JobKeeper Part 2 – Basic “Draft” Rules Explained For Business Entities With Self-Employed Owners
*As at 9 April 2020, these rules have now been finalised*
Last night the Parliament passed the changes to the Fair Work Act and some changes to the Tax Act to allow the JobKeeper payments to be made. However, they deferred the actual “rules” of the JobKeeper scheme to the Treasurer. We have a copy of the “draft” rules. Yesterday, they were released and then taken off the website, so please be aware they are subject to change.
We have set out below a high-level summary of the program as we understand it based on the briefly published draft rules.
This summary is for Self Employed individuals that run a business. Our Part 1 Summary was for employees of business entities.
There are 5 key steps for this aspect of JobKeeper. The system is designed around JobKeeper fortnights. The first fortnight starts on 30 March 2020 with the final fortnight ending on 27 September 2020.
- Determine if the entity qualifies. The entity, if it carried on a business on 1 March 2020, had an ABN on 12 March 2020 and previously had reported to the ATO business income earned since 1 July 2018, will qualify under the following scenarios:
a) If on 30 March 2020, the entity’s GST Turnover for the month ending 31 March 2020 is 30% lower than March 2019 GST Turnover. If this test is met, the entity is in the system;
b) If on or before the end of each subsequent fortnight, you compare the GST turnover of either a month starting after 31 March or a quarter starting on either 1 April or 1 July, with the relevant comparable period in the previous year, and it is 30% lower, then the entity will qualify from that fortnight onwards; OR
c) The entity meets an alternative test approved by the Commissioner.
- Determine if an individual is an eligible business participant. The individual will be an eligible business participant in the following circumstances:
a) On 1 March 2020:i) The individual was aged 16 or over; and
ii) The individual was actively engaged in the business carried on by the entity and was a:
1. Sole trader; or
2. Partner (if the business entity is a partnership); or
3. Adult beneficiary (if the business entity is a trust); or
4. Shareholder or director (if the business entity is a company); and
iii) The individual was an Australian resident, or the individual was a tax resident of Australia and the holder of a Subclass 444 Visa (New Zealand).
b) In the relevant JobKeeper fortnight:
i) Only one individual is receiving the Jobkeeper payment from the entity
ii) The individual is the same person receiving the Jobkeeper payment from the entity across all Jobkeeper fortnights
iii) The individual has given the entity (or the ATO in the case of sole traders) a notice that it complies with certain items (e.g. not an employee of another entity; not receiving a Jobkeeper subsidy otherwise from another entity; nor excluded under other provisions)
iv) The individual is not on parental leave
v) The individual is not on a worker’s compensation arrangement.
- The entity notifies the Commissioner that it is electing to participate in the scheme and gives the relevant individual’s details to the Commissioner.
The notification must be in the approved form and for the first or second fortnight of the scheme the notification must occur on or before 26 April 2020. For future fortnights, the notification is required on or before the end of the fortnight.
- The entity (except for sole traders) notifies the relevant individual within 7 days of the notification in step 3.
- The entity reports to the Commissioner monthly while on the scheme. Within 7 days (not business days, actual days) of the end of the calendar month, the entity must report its current GST turnover for the month and its projected GST turnover for the following month. The first reporting date will be 7th May 2020.
If all of the above conditions are met, the Commissioner will pay the JobKeeper payment of $1,500 per eligible fortnight no later than 14 days after the end of the calendar month in which the fortnight ends to the nominated bank account of the entity. This means the first payment will be made no earlier than 14 May 2020.
As mentioned above, these rules are not yet final, but provide a good basis for entities to start determining if they will apply the scheme to their chosen eligible business participant.
Please do not hesitate to call or email The Macro Group to discuss further with a team member.