Date posted: 14/05/2020

JobKeeper – what you need to know

What you need to know about the new JobKeeper Payments scheme

In brief

  • View the package of Bills for the JobKeeper Payment scheme
  • Find out whether a business qualifies for the scheme under the JobKeeper Rules
  • Which employees can receive the JobKeeper Payment
  • What employers need to do to receive the JobKeeper Payment

Last modified: 14/05/2020

The JobKeeper payment is a $130 billion temporary subsidy scheme to support businesses (including not-for-profits) that have been impacted by Coronavirus (COVID-19) and have seen significant reductions of between 30% – 50% (15% for charities) in annual turnover. The scheme will provide $1,500 per fortnight per eligible employee from 30 March to 27 September 2020 and is also available to self-employed.

The package of Bills establishing the framework for the JobKeeper payment scheme passed Parliament on 8 April 2020 and received Royal Assent on 9 April 2020. The Bills are:

The Bills are accompanied by an Explanatory Memorandum.

Omnibus Bill

The Omnibus Bill contains various amendments to deal with the impact of the COVID-19 including changes to the Fair Work Act to support the practical operation of the JobKeeper scheme in Australia workplaces; sets up the JobKeeper Framework; makes technical amendments to the guarantee of lending to SMEs; makes amendments to support the child care sector and expands the tax secrecy rules to allow the Commissioner to disclose de-identified protected information to the Treasury for the purposes of policy development, or analysis, in relation to the Coronavirus, including in relation to program introduced in response to the economic impacts of the Coronavirus.

Payments and Benefits Bill

The Payments and Benefits Bill establishes the framework to administer the Coronavirus economic response payments. The Bill includes the method of payment (i.e. pay in the nominated bank account), provides the Commissioner the ability to claw back an overpayment with general interest charge (entities can be made jointly and severally liable the amount), require records to be kept for 5 years under its record keeping requirements and an integrity rule to deal with contrived schemes.

Schedule 2 of the Payments and Benefits Bill also makes minor amendments to the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 to:

  • ensure that the payments under that Act are available to businesses and non-profit entities operating in the external territories, and
  • allow the Commissioner to provide further time for an entity to first hold an ABN if it did not hold one on 12 March 2020. This discretion is only able to be exercised by the Commissioner for unintended situations where the entity was running an active business prior to 12 March 2020 but was not required to have an ABN to operate it.

The JobKeeper Rules

Interestingly, the Payments and Benefits Bill does not contain the rules governing the eligibility for the JobKeeper payment. Instead, the Treasurer may by legislative instrument make rules prescribing matters to give effect to the Bill (section 20). This means, the bulk of the detail on the eligibility for JobKeeper is contained in a legislative instrument, namely, the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules). The Rules was registered on 9 April 2020.

Due to feedback from businesses and the tax profession on various issues with applying certain eligibility requirements, the Government has subsequently registered the following legislative instruments to expand access to the JobKeeper scheme:

Qualification for JobKeeper payment scheme

Employers (including not-for-profits) will qualify for the JobKeeper scheme for an eligible employee for a fortnight if:

  • they were carrying on a business in Australia on 1 March 2020 or was a not-for-profit body pursuing its objectives principally in Australia, and
  • their business:
    • has a turnover of less than $1 billion and their turnover will be reduced by more than 30% relative to a comparable period a year ago, or
    • has a turnover of $1 billion or more and their turnover will be reduced by more than 50% relative to a comparable period a year ago.

Certain charities registered with the ACNC will have a concessional turnover threshold of 15%.

Some sectors will not eligible as they may be separately provided with support from the Government which requires them to forgo access to the JobKeeper payment. Exceptions include businesses subject to the Major Bank Levy, Australia government agencies, local governments and companies in liquidation.

One of the common questions CA ANZ received after the announcement of the JobKeeper payment scheme was how to calculate the decline in turnover for a business.

Decline in Turnover Test

The Rules provide for a decline in turnover test which includes a Basic Test and an Alternative Test. According to the Explanatory Statement to the Rules, the decline in turnover test only needs to be satisfied once for a business to be eligible for the Jobkeeper scheme – there is no requirement to retest in later months.

Basic Test

The Basic Test involves a comparison of the business' projected GST turnover for a 'turnover test period' compared with the business' current GST turnover for a corresponding period in 2019 and showing that the relevant percentage reduction has occurred.

GST turnover concepts are used to calculate the decline in turnover (disregarding GST grouping rules) as it only includes supplies that has a connection with Australia. Note that the definition of GST turnover includes all taxable supplies and all GST free supplies but not input taxed supplies (e.g. residential rent, financial products), sales from capital assets and other items. 

'Turnover test period' must be

  • a calendar month that ends after 30 March 2020 and before 1 October 2020, or
  • a quarter that starts on 1 April 2020 or 1 July 2020.

