Last night saw the $130 billion JobKeeper wage subsidy program pass the Senate, making it the largest financial package legislated in Australian history.
With more than 730,000 businesses already registered for the JobKeeper support and with many more anticipated, understanding the rules and legislation that apply to this payment is essential.
With two bills passed in Parliament last night that provide a framework on the Jobkeeper payment, now is the time to take a look at these guidelines and how they will apply moving forward.
From rules surrounding the eligibility of recipients, timing of payments, payable amount, conditions applicable to the payments through to the rights, obligations and liabilities surrounding the JobKeeper payment, outlined below is what we know so far.
When and Who
The JobKeeper payments can be made from 1 March 2020 through to 31 December 2020 (however only 6 months of fortnightly payments will apply).
Around six million workers will receive a flat payment of $1500 per fortnight through their employer for six months.
The money won’t be paid to eligible workers directly – employers will pay their staff and be reimbursed by the Government.
The first payments by the ATO will be received by employers in the first week of May. This will be backdated to when the scheme was first announced in late March, which means people will initially receive a lump sum of one month’s worth of payment.
Who is not eligible for the JobKeeper payment?
- Temporary Residents – Council Workers - University Employees – Government Workers – Arts & Entertainment Sector – Casual Workers employed for less than 12 months -
Payments
The Commissioner of Taxation will generally pay JobKeeper payments to the entity by crediting the amount of the payment to the entity’s nominated financial institution account. However the Commissioner may direct a payment to be made via an alternative method (such as crediting an amount to the running balance account of the entity) to delay the payment in order to verify the entitlement to the payment.
- Payments will not be offset against tax liabilities or other amounts owing to the Commissioner, unless specified by the Commissioner -
Overpayment
Overpayment can arise when an entity is not entitled to whole or part of a payment made or it is paid more than the correct amount. In the event of such an overpayment, an entity must repay the overpaid amount plus any general interest charges that apply (for outstanding unpaid amounts), unless the Commissioner makes written determination to this effect.
This exclusion provides the Commissioner with the flexibility to address issues that might otherwise arise where entities may have made an honest mistake and not retained any personal benefit from a payment they have received.
- Given eligibility to the JobKeeper payment is dependant on a reduction of at least 30% in turnover for businesses (less than $1bn) further clarification is needed regarding when the Commissioner would not seek repayment, particularly where the payment has been made to employees –
Integrity Rules
Treasury has developed integrity rules, which aim to prevent employers from entering into artificial schemes in order to get inappropriate access to payments.
The Commissioner may make the determination with regards to integrity when considering the scheme and:
How it was entered into or carried out e.g. when it was entered into and what was the time period of implementation;
Its form and substance;
The result in relation to the operation of the Coronavirus payment framework that, but for this provision, would be achieved by the scheme;
Any change in the financial position of the recipient that will or may reasonably be expected to result, or has resulted;
How it has impacted any recipients or connected persons;
The nature of any connection (whether of a business, family or other nature) between the recipient and any connected person.
- The schemes do not need to be criminal in nature e.g. the Commissioner could make a determination to deny an entity an assistance payment, such as the JobKeeper Payment, if the entity has deliberately altered its business arrangements to reduce its turnover in order to allow the entity to meet the turnover requirements to receive the payment -
Who will be the one?
Discussion is currently underway with regards to who and how many individuals will be eligible recipients of the JobKeeper payment across entities such as partnerships, trusts and companies.
To date, Treasury has indicated that there will most likely be one selected party in such arrangements that will be eligible to receive the JobKeeper payment. For example:
Partnerships are slated to be limited to one JobKeeper payment in total, so only one partner can be eligible for payment.
Similarly, where beneficiaries of a trust receive distributions in lieu of salary and wages, only one individual beneficiary will most likely be eligible to receive the JobKeeper payment.
Eligible businesses can only nominate one director to receive the payment in lieu of payment as an employee. Or for businesses that pay shareholders in the form of dividends for their services, only one shareholder will most likely be eligible for the payment.
More to come
There are more rules that are currently awaiting announcement by the Treasurer. These rules will be made by legislative instrument and will allow for flexibility and the ability to update the rules to respond to the rapidly changing circumstances. These include:
Which employers are eligible for the payment;
To which employees do the payments relate;
The amount payable and when;
The obligations for recipients of the JobKeeper Payment;
How an application must be made;
Whether a payment is to be paid in instalments or as a lump sum;
The amount of a payment (including the amount of any instalments) and when;
Conditions applying to a payment or an instalment of a payment;
The provision of information or notices; and
The rights, obligations and liabilities under the payment scheme of payment recipients, and other entities that directly benefit from payments or in relation to which a payment is made
We will continue to keep you up to date on any new developments and legislation as soon as they become available.
If you have any queries about the SG Amnesty, please do not hesitate to contact the BCP team.