Date posted: 31/03/2020 5 min read

JobKeeper crunch time for employer decision making

Many Australian employers will need to rapidly gear up for lots of JobKeeper questions from employees, even those laid off since 1 March 2020, according to Chartered Accountants Australia and New Zealand (CA ANZ).

"JobKeeper raises hope but also lots of questions. Centrelink queues are to some extent being diverted to employer payroll departments," said Michael Croker, Australian Tax Leader at CA ANZ.

"Employers who think they're eligible should send a short email to employees indicating that JobKeeper entitlements are being explored, and decisions will be made as more information comes to hand."

"JobKeeper is a wage subsidy: it won't cover the employer's entire wage cost. Business viability decisions factor in many other costs in determining whether to remain operational even in a "hibernation" sense. The outcome of rent relief negotiations and reducing other fixed costs remains critical," Croker said.

"Employees will also be keen to know how JobKeeper will impact employer decision-making on staff retention and remuneration."

"For some employers, $1,500 will subsidise a higher salary. Others may regard JobKeeper as setting the upper limit of a reduced wage, reduced hours package during the next six months. Superannuation Guarantee also has to be factored in."

The JobKeeper policy design is that payments must flow to employees, not pocketed by the business.

The way Australia's tax system is being rapidly reverse engineered to distribute cash to employees is a fascinating by-product of COVID-19.

"The JobKeeper package is underpinned by the recently introduced Single Touch Payroll (STP) system, administered by the ATO."

"STP and the myGovID system for accessing government online services now have national infrastructure status, critical to the success of Australia's economic response to COVID-19."

Croker noted that some employers – particularly in the small business or "micro-employer" categories – have yet to get onboard STP.

"They'd better get cracking" said Croker.

"Accountants can recommend business software that helps a business budget through hard times, not just access JobKeeper payments."

Croker said employers should not inundate ATO call centres with questions about the JobKeeper arrangements.

"Although the ATO has established a site where employers can now lodge an expression of interest, details about employer eligibility, the delivery process and compliance obligations are still a work-in-progress. The ATO can't pay a cent without legislation being passed."

Two 'Fact Sheets' written by Treasury officials are all we have right now.

"Chartered Accountants too have plenty of questions, but they'll get busy identifying businesses who meet the 30% (or 50%) turnover downturn test and JobKeeper eligible employees."

In an interview on 7.30 Report last night, Treasurer Josh Frydenberg said the Commissioner of Taxation had indicated the ATO was ready to deliver.

So are Chartered Accountants, Croker said.

"The take-up rate on JobKeeper – together with previously announced COVID-19 packages announced at both Federal and State or Territory level – will determine how well Australia emerges from the COVID-19 emergency. Our members are working long hours to help clients through this."

Croker also suggested the Government soon start a conversation with the Australian community about how the tax system would need to change to resume its traditional role: that of collecting tax to recoup the massive COVID-19 outlays.

"Many CAs are pointing out the elephant in the room, asking whether Australia's tax system is experiencing a burning bridge moment which will trigger the need for sweeping tax reform measures."

JobKeeper Payment factsheets

For more about the JobKeeper Payment you can download the factsheets.

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COVID-19 resources

CA ANZ has compiled resources and information for members to navigate businesses and clients through the pandemic.

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