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FAQ: Taxation and Business Impacts from COVID-19

22 April 2020

In response to the large number of questions received during our series of webinars on the business impacts from COVID-19 we have created a 'Frequently Asked Questions' page.

Please be aware that this information is current as of 22 April 2020 and should be treated as general in nature. Should you require advice specific to your circumstances please contact our team at Cutcher & Neale on (02) 4928 8500.

Frequently Asked Questions

How do I apply for JobKeeper?

  • To apply for JobKeeper you must first enrol via the Business Portal using your MyGovID or arrange for your tax or BAS agent enrol on your behalf. Enrolments opened on 20 April. An entity seeking JobKeeper for the first 2 fortnights commencing 30 March will need to enrol by the end of April. However, if they need more time, they can enrol by the end of May (no need to apply). In addition, you or a registered tax agent will then apply for the JobKeeper payment for your eligible employees from 4 May 2020.

For further information on how to enrol and apply for the JobKeeper Payment, please visit the Cutcher & Neale blog at: http://www.cutcher.com.au/blog/news/jobkeeper-payment-eligibility

I received salaries and wages from my employer and operate as a sole trader in my own right, can I receive JobKeeper as an employee and as a sole trader?

  • No, for a sole trader to receive JobKeeper they must
    • Not be a permanent employee of another entity (other than a casual employee), or
    • Entitled to another JobKeeper payment as a nominated business participant of another business (i.e. shareholder) or as an eligible employee.

As a sole trader with employees and qualifying via the 30% income reduction am I also eligible for JobKeeper like my staff?

  • Yes, self-employed individuals (and their eligible staff) will be eligible to receive the JobKeeper Payment if their turnover has reduced (or is expected to reduce) by 30% and they meet all eligibility requirements.

If my income is GST free and the business turnover test is based on measuring a reduction in “GST turnover” of the business can is access Jobkeeper?

  • Yes, the business turnover test is based on the same basis as it is for GST purposes, which includes your total business income, including GST free income. However, GST turnover excludes input-taxed supplies such as interest.

Can I still eligible if the reduction in business turnover is not reflected in the March 2020 Business Activity Statement?

  • Yes, the turnover test operates by comparing:
    • The entity’s projected GST turnoverfor a turnover test period; with
    • the entity’s current GST turnoverfor a relevant comparison period.
  • The turnover test periods are:
    • a calendar month that ends after 30 March 2020 and before 1 October 2020, which includes each from March 2020 to September 2020: or
    • a quarter that starts on 1 April 2020 or 1 July 2020, so the June 2020 and September 2020 quarters.

These need to be compared to the corresponding month or quarter in the 2019 year, for example the month of April 2020 with April 2019.

If my projected income does not reduce by 30% until the month of May 2020 am I able to receive the JobKeeper payment from April 2020?

  • An entity must qualify for the scheme at a particular point in time to be eligible for the fortnights JobKeeper payment, including being able to satisfy the decline in turnover test at or before that time.
  • The entitlement to JobKeeper only arises in the fortnight in which eligible employees are registered under the scheme. If an employer does not become eligible until later in the JobKeeper period they cannot back date their claim to 30 March. However, there is an exception for the month of April 2020. Employers may register prior to the end of April, and if eligible they will receive JobKeeper payments for the first two JobKeeper fortnights.
  • A business is able to calculate a fall in turnover for the first fortnight starting 30 March 2020 based on projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019. Therefore, this may allow the business to qualify even though the reduction in turnover does not start until May 2020.

If I have only recently started my business and can’t compare my turnover to last year can I still be eligible for JobKeeper?

  • Whilst you may not be able to satisfy the basic test, under an alternative test the Commissioner will have discretion to consider additional information to determine whether the business has been affected by COVID-19. We would expect this may include cash flow reports or budget projections. The Government will provide more information on the alternative test soon.

Do you need to be an Australian citizen to be able to receive the JobKeeper payment?

  • Eligible employees and eligible business participants (such as sole traders, directors and shareholders, trust beneficiaries and partners) must be an Australian resident (within meaning of section 7 of the Social Security Act 1991) or must be a resident of Australia for the purposes of the ITAA 1936 and is the holder of a special category visa referred to in the regulations under the Migration Act 1958 as a Subclass 444 (Special Category) visa.

If my employee earns less than the JobKeeper amount or has been stood down how much do I pay them?

  • If an eligible employee earns less than $1,500 (before tax) per fortnight, you must pay them at least $1,500 each fortnight to claim the JobKeeper payment.

Do I have to pay PAYG Withholding on the JobKeeper payment?

  • Yes, the minimum payment of $1,500 per fortnight is salary or wages for the purpose of PAYG Withholding rules, and as a result, employers must withhold and remit withholding tax as appropriate. However, it appears that there is nothing which prevents an employer receive the Cash Flow Boost in relation to JobKeeper payments made to eligible employees.

Do I have to pay Superannuation on the JobKeeper payment?

