The fog is now starting to clear on the federal government’s $1500-a-fortnight JobKeeper wage subsidy scheme – a major component of Australia’s COVID-19 economic survival package – says The Real Media Collective (TRMC) general manager of IR, policy and governance Charles Watson.
The $130 billion scheme recently passed federal parliament and eligible business owners can now apply to receive the wage support for staff with the funds to be reimbursed to businesses in the first week of May and be backdated to March 30.
The payments will be paid to employers for the next six months under the current guidelines of the scheme.
The announcement of the JobKeeper package prompted many questions from business owners about how it would work.
Watson sought to address these questions through a TRMC webinar and said while the stimulus is enormous and will make a significant difference for both businesses and employees over the next six months, he warned it may not necessarily be a total solution.
“Despite the subsidy scheme, businesses may nevertheless find themselves in a situation where they still have to make hard decisions related to workers in the coming months,” Watson said.
Communication with staff about whether their wages were being paid using the JobKeeper subsidy was also crucial, he said.
“During this period, communication with your employee is key. Over-communication is probably not a bad thing – if it’s expected that your employees will receive wage-subsidisations through this scheme, you have to tell employees now that you’ve registered the business and that they’ve been nominated to receive subsidisation flowing from the scheme.
“Once approved and payments are underway, employers are required to advise eligible employees that they are receiving Jobkeeper wage subsidisation.”
The scheme is administered by the Australian Taxation Office (ATO).
To be eligible for JobKeeper businesses with a turnover of less than $1 billion a year need to have lost up to 30 per cent of income due to the coronavirus pandemic, while businesses earning over $1 billion a year need to have lost up to 50 per cent of income.
JobKeeper applies to full-time, part-time and casual employees that have worked for the business for longer than 12 months. If an employee was stood down due to COVID-19 prior to the JobKeeper scheme’s announcement that employee can be re-engaged by the employer and linked to the scheme.
It also applies if a business is hibernating and the employee is not required to actually come to work.
Watson said withholding PAYG income tax on the $1500 wage subsidy is required.
“It is currently unclear how states are approaching the issue of payroll tax, although most are looking at some form of concession such as increasing the threshold. Superannuation is not required to be contributed on Jobkeeper payments if the employee stood down but is being paid a Jobkeeper payment only,” he said.
“Regular superannuation obligations will apply where an eligible employee is paid more than $1500 per fortnight, and the Jobkeeper payment is used to supplement wages.
“For employees who are regularly paid less than $1500 per fortnight prior to the Jobkeeper subsidy, eligible employers will have the discretion as to whether they pay superannuation on any additional wages.”
As for the next steps, Watson advised that eligible employers need to ensure that payroll processes are set up to process Jobkeeper specific payments, that any direction, request or agreement with employees has been carefully drafted and there is good reasoning behind it.
“Make sure you keep records of any decisions or agreements as they can provide evidence of your reasoning if a dispute arises later,” he advised.
“There is a lot to consider with the Jobkeeper payment scheme and the associated legislative changes. And it is still a little ‘smoky’.”
More details of the JobKeeper stimulus can found here.
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