The new JobKeeper stimulus package presents some challenges for employers when processing payroll.
Businesses will need to register their interest online with the ATO. For most employers, Single Touch Payroll data will enable the ATO to pre-populate employee details.
The wage support package means that eligible employers will receive a $1,500 per fortnight JobKeeper payment delivered via the ATO. The eligible employers must pay the eligible employees at least the $1,500 payment per fortnight, even if their regular wage per fortnight is less than $1,500.
This must be paid on a before tax basis, to full time or part time employees employed as at 1st March, who have either been stood down since or will be kept on over the next six months.
Payments will also be made to casuals who have been with the business for at least 12 months.
Payments will also be made to ABN Sole Traders (with or without employees). The inclusion of Sole Traders is a huge relief as this group was previously overlooked.
We’re continually analysing how this works, but we’ve outlined below a couple of examples which may help you, your payroll team, bookkeepers and admin staff understand some of the detail.
Please don’t hesitate to book some time with us to run you through it.
- Employers will receive $1,500 per employee per fortnight, irrespective of what the employee’s earnings are
- For employees who earn less than $1,500 in a fortnight, the employer will need to top up to $1,500
- Employees must notify eligible employees that they will be receiving the JobKeeper payment
- An employee with multiple jobs can only receive one JobKeeper payment
- Wages are subject to PAYG Withholding including the component supported by the JobKeeper Payment
- For an employee stood down entirely, the payment will be worth $1,308 per fortnight after tax ($1,500 less $192 PAYG withholding; assuming claim of the tax-free threshold and no HECS debt etc)
- Superannuation Guarantee (SGC) obligations will continue except that it won’t apply to any top up for those employees who were earning less than $1500 per fortnight.
This payment will be a challenge to manage for payroll systems, particularly where there is no requirement to pay SGC in relation to part of the payment to the employee.
- An employee currently earning $2,000 per fortnight and kept in that job by the employer. The employer gets the payment of $1,500 per fortnight and uses it to subsidise the employee’s wage. However, SGC must be paid on the full $2,000 paid to the employee.
- An employee currently earning $1,000 per fortnight and kept in that job by the employer. The employer gets the payment of $1,500 per fortnight and must pass it on in full (ie the employee receives $1,500). SGC must continue to be paid on $1,000, but not on the additional $500.
- An employee currently stood down earning $nil per fortnight. The employer gets the payment of $1,500 per fortnight and must pass it on in full (ie the employee receives $1,500). No SGC needs to be paid.
Clarity is also required to understand if & how any back payments for the period from 1st March to 30th April should be handled for PAYG withholding and Super purposes, especially for those employees who earned less than $1,500 per fortnight during this period. Stay tuned on this one!
Also, it’s worth noting as we previously mentioned, this is yet to pass into legislation, and we’ve already seen overnight some tweaking of the rules around eligibility. For example: Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because they were newly established, there was an interim acquisition, or their turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of COVID-19.
The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business ceases or significantly curtails its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 per cent fall in turnover but actually experience a slightly smaller fall.
We’ve provided a link below to Government JobKeeper Fact Sheets which will hopefully provide further guidance.
Again, please don’t hesitate to book some time with us to run through all this. We can hopefully help to answer any questions you might have, and even offer full Payroll services. In any case, we are here to help.
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