Wage subsidy payments to Australian businesses will begin flowing from early-May as the Morrison government prepares to “dig deep” to ensure an estimated six million workers keep their jobs amid the COVID-19 pandemic.
Announced Monday, employers will have access to $1,500 fortnightly payments for each full-time or part-time staff member on their books.
Sole traders and casual workers with a tenure of more than 12 months will also have access to the payments, expected to last for a period of six months.
The Australian Tax Office (ATO) will administer the so-called “JobKeeper” scheme and has begun taking expression of interests from employers through its website.
“Now is the time to dig deep,” Morrison told reporters in Canberra on Monday.
“We want to keep the engine of the economy running through this [coronavirus] crisis. It may run on idle for a time, but it will still continue to run.”
Businesses which can show they’ve lost at least 30% of their turnover due to the coronavirus will be eligible to access the payments, which will be backdated to today (March 30) and begin being paid in the first week of May.
Businesses with more than $1 billion in annual turnover will be required to show a 50% reduction in turnover.
As overseer of the program, the ATO will be required to enforce a legal obligation for employers to use the funds to pay their staff, with single touch payroll functions slated to be used to track the money.
The scheme will cost $130 billion over the next six months, according to Treasurer Josh Frydenberg, who said the payments are equivalent to about 70% of the median wage nationally.
“We’ve been focused on keeping Australians in jobs and Australian businesses in business,” he told reporters in Canberra on Monday.
“Today we go further, we go much further.”
Legislative measures will be required to give life to the wage scheme, with parliament due to sit again to get the bill passed in what is understood to be a bipartisan effort with the Labor opposition.
Asked about the application process for the scheme on Monday, an ATO spokesperson said it was unable to provide detailed comment on the measures until they pass parliament.
“The ATO stands ready to support businesses to access the support measures once they have been enacted,” the spokesperson said.
The $130 billion in additional economic support brings total fiscal spending on the coronavirus crisis to almost $300 billion, or more than 15% of GDP.
Which businesses are eligible for the JobKeeper wage subsidy payments?
The wage subsidy is available to businesses with annual turnover of less than $1 billion, that have seen a 30% drop in turnover due to the coronavirus.
Businesses with annual turnover of $1 billion or more will be eligible if they have seen a 50% drop in turnover.
It is not currently clear what time period that decline will be based on, however SmartCompany is making enquiries and will update this as more information becomes available.
Not-for-profits and self-employed people are also eligible, if they meet these requirements.
Which employees are eligible?
The subsidy is available for employees over the age of 16 that was on a business’ books as of March 1 2020.
This means a business can claim the subsidy for employees who have been stood down in the past month.
It applies to full-time and part-time staff, and casual employees who have been employed on a regular basis for 12 months, as of March 1 2020.
Employees can only receive the JobKeeper payment from one employer.
The subsidy is not available for employees on temporary visas. However, it is available to:
- New Zealand citizens on the subclass 444 visa;
- Holders of a permanent visa;
- Holders of a protected special category visa; and
- Those holding a non-protected special category visa, who have been residing in Australia continuously for 10 years or more.
How do I claim it?
The initial expression of interest form asks for the business name, ABN, and contact details. Later, there will then be an online application form to complete.
Businesses have been urged to apply online, rather than calling the ATO.
However, the ATO has not yet offered up any details on what the application process will involve, saying it will provide more detail once the measures have passed parliament.
Employers will have to identify eligible employees and provide monthly updates to the ATO.
Sole traders and self-employed people can also register their interest with the ATO immediately, via the same link.
They will later have to provide an ABN for their business, nominate an individual’s tax file number, and provide a declaration of recent business activity.
Payments will then be made to the individual’s bank account.
Sole traders will also be required to provide a monthly update, and proof of continuing eligibility for the payments.
How much will I get, and how often?
Registered employers will receive a flat $1,500 for each eligible employee, including those that have been stood down or recently rehired, every two weeks.
If an employee usually earns more than that amount, the employer can choose top up their wage payment. It is also up to the employer whether they want to continue to make superannuation payments.
It’s worth noting that employers are under a legal obligation to pass the payments on to their employees. The subsidy is specifically intended to keep employees in work, not to boost the bank balances of businesses themselves, and the ATO will enforce this.
When will the payments start?
Businesses are expected to start receiving payments from the first week of may, however they will be backdated to March 30.
What does this mean for sole traders?
You can find more information on what the wage subsidy measure means for sole traders here.
What about startups?
There is some confusion about how far the measure goes to support startups. Largely, this hinges on the 30% drop in revenue, and whether that is calculated on a year-on-year basis, or on more recent turnover.
Of course, this may not be relevant at all for startups that don’t yet have turnover.
SmartCompany is seeking to clarify these points, and will keep you updated as we learn more.
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