKeeper payments are still payroll taxable
• When calculating interstate wages use the actual taxable wages declared in each state (keeping in mind SA, WA and TAS have excluded JobKeeeper payments from their taxable wages).

In SA and WA:

• The full $1,500 per fortnight subsidy is exempt from payroll tax
• When calculating interstate wages use the actual taxable wages declared in each state (keeping in mind SA, WA and TAS have excluded JobKeeeper payments from their taxable wages).

TAS:

• The full $1,500 per fortnight subsidy is exempt from payroll tax
• When calculating interstate wages- For SA and WA use the actual wages declared, as JobKeeper payments have already been excluded- For NSW, VIC, QLD, ACT and NT you will need to use a notional figure and reduce the actual taxable wages declared by excluding JobKeeper payments.

The JobKeeper payroll tax exemption:

The full $1,500 per fortnight subsidy is fully exempt from payroll tax in SA, WA and TAS. This means:

Employees with wages higher than the JobKeeper Wages

Where an employee receives a higher fortnightly wage than the JobKeeper Wages, tax must be paid on the amount of the wage that exceeds the JobKeeper Wages. Payroll tax is not payable on the portion of the wage that is the JobKeeper Wages.

For example, an employee is receiving wages of $2,000 per fortnight. Payroll Tax is waived on $1,500 JobKeeper Wages but is payable on $500. Only include $500 in the monthly return.

Employees with usual wages lower than the JobKeeper Wages

Where an employee usually receives a fortnightly wage lower than the JobKeeper Wages, and is now paid an amount equivalent to the JobKeeper Wages, payroll tax is not payable on the full amount of their $1,500 fortnightly wage. Do not include the $1,500 payment in the monthly return.

Employees who have been stood down

Where an employee usually receives a higher fortnightly wage than the JobKeeper Wages but now is only paid the amount equivalent to the JobKeeper Wages, tax is not payable on the full amount of their $1,500 fortnightly wage. Do not include the $1,500 payment in the monthly return.

For a summary of all payroll tax relief measures in response to the COVID-19 crisis offered by the various jurisdictions please visit www.payrolltaxsolutions.com.au, the article is available for download and is updated regularly.

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From May 11 (FN04), for 16 and 17 year olds:

• If you are a full-time student you cannot claim JobKeeper unless you are also independent
• All part-time students can claim JobKeeper (you do not need to worry about the “independent” criteria)
• If you are not a student you can claim JobKeeper (you do not need to worry about the “independent” criteria)

The ATO has released a new version of the JobKeeper Nomination form here:
https://www.ato.gov.au/Forms/JobKeeper-payment—employee-nomination-notice/

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The ATO have announced that employers now have until 8 May to ensure all eligible employees have been paid $1500 (before tax) for JobKeeper fortnights 1 and 2 (30 March – 12 April, 13 April – 26 April).

If employees are not paid by 8 May, employers will not be able to claim JobKeeper for the first two fortnights.

This extension date allows more time for employers to consider their circumstances and pay staff and still be eligible for those payments.

Employers have until 31 May 2020 to formally enrol to claim the JobKeeper payments for fortnights 1 and 2, however, the sooner an employer pays their staff for those April fortnights and enrols, the sooner the ATO can reimburse them the JobKeeper payments.

Based on this new information, here are the key dates you need to be aware of.

• From 20 April: Enrol for JobKeeper payment.
• 4 May onwards: Identify your employees and claim your first reimbursement.
  
• By 8 May: Pay your employees $1,500 for each fortnight to claim JobKeeper payments for April.
  
• 31 May: Final date to enrol to claim for JobKeeper fortnights in April and May
  
• Each month: Reconfirm eligibility.

This JobKeeper Webinar was recorded on 29 April 2020 for members of The Association for Payroll Specialists. Visit TAPS for further information

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On 30th March, the Federal Government announced the introduction of a subsidy program to support employees and business. The JobKeeper Payment is aimed at helping business affected by the Coronavirus to cover the costs of their employees’ wages so that more employees can retain their job and continue to earn an income.

In the context of many discussions, Ascender has had in recent weeks with clients and the challenging times we find ourselves in, Ascender welcomes this announcement as a positive step toward providing much needed support to employees and employers alike.

Consultation with Industry and Government

Ascender staff have been in dialogue with Industry and Government organisations including the ATO, The Association for Payroll Specialists (TAPS) and the Australia Business Software Industry and Association (ABSIA) to better understand the format of the JobKeeper Payment subsidy, and ask the practical questions that will allow us to guide Ascender clients through the process of setting up the required configuration in your Ascender payroll platforms.

What we Know so Far

• The program is an ‘opt-in’ scheme – employers must assess eligibility through the ATO
• The program is effective as of 30 March 2020. Any employer who continues to pay employees from this date can be reimbursed back to this date for the prescribed amount.
• Included will be employees employed as of 1 March 2020. This incorporates employees who have been stood down and/or re-hired employees since that date. Employees hired since 1 March are not included.
• Eligible employers can expect to receive the first JobKeeper Payment on or around the first week of May.
• Employees must nominate their primary employer – they can only receive payments from this employer.
• If an employee is normally paid over $1500 in a fortnight, they should be paid their normal pay. The $1500 will act as a subsidy towards their pay.
• If an employee is normally paid under $1500 in a fortnight, it is expected that the employer will pay the full $1500 entitlement, with the JobKeeper payment treated as a top-up payment against their ordinary pay – noting this could be a variable top-up payment each pay cycle.
• Tax should be withheld on payments. The top-up payment is not subject to super, but super payment will be at the discretion of the employer.
• There will be no change to STP reporting. All payments will be subject to STP reporting.
• It is envisaged that clients will be required to set up a new pay code in your Ascender payroll system and likely some basic supportive payroll reporting will be necessary

Many Questions Remain Unanswered

The ATO has advised that they are working through a number of clarifications from payroll providers and industry to address outstanding questions. Ascender will continue to work closely with the ATO and industry bodies through this process and advise all clients accordingly. Examples of questions still to answer are:

• What is the value of the Weekly and Monthly JobKeeper payment
• Is the payment eligible for Payroll Tax or does it apply into a Workers Compensation levy
• Should arrears/retro payments into a pay period affect the payment/top-up

Whilst there is a high degree of confidence that the JobKeeper Payment subsidy will commence as intended, Ascender wishes to remind clients that certainty in this regard will only be realised once the relevant legislation is passed.

The following JobKeeper Webinar was recorded on 2 April 2020 for members of The Association for Payroll Specialists. Payroll has never been more complex. Payroll professionals and their employers must deal with ever-changing legislation and regulations. TAPS has been supporting the Australian Payroll community for over 30 years.

For more information, if you or your organisation would like to become a TAPS member Click here

This JobKeeper Webinar was recorded on 16 April 2020 for members of The Association for Payroll Specialists. Visit TAPS for further information.

This JobKeeper Webinar was recorded on 2 April 2020 for members of The Association for Payroll Specialists. Visit TAPS for further information.

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