Scott Morrison has now released the 3rd and most substantial phase of the economic stimulus package. A phase that finally see’s relief for self-employed individuals and NZ citizens living in Australia . The $130b package will provide $1,500 per fortnight (before tax), per employee/per self-employed individual for 6 months commencing from 30 March 2020.

For the Employer to be eligible to receive and subsequently pass the payments onto employees, their turnover must be less than $1b per annum but more importantly, their turnover must have dropped by 30% relative to a comparable period from the prior year. E.g. Turnover for the month of March 2020 must be more than 30% lower than March 2019. The same concept applies to the self-employed. Further, the employer must register for the payments direct with the ATO (process to be opened in coming days) and must report to the ATO on a monthly basis.
 

For the self-employed which includes sole traders, partners in a partnership and beneficiaries of a trust who take their income as drawings (as opposed to wages), the process looks to be quite straightforward:

• An active ABN and TFN must be provided;
• An individual must be nominated to receive the payment
• A declaration provided to the ATO confirming recent business activity

I have adapted two working examples direct from Treasury to put the above into action:

Example 1 – Employees on Different Wages

Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The
employees are:

• Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
• Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
• Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
• The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;
• The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.

Example 2 - Employer with employees who have been stood down without pay

Gary runs a restaurant in Port Douglas. Ordinarily, he employs three permanent part-time chefs, but the government directive that restaurants can no longer operate has required him to shut the business. As such he has been forced to stand down his three chef’s without pay. Garys turnover will decline by more than 30 per cent, so he is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of his three chefs for up to six months. Gary will maintain the connection to his employees, and be in a position to quickly resume his operations.

Gary is required to advise his employees that he has nominated them as eligible employees to receive the payment. It is up to Gary whether he wants to pay superannuation on the additional income paid because of the JobKeeper Payment. If Gary’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.