  • An employer will only need to make superannuation contributions for any amount payable to an employee in respect of their actual employment, disregarding any extra payments made by the employer to satisfy the wage condition for getting the JobKeeper payment. However, an employer may choose to pay superannuation contributions on the extra payments if they wish.
  • For example, if the work actually done by an employee over a period entitled them to be paid $1,000, but the employer instead paid them $1,500 to satisfy the wage condition for a JobKeeper fortnight, then the employer will only be required to make superannuation contributions in relation to $1,000.
  • An employer will still be required to make the same superannuation contributions for an employee whose pay exceeds the JobKeeper payment. For example, if an employee is entitled to be paid $2,000 for their work, the employer will continue to be required to make contributions in relation to that amount, irrespective of whether they were eligible to receive the JobKeeper payment in relation to the employee.
  • An employer will not be required to make superannuation contributions for an employee who is stood down. This is because employers have no obligation to pay stood down employees. If an employer pays a stood down employee $1,500 to satisfy the wage condition for receiving the JobKeeper payment, then the entire amount will be disregarded for superannuation guarantee purposes.

I usually pay my employees monthly do I have to change my pay cycle to fortnightly?

  • No, the Jobkeeper payment can be allocated between fortnights in a reasonable manner. However, you must ensure that your employees receive at least $3,000 for every four-week period.

Can I change my employee’s duties, hours of work or other employment conditions and still qualify for JobKeeper?

  • The legislation enabling the JobKeeper payment included measures allowing for the variation of work duties, hours of work and other employment conditions. However, prior to making any changes to an employee’s working conditions it is critical get legal advice.

If the employer faces cash flow issues from having to fund the payment of the JobKeeper payment prior to being reimbursed by the ATO what are our options?

  • The ATO will accept the minimum $1,500 payment for each fortnight for the first two fortnights (30 March – 12 April, 13 April – 26 April) to be paid late, provided it is paid to the employee by the end of April. This means that you can a payment of at least $3,000 before the end of April.
  • This may mean that employers will need to obtain temporary cash flow support from their banks to cover the timing difference between payment to employees and receipt of the JobKeeper Payment from the ATO.
  • The Government has introduced the Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme which will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. Under the scheme the Government will provide eligible lenders with a guarantee for loans with the following terms:
    • SMEs, including sole traders, with a turnover of up to $50 million.
    • Maximum total size of loans of $250,000 per borrower.
    • Loans will be up to three years, with an initial six-month repayment holiday.
    • Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

However, the decision on whether to extend credit, and management of the loan, will remain with the lender.

Some of my employees have taken annual leave or leave without pay, will this affect the amount of the Jobkeeper payment I pay them?

  • No, even employees who have been stood down or are on paid or unpaid leave they will still be entitled to the $1,500 per fortnight payment if they met the eligibility criteria.

Are employees who are on maternity leave eligible for the JobKeeper Payment?

  • Yes, provided they meet the “eligible employee” tests. However, if the employee receives paid parental leave or dad and partner pay and the person’s paid parental leave period overlaps with or includes a fortnight they are paid a JobKeeper payment, the person is not an eligible employee for JobKeeper for that fortnight.

Some of my employees have multiple employers, can they choose which employer to receive the JobKeeper payment from?

  • If an employee has multiple employers, they can choose which employer to nominate for as they are only entitled to receive JobKeeper from one of their employers.
  • If the employee is a long-term casual for one employer and a permanent employee for another the employee must nominate the permanent employer.

I use Single Touch Payroll (STP) accounting software to pay may staff, do I also have to make a monthly business declaration?

  • Yes, you must reconfirm your reported eligible employees and provide information as to your current and projected turnover each month by lodging a monthly business declaration through the Business Portal or via your registered tax or BAS agent.

If I operate my business through a company am I eligible for JobKeeper as the owner of the business?

  • Yes, where an eligible business is operated through a company, a director or shareholder who is actively involved in the business may be nominated to receive the JobKeeper payments. However, this applies to only onesuch director or shareholder.

If I operate my business through a partnership are all partners eligible for JobKeeper?

  • No, only one partner can be nominated to receive a JobKeeper payment along with any employees of the partnership, noting that partners cannot be an employee of the partnership.

If I lodge my March 2020 BAS on time when will I receive the Boosting Cashflow payment?

  • If eligible payments will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements. Where the entity is in a refund position, the ATO will deliver the refund within 14 days.

How much of the Boosting Cashflow payment can I expect to receive?

  • The minimum payment of $10,000 will be applied to the entity’s first lodgement, with the first boost being based on 100 percent of the PAYG Withholding reported in the activity statement up to a maximum of $50,000.
  • Quarterly lodgers will be eligible to receive:
    • he first boost once they lodge their March 2020 and June 2020 activity statements (up to a total of $50,000).
    • the second boost once they lodge their June 2020 and September 2020 activity statements (up to a total of a further $50,000).
  • Monthly lodgers will be eligible to receive:
    • the first boost once they lodge their March 2020, April 2020, May 2020 and June 2020 activity statements (up to a total of $50,000).
    • the second boost once they lodge their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of a further $50,000).
  • The second boost will be equal to the full amount of the first boost. The second boost is available to all entities that received any amount of the first boost, even if their circumstances have changed, provided the entity lodges an activity statement for the tax periods from June 2020 to September 2020.

Are sole traders eligible for the Boosting Cashflow payment?

  • Yes, sole traders will be eligible based on the PAYG withholding paid in respect of their employees, just like a company or a trust. However, a sole trader cannot employ themselves, so if the business does not employ anyone in the eligible period, sole traders will not be eligible for the payment in respect of their own drawings from the business.

 

Our team at Cutcher & Neale are here to help you. Please phone us on (02) 4928 8500 if you need any assistance.

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