This article was updated on 29 April 2020. As the COVID-19 situation continues to develop, you can find the information you need on government support at the ATO’s dedicated page. Now more than ever, it’s an excellent time to reach out to an accountant or bookkeeper to help navigate the subtleties of your setup.
Every business and every person in Australia has been affected in some way by COVID-19. As we navigate our way through this challenging economic environment, the government is providing critical financial support for eligible small businesses and their employees through the JobKeeper stimulus package.
Directed at those significantly affected by the coronavirus pandemic, JobKeeper has been designed to help keep more Australians in work. Open to eligible employers, it is designed to allow business owners to continue to pay their staff so that they can return to normal as soon as possible when the crisis is over.
To be eligible for JobKeeper, you and your employees must meet a range of criteria (this also includes those who are self-employed or sole traders). But with so much information on offer, it can be difficult to know where to begin. To cut through the confusion, the Xero team is sharing some of the most commonly asked questions from our community – and connecting you with the answers and resources you need to help stay on top of all things JobKeeper and Single Touch Payroll (STP).
I want to make sure that my business and employees qualify for JobKeeper as quickly and easily as possible – how do I make this happen?
This is where technology comes into play. Unless your turnover exceeds $1 billion per year, you’ll need to document a 30 percent drop in revenue to prove your eligibility. You’ll also need to share payroll details of eligible employees, information that should already be with the ATO via STP. Both of these tasks can easily be taken care of through the help of cloud-based accounting software – making the entire process more efficient, accurate and straight forward.
During these challenging times, the Xero team is listening to our small business and accountant and bookkeeper communities as to how we can help. We’re also working closely with the ATO to ensure you have a smooth experience with JobKeeper. That’s why we’ve enhanced our Xero Payroll feature to make processing JobKeeper payments as simple as possible – all so you can spend less time hunting for information, and more time supporting your business through this challenging period.
What role exactly does STP play in all of this?
For many businesses, the ATO will use the information captured by STP to help determine their eligibility for JobKeeper payments as well as for any future stimulus.
Basically, STP is set to drastically streamline the entire process. If your business is STP compliant, then it will pre-populate employees that may be eligible for JobKeeper within your accounting software and send that information straight to the ATO (you just need to go through and confirm).
Alternatively, if your business isn’t registered, you’ll have to take the time to manually enter the details of each employee through the ATO’s online services or business portal. If you are yet to activate STP, you can do so in a matter of minutes within your Xero account.
What happens if I’m self-employed or a sole trader?
The JobKeeper payment is available to sole traders who have experienced the requisite downtown in revenue. You’ll need to have had an ABN since the 12 March and be completely up to date with your tax lodgements. If you’re self-employed, you’re also eligible.
And what if I’m a self-employed or a sole trader with no employees?
Provided you meet the eligibility criteria, both sole traders and the self-employed who employ people and those who don’t, can access JobKeeper payments. Businesses without employees are entitled to one payment, or if the business has employees, one payment in addition to eligible employees.
If you’re still feeling a bit confused as to whether your particular business structure fits the ATO requirements, check this handy page on their website.
How does my business’s GST turnover affect my eligibility for JobKeeper payments?
The majority of businesses in Australia – those with a turnover of less than $1bn – will need to prove that they’ve experienced a loss of 30 percent or more of their revenue in relation to a comparable period a year ago. In turn, businesses with a turnover of over $1bn need to have experienced at least a 50 percent reduction.
If you’re a Xero user and want to check your eligibility status, we’ve built an intuitive tool to help assess your fall or increase in GST turnover. If you can’t use the basic turnover test to determine if your business is eligible for JobKeeper, the ATO has outlined circumstances where an alternative test can be used instead.
What about the number of staff I have – does this make any difference?
The short answer is “no”. As long as your business can prove the requisite loss in revenue and your employees are considered eligible then staff numbers don’t come into it.
How do I know if my employees are eligible?
The JobKeeper payment is available to full-time and part-time workers as at 1 March, and casuals who have been on the books for more than 12 months from the start of March.
They also need to be at least 16 years of age and an Australian resident (this includes Australian residents for the purpose of the Income Tax Assessment Act 1936 and New Zealanders on a special category subclass 444 visa). You can learn more about the specifics here.
I’m confused about employee enrolment. How does it work?
After you’ve confirmed your business is eligible for the JobKeeper scheme you’ll need to check which of your employees meet the ATO’s eligibility criteria. If you’ve set up STP in Xero, we provide a list of your employees who are likely to be eligible for JobKeeper payment.
Once you’ve identified who is eligible simply click “Start JobKeeper” next to the employee’s name in Xero and choose the fortnight you want to start the $1500 payments. Learn more about enrolment here.
How much will my employees be paid? And what if it comes to more or less than their usual salary?
If you’re an eligible employer, the ATO is promising to reimburse you $1,500 a fortnight for every eligible worker. You must then pass this amount directly to the employee. It’s important to note that if employers don’t continue to pay their employees for each pay period, they will cease to qualify for the JobKeeper payment.
If your worker normally receives less than $1,500 a fortnight in wages, they effectively get a raise: you’ll pay them the full $1,500 you receive, minus PAYG withholding. If the employee normally receives more than $1,500 a fortnight, you’ll need to continue paying their normal wages. You’ll simply be subsidised by $1,500.
Do I need to put all of my employees on JobKeeper?
If an employer decides to put one of their eligible employees on JobKeeper, they have to put all of them on. Basically, it’s one in, all in.
Do I need to keep paying my staff?
One chief eligibility criteria is that businesses must have paid workers at least the minimum $1,500 fortnightly wage subsidy payments throughout April (the Commissioner has extended the time to enrol for the initial JobKeeper periods from 30 April 2020 until 31 May 2020).
How do I make missed April payments?
You can use unscheduled pay runs to pay eligible employees the $1500 per fortnight JobKeeper payments you may have missed in April. You’ll need to make these pay runs by 8 May to get the reimbursement. Learn how to process an unscheduled pay run.
What business finance support is available?
Many small businesses are needing help with the cash flow gaps as they pay staff JobKeeper payments before 8 May (at the latest). To make applying for finance simpler ahead of the JobKeeper payments becoming available, ANZ, CBA, NAB and Westpac have recently launched dedicated support hotlines.
Lenders have also extended a range of support measures including temporary overdrafts through to term loans. Read more on the latest financial relief initiatives
What happens if I terminated or stood an employee down due to the ramifications of COVID-19?
If you have stood any staff down after 1 March, you can choose to reinstate them and pay them the $1,500 JobKeeper subsidy. This means that employees of businesses that shut down due to restrictions – such as cafes, restaurants and theatres – may continue to be paid, and will be expected to contribute appropriately.
If you terminated an employee after 1 March 2020, you can also re-engage them and they will be eligible if they met the criteria as of 1 March 2020. Note that you will only be paid a JobKeeper payment for employees from the eligible fortnight they were re-engaged, starting March 30.
My business is a registered charity – do I still qualify?
You do. For registered charities, the threshold is a decline in turnover of 15 percent or more in relation to a comparable period a year ago.
Lastly, how does the payment process work and when will I see it?
The first step is to register for JobKeeper and both nominate your eligible employees and process their payroll through STP.
From 4 May, you’ll be asked to log in to the ATO Business Portal and confirm your details (this means re-confirming the eligibility of your business and employees and signing a declaration online). The ATO will then make payment two to three business days later – this process is repeated each month. You can find out more here.
Continuing business at times like these is tougher than ever. Xero’s business continuity hub has pulled together the latest information, tools and resources on everything from government aid to managing cash flow to help guide you through.