Businesses all over the world have been hit hard by the economic downturn triggered by the Coronavirus pandemic, with many looking to cut costs and reevaluate their plans in order to stay afloat.
You don’t have to look hard to see what’s happening with COVID-19 right now.
However, you may not be as familiar with the government’s measures taken to help businesses and individuals alike stay afloat throughout the crisis.
We’re talking about measures like:
- Allowing individuals to access their super earlier
- Increases to unemployment benefits
- Stimulus payments
One that’s caught the attention of small business owners is JobKeeper.
Have questions about JobKeeper? Our bookkeepers in Melbourne answer the top queries Victorians are asking.
First thing’s first: how does JobKeeper work?
First coming into effect at the beginning of April, JobKeeper is intended to help businesses like yours continue paying your employees as usual.
Essentially, you continue processing payroll as you would.
Every fortnight, you will receive a $1,500 lump sum for each eligible employee to make it possible for your business to retain staff throughout the economic downturn.
- Full-time staff
- Part-time staff
- Long-time casual employees
- Stood down, furloughed or terminated employees
Does my business qualify for JobKeeper?
No doubt the first question you have regarding JobKeeper is whether or not your business qualifies for it.
As with any other government payment, there are a range of criteria your business needs to meet before you can apply for JobKeeper.
- Businesses with turnover of $1bn or less – 30% drop in revenue
- Businesses with turnover of more than $1bn – 50% drop in revenue
- Registered charities – 15% drop in revenue
Of course, there are qualifications to be met for employees, too.
For your employees to be eligible for JobKeeper, they also need to meet several criteria:
- Were employed as of 1 March 2020
- Long-term casuals employed on a regular basis for longer than 12 months are also eligible
- Employees should be at least 16 years of age
- They must also be Australian citizens, permanent residents, on a protected special category visa or on a subclass 444 visa
Finally, JobKeeper is one in, all in – every eligible employee on the books will have to be entered.
Our bookkeepers in Melbourne answer the common questions about JobKeeper
How long will the scheme run for?
The JobKeeper scheme will run for 6 months – specifically, from 30 March 2020 through to 27 September 2020.
When will my business receive its first payments?
While JobKeeper may have come into effect from April, the payments themselves are starting until May.
Many clients have come to our Melbourne bookkeepers with questions regarding what happens to that “missing” month.
Luckily, there’s good news: once payments begin, businesses like yours can claim money back for the two fortnights of April.
Of course, this is all dependent on your ability to continue paying your staff in the meantime – if you aren’t in a financial position to do so, you may only receive payments for May-onward.
Can I use some of the money to cover business expenses?
We get it. Money’s tight, and you need to find a way of keeping the lights on while you ride out the pandemic.
Unfortunately, taking part of an employee’s JobKeeper payments isn’t one of them!
Employers are required to pass on the full amount to their employees, while Single Touch Payroll (STP) allows the ATO to check whether or not you’re meeting this obligation (more on that later).
Failure to do so will see your payments suspended altogether, and you may be hit with further penalties by the ATO such as fines and even prison time.
How does the tax and super situation look?
The $1,500 amount is pretax and doesn’t include super – as such, you’ll still need to process both of those separately when doing your bookkeeping.
When it comes to superannuation specifically, employers like you will need to continue paying super guarantees on regular wages – if your staff have effectively gotten a pay rise with JobKeeper however, it’s up to you whether you pay super on the surplus.
Is there a deadline to apply?
There’s no deadline to apply for JobKeeper – however, if you want to receive JobKeeper payments for the month of April, you originally had to file your application before the 30th of April.
Please note that this application deadline has been extended until the 31st of May 2020.
Do I need to set anything up?
Not at all if your business is already using single touch payroll (STP!)
STP streamlines reporting to the ATO. Instead of having to record information regarding pay runs, your bookkeeping software automatically relays this information to the tax office.
In addition to making things easier when foiling out your BAS and IAS forms, the ATO uses information captured by STP to determine which of your employees are eligible for JobKeeper payments.
Not only that, but it also uses STP to ensure that businesses are playing by the rules.
Employers need to continue to pay their employees for each pay period to qualify for the JobKeeper payment.
STP helps track these pay runs, as well as whether or not businesses are passing on the full amount.
Has your business not implemented single touch payroll yet? Our bookkeepers in Melbourne can help with that.
In addition to helping you qualify for JobKeeper, our single touch payroll solutions will also save you a heap of time once everything’s said and done!
What do employees need to do?
From an employee’s perspective, nothing’s changing since all the work is on your employer’s end.
All you’ll have to do during the application process is write out your details and fill in some forms for your employer to send out.
Of course, that doesn’t mean that it’s quite ‘business as usual’.
JobKeeper is a $1,500 fortnightly payment – if your fortnightly take home pay is lower than that, you’ve effectively been given a raise. Conversely, any amount over $1,500 is dependent on your employer and their ability to pay.
There’s no work for me to do – can I still qualify?
For some industries, there may not be enough demand to justify giving you shifts.
For others like hospitality, social distancing and crowd restrictions may stop you from operating altogether.
The good news is that you don’t have to be actively looking to qualify for JobKeeper. If you’ve been furloughed or had your hours modified or reduced, you can still qualify as long as you’re still formally on the books.
In fact, employees who’ve been terminated as a direct result of the pandemic can even be reinstated and paid the full subsidy.
Just make sure you haven’t applied for JobSeeker payments too, as you can’t apply for both.
What about self-employed and sole traders?
Good news: you are covered by the scheme too.
Sole traders and self-employed individuals are some of the most vulnerable to the economic consequences of the pandemic.
As such, JobKeeper is being extended to these individuals as well.
There are only three conditions:
- You meet the prerequisites
- You’ve had an ABN since the 12th of March
- You’re up-to-date with your tax lodgements
And that includes gig economy workers like ride-share drivers!
Confused? Our bookkeepers in Melbourne can help
Luckily for you, JobKeeper payments aren’t that hard to record in your bookkeeping.
Of course, that’s assuming your business records are in order!
Is your small business bookkeeping a total mess? If so, you’re going to have a hard time making the right calls for your business.
We understand that your finances are a little bit tight at the moment. If you ask us however, bookkeeping is one expense that you should never cut.
Healthy numbers – and therefore, good bookkeeping – are key to your business’ long-term survival.
And all it takes is a phone call.