This afternoon the Prime Minister announced a $130b “JobKeeper” package – the largest package delivered by the Federal Government in response to COVID-19 to date.
In acknowledging that Australia needed to dig deep to “get through to the other side” of this crisis, the Prime Minister noted that the package is one that no Australian government has ever delivered before, and one he said he hoped would never have to be delivered again.
This package will provide a flat minimum payment of $1,500 per employee per fortnight over the next 6 months to businesses affected by coronavirus COVID-19. This amount is equivalent to 70% of the median wage and represents 100% of the median wage for those industries most affected, such as tourism, hospitality and retail.
Full-time and part-time employees and long-term casuals (ie casuals that have been with their employers for at least 12 months) are all eligible for this payment, subject to them being at least 16 years of age. It will also be available New Zealanders in Australia on 444 Visas.
Only currently engaged employees, including those stood down, qualify for the payment. If employees have been retrenched, they would need to be reinstated to qualify for the benefit
For most employers, Single Touch Payroll data will enable the ATO to pre-populate employee details.
Sole-traders without employees that meet the turnover tests will also be eligible.
Business eligibility subject to “required turnover decline”
Businesses with turnover of up to $1 billion that have seen their revenue drop by 30%, and businesses with turnover of more than $1 billion that have seen their revenue drop by 50%, due to coronavirus are eligible to register with the ATO for the JobKeeper subsidy.
The turnover decline will require that turnover of a current period be compared with a comparable period of a year earlier (of at least one-month duration).
Not-for-Profit organisations (including charities) also qualify. However, financial institutions that are subject to the Major Bank Levy will not be eligible.
The package commences from today and applies to employees registered with their employer from 1 March 2020. The first payment will be made via the ATO from 1 May and will be backdated to today (30 March 2020).
The JobKeeper subsidy will be administered by the ATO on a self-assessment basis.
How does this work with Jobseeker?
The Prime Minister and Treasurer were clear that people can either access the Jobseeker payment or the JobKeeper payment, not both. It was also flagged that the partner threshold for people looking to access the Jobseeker payment will be lifted to nearly $80k ($79,762), allowing more people to access support in the future.
Still to be clarified
There are still issues to be clarified given the limited detail available at this stage. For example, employers with no turnover a year ago (e.g. start-ups or life science companies) appear to miss out on the benefit.
There is also no information as yet about employers who experience intermittent impact from COVID-19 – eg reduced turnover in some periods over the next 6 months but not in others.
More clarity is also required to understand how backpayments for the period from 1 March to 30 April should be handled for PAYG withholding and superannuation purposes, especially for those employees who earned less than $1,500 per fortnight during this period.
Federal assistance now sits at 16.4% of GDP
Before today, the Federal Government had released two packages of support worth almost $70b. There has been $15b in additional measures from States and Territories. Between the Federal Government and Reserve Bank of Australia, there has been a $105b injected into our financial system. With this additional $130b package, total Federal support represents 16.4% of GDP.
- Employers will receive $1,500 per employee per fortnight, irrespective of what the employee’s earning are
- For employees who earn less than $1,500 in a particular fortnight, the employer will need to top up to $1,500
- Employers must notify eligible employees that they are receiving the JobKeeper Payment
- Employees with multiple jobs can only benefit from one JobKeeper Payment
- Employees are subject to PAYG tax on their earnings including the component supported by the JobKeeper Payment
- Superannuation guarantee obligations will continue except that it won’t apply to any top-up for those employees who were earning less than $1,500 per fortnight