Jobkeeper Payment – Further Details Released from Treasury

Treasury has released further details overnight on the Jobkeeper Payment announced on the 30th of March 2020 as part of the third stimulus package to combat the economic fallout from COVID-19. We have detailed below the updated key features of the new measures:

Jobkeeper

The Jobkeeper Payment provides a fixed wage subsidy to employers and the self-employed who retain or reinstate staff that were employed on 1st March 2020. The program will be administered by the ATO and individual employers will need to register to receive payments. Payments will begin being made on 1st May 2020 but will be backdated to 1st March, meaning the first payment received by employers will cover up to two months of wage costs.

The payments have the following key features:

An employer will receive $1,500 per eligible employee, per fortnight, to assist with the cost of wages

• The definition of eligible employee is a full time employee, part time employee or casual employee with over 12 months service (full/part time does not have a minimum service period)
• When registering for the scheme, an employer also registers each of their eligible employees

The $1,500 is a flat payment, meaning the amount the employee earned as a wage is irrelevant

• An employee that is registered for the scheme must receive at least $1,500 before tax per fortnight; an employer is able to pay additional wages but not less even where the employee is part time

To be eligible for the program, employers and employees have to meet the following criteria:

Employers must:

• Have turnover of less than $1 billion and had their revenue, or expected revenue, decrease by 30% or more

OR

• Have turnover of over $1 billion and had their revenue, or expected revenue, decrease by 50% or more
• Elect to participate in the scheme by registering with the ATO and providing supporting information to show their drop in turnover and provide details of their participating employees

Employees are eligible if they:

• Were employed by the employer on 1st March 2020 and continue to be employed while participating in the program. Under the program an employee is employed even where they are stood down from duties
• Were employed by the employer on 1st March 2020, have been dismissed and now subsequently rehired by the same employer
• Are over 16 years of age
• Are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder
• Have not previously claimed the Jobkeeper payment from a different employer

Self-employed participants in the program will be able to register and nominate a natural person within the business to register for the scheme. That nominated person will then receive the subsidy. The explanation to date is silent on whether this amount must be paid on as wages.

When determining how much to pay an eligible employee, the following scenarios apply:

• Where an employee earns more than $1,500 in a fortnight under their prevailing employment conditions, the employee receives their normal wage plus super. The $1,500 is retained by the business to subsidise this wage cost.
• When an employee earns less than $1,500 in a fortnight under their prevailing employment conditions, the employee receives $1,500 less tax. Super is calculated on the amount they would have received were it not for the subsidy. An employer may choose to pay additional super
• Where an employee has been stood down, the employee receives $1,500 less tax. The employer is not liable for any super but may choose to pay it

Currently the ATO have a pre-registration page live on their website that allows employers to register their interest in the program. A much more comprehensive online application will be made available in due course where employers will enter details about their business and their eligible employees. At this point employers will also be required to submit supporting information showing their decrease in turnover.

As this program is yet to be legislated there are significant gaps and ambiguities in what has been announced. The following are some key examples of items that need clarification:

• Where an eligible employee is rehired by their employer and then stood down from duties (so employed but without pay) there is no guidance on whether this would qualify for the program or be excluded under an integrity measure
• The program appears to allow employers to reduce an employee’s regular hours to better match with the $1,500 subsidy as it is a flat payment. Where staff are salaried this may be more complicated and there is little direct guidance on either method
• The advice from Treasury states that employees must be employed or reinstated under their ‘prevailing workplace arrangements’. We have interpreted that to mean hourly pays and conditions must be in line with award rates and employment agreements but note the definition of ‘prevailing workplace arrangements’ could be expanded to include other conditions by the legislation
• Where multiple business owners are self-employed and operating through a trust, partnership or company and not drawing a salary they may not receive the correct benefit as only a single person for each ABN is nominated to receive payment

In conclusion we see this wage subsidy as a big positive for our clients as it allows them to retain staff and keep their business ready for the eventual recovery. For our clients who are sole traders and self employed this package offers a lifeline to those who have seen their income decrease or in some cases disappear completely.

As with all Government announcements we are eagerly awaiting legislation to review and will provide further information and updates as they come to hand.

Expanded Jobseeker access

Previously access to Jobseeker payments were denied where a person’s spouse earned more than $48,000. This limit has been lifted to $80,000 to enable more people to access these benefits. This measure appears to be aimed at supporting households that had previously set their expenditure levels, particularly with regard to housing, on the basis of at least one person earning a decent wage.

We are here to help

Trying to think of everything you need to do keep your team and customers safe and healthy right now as well as run your business is tough.

We will continue to keep you informed of all government stimulus and other measures and how they apply to your business and are here at any time of the day to give you advice on your business continuity plans and cashflow.

Please call us on (08) 9316 7000 if there is anything we can do to help you.

If you need us outside of work hours, please call one of our Directors:

Andrew Sullivan on 0407 680 698
Chris Grieve on 0417 967 539
Ashley Dawson on 0438 014 318

We are here for you and together we will all get through this.

We will all come out the other side with more resilience, more compassion and more empathy.  Until we do, please look out for each other.

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Making sure your Self Education is actually deductible

It’s July once again and at GeersSullivan that means one thing above all else, individual tax returns are coming! Over the past few years we have seen an increase in the number of warning letters issued by the ATO where taxpayers have a higher level of deductions than their peers.  

One of the chief drivers of high deduction claims is self-education expenditure; at this item taxpayers are allowed to claim for courses and seminars attended, as well as travel costs and related study expenses such as stationery, internet access and even depreciation. The key to claiming these items is that the study “must have a sufficient connection to your current work activities as an employee” and: 

• maintain or improve the specific skills or knowledge you require in your current work activities, or 
• result in, or is likely to result in, an increase in your income from your current work activities. 

The two most common errors when determining if education expenses meet the above tests are: 

• the study is only generally related to the taxpayer’s employment and lacks the relevant connection; 
• the study enables them to gain new employment. 

For a course of study – such as a certificate or similar formal qualification – to be deductible, the skills and knowledge you are acquiring need to have a strong connection with your current employment. In the case of a certification or formal schooling this means: 

• You will directly apply the skills being taught in your current employment, or 
• The skills being taught will enable you to take on a more senior role in your current profession, or 
• You are obtaining additional knowledge about your area of expertise and this will assist you in performing your role or in obtaining a more senior role in the same profession 

An example of this is a nurse who undertakes studies to become a nurse practitioner with the ability to prescribe some medications. He or she is likely able to apply for more senior roles but the study maintains the specific connection to the profession of nursing.  

In contrast a taxpayer employed in an internship role would not be able to claim their course fees against their income earned as an intern. This is because the study is not being undertaken for the purpose of gaining employment as an intern and is therefore in relation to gaining new employment. 

In the case of a seminar, conference or similar event having a strong connection to your employment means: 

• The topic being presented on is directly related to your area of expertise, or 
• The issues being discussed or the planned outcomes have a direct relationship to your area of expertise or how your industry operates. 

Revisiting our example of the nurse, if he or she attends a two-day seminar on best practice methods for caring for patients suffering a particular ailment this would have the necessary connection to their employment. Similarly, a conference on the impact of changing legislation on nurses’ professional conduct will also have the necessary connection. 

On the other hand, a seminar that presents the results of a new medical device or the impact of a particular disease on the population is likely to be too general to be considered in relation to the nurse’s employment. Put plainly the topic does not directly impact the taxpayer’s work as a nurse. 

We encourage anyone who is considering further study and believes the course to be tax deductible to consider the points of this article carefully. If in doubt, please feel free to call us to discuss on (08) 9316 7000. 

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