From a practical perspective, the applicable turnover test period may depend on whether a business is a monthly or quarterly BAS lodger but, according to the ATO website guidance, there is no obligation to follow the same period as the period a business reports its BAS.  The Explanatory Statement provides some examples of applying the Basic Test and the ATO website provides more information on how to calculate a decline in turnover for the first fortnight starting 30 March 2020.

For those large businesses with a turnover around $1 billion, the relevant percentage reduction is 50%, if the business' aggregated turnover for the 2020 income year is likely to exceed $1 billion or the aggregated turnover for the 2019 income year exceeds $1 billion. Here, “aggregated turnover” has the same meaning as in section 328-115 of the Income Tax Assessment Act 1997 and includes the annual turnover of an entity that is connected with or an affiliate of the business. Therefore, a small business that forms part of a group that is an over $1 billion turnover business must have a 50% decline in turnover to satisfy the test.

Alternative Test – no appropriate relevant comparison period?

This test is one determined by the Commissioner by way of legislative instrument. The Rules allow the Commissioner to determine that an alternative decline in turnover test applies to a class of entities, if the Commissioner is satisfied that there is not an appropriate relevant comparison period to show a reduction in turnover.

The ATO website has published guidance on the Alternative Test and a legislative instrument is now available. Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020 has been registered and it caters for the following situations:

  • Start-up businesses
  • Businesses which have experienced a disposal acquisition or restructure
  • An entity which actually had a substantial increase in turnover, before COVID-19 struck
  • An entity impacted by drought or some other type of natural disaster
  • A entity with irregular turnover
  • A sole trader or small partnership, impacted by sickness, injury or leave.

The accompanying Explanatory Statement gives examples on when the Alternative Test will now apply.

The Government has also registered Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 2) 2020 which provides for a modified decline in turnover test for special purpose service entities that provide employee labour to group members and that have not met the basic test for decline in turnover. This modified test will apply where an entity provides the services of its employees to other members in its group. The group can be a consolidated group, consolidatable group or a GST group.

Entities that are members of a larger group 

The ATO has provided guidance on how an entity that is part of a larger group may apply the decline in turnover test to determine the entity’s eligibility. To determine the specified percentage of decline that is applicable, e.g. 50%, the aggregated turnover of more than $1 billion test will be applied at the larger group level. Testing the actual decline in turnover is done on an individual employer entity basis, i.e. only the GST turnover of the entity which is the employer is relevant.

Who is an eligible employee?

An eligible employee for a fortnight is a person:

  • who is currently employed by the employer (including those stood down or re-hired)
  • who gives the employer a nomination notice (a JobKeeper employee nomination notice) and agrees to be nominated by the employer as an eligible employee for the purposes of the JobKeeper scheme

and at 1 March 2020:

  • was employed full-time or part-time by the employer
  • was a long-term casual (employed on a regular and systemic basis for 12 months or longer as at 1 March 2020) and not a permanent employee of any other employer
  • was at least 16 years of age (as a result of the subsequent amendment to the Rules, for JobKeeper fortnights commencing after 11 May 2020, only employees aged 16 or 17 years who were either independent, or not in full time study at 1 March 2020, as defined in the Social Security Act 1991, are eligible for the JobKeeper payment)
  • was an Australian resident for social security purposes or a tax resident subclass 444 visa holder (i.e. a New Zealand citizen who is an Australian tax resident).

However, the following employees are excluded:

  • an employee receiving parental leave pay under the Paid Parental Leave Act 2010 and the PPL period overlaps the fortnight
  • an employee receiving paid dad and partner pay under the Paid Parental Leave Act 2010 during the fortnight
  • an employee who is receiving Australian workers' compensation and the employee is totally incapacitated for work through the fortnight
  • an employee in receipt of a JobKeeper Payment from another employer.

Businesses that change hands

Where a business has recently been taken over, the Rules are expected to allow the new owner to treat those employees who worked for the previous owner as having been employed by the new owner at the same time as the previous owner.

What do employers need to do to receive JobKeeper payments?

According to the Rules, for a qualifying employer to be entitled to a JobKeeper payment for an eligible employee for a fortnight, the employer also:

  • Has to satisfy the wage condition, i.e. pay the employee at least $1,500 (before tax). The ATO website has published guidance on paying your employee.
  • Has to notify the Commissioner that it elects to participate in the JobKeeper scheme in approved form (by the end of a JobKeeper fortnight with the exception of the fortnights in April and May 2020)
  • Has to give information about the entitlement for the fortnight including details of the employee to the Commissioner in approved form
  • Has to notify the employee in writing within 7 days of giving the Commissioner the employee’s details.

Note that once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all of these eligible employees are covered by their participation in the scheme. This includes all eligible employees who are undertaking work for the employer or have been stood down. The employer cannot select which eligible employees will participate in the scheme.

Initial action

  • Determine if  the requisite reduction in turnover has occurred and keep records of your calculations
  • Check the eligibility of your employees
  • Enrol and apply for the JobKeeper payment to receive payments to cover the business from the first fortnight beginning Monday 30 April, employers need to notify the ATO by 26 April 2020.  However, the Commissioner has now extended the time to enrol until 31 May 2020.  If you enrol by 31 May you will still be able to claim for the fortnights in April and May, provided you meet all the eligibility requirements for each of those fortnights. This includes having paid your employees by the appropriate date for each fortnight.

The ATO has published guidance on how to enrol and apply for the JobKeeper payment which sets out the steps that an employer or a registered tax professional needs to follow for an employer to be entitled. Broadly you can enrol for the JobKeeper payment from 20 April 2020 onwards and confirm the eligible employees that you will claim JobKeeper payment from 4 May 2020 onwards.

Tax consequences

According to the ATO website, the JobKeeper payments will be assessable income of an eligible business. The normal rules for deductibility apply in respect of the amounts the business pays to its employees where those amounts are subsidised by the JobKeeper payment. The JobKeeper payment is not subject to GST. Note: new rules are being introduced by the Government with the intention to not require super guarantee to be paid on additional payments (i.e.  amount over their usual wage) that are made to employees as a result of JobKeeper payments. 

Regarding payroll tax treatment,  the Australian Capital Territory, New South Wales, Queensland, South Australian, Tasmanian, Victorian, and Western Australian Governments have announced that they will exempt businesses from paying payroll tax on the JobKeeper payment.

Self-employed persons, and the principals of partnerships, trusts and companies

Subject to turnover decline testing, JobKeeper payments can also flow to a sole trader, partnership, trust or company with one or more individuals actively engaged in the entity's business (but not as an employee).

The business can only be entitled to the JobKeeper payment for one individual (eligible business participant) and that individual cannot be entitled to the JobKeeper payment from any other business.

According to the Rules, the business is not entitled to a JobKeeper payment unless:

  • it had an ABN on or before 12 March 2020, and
    • either had an amount included in its assessable income for the 2018-19 year and it was included in their income tax return lodged on or before 12 March 2020 (or such later time as allowed by the Commissioner), or
    • made a supply during the period 1 July 2018 to 12 March 2020 and provided this information to the Commissioner on or before 12 March 2020 (or such later time as allowed by the Commissioner).

An individual is an eligible business participant for a business for a fortnight:

  • if the individual is not employed by the business
  • the individual satisfies the following business participation requirements:
    • the individual is actively engaged in the business
    • if the business is a:
      • sole trader – the individual is the sole trader
      • partnership – the individual is a partner
      • trust – the individual is an adult beneficiary of the trust
      • company – a shareholder in or a director of the company
  • if the individual is not entitled to another JobKeeper Payment (either a nominated business participant of another business or as an eligible employee)
  • if as at 1 March 2020 the individual:
    • was aged at least 16 years of age
    • satisfied the business participation requirements
    • was an Australian resident for social security purposes or a tax resident subclass 444 visa holder (i.e. a New Zealand citizen who is an Australian tax resident).
  • The individual must also give a nomination notice to the business and agree to be nominated by the business as the eligible business participant for the JobKeeper scheme. If the business is a sole trader then the individual must give a nomination notice to the Commissioner  (this can be done via the online enrolment process).
  • The same exclusions for individuals in receipt of payments under the Paid Parental Leave Act 2010 and workers compensation for eligible employees apply to eligible business participants.

How to apply

Businesses will need to enrol and nominate by the JobKeeper payment. To receive payments to cover the business from the first fortnight beginning Monday 30 March, businesses need to enrol with the ATO by the end of April 2020.

More information on how to enrol and nominate for sole traders, partnerships, trusts and companies is available on the ATO website.


According to the Rules, the Commissioner must be satisfied that a business is entitled to the JobKeeper payments before making the payment for the fortnight. However, there is a transitional rule for the first two JobKeeper fortnights (i.e. fortnights ending 12 April and 26 April) that gives the Commissioner some leeway to make the payments if he is satisfied on the basis of the information provided that it is reasonable to make the payment.

Timing of payments

The subsidy will start on 30 March 2020, with first payments to be received in the first week of May. This means a business with employees still on the books will have to initially fund the fortnightly payment of $1,500 or more to eligible employees before it receives the JobKeeper payments of $1,500 for each fortnight from the ATO. Businesses finding trouble to pay their eligible employees upfront can seek access to bridging finance from the major banks as they have agreed with the Government to fast-track applications for any businesses needing funding to bridge the gap until the first JobKeeper payments are made by the ATO in May.

Payments will be made to the employer's nominated account no later than 14 days after the end of the calendar month.

Alternative test for JobKeeper

New test allows commissioner to determine a different approach for proving the decline in turnover for a class of entities.

Read more