More JobKeeper questions answered

Glynn Flaherty, Director of Payroll Matters Pty Ltd has been providing a running update on JobKeeper and all that is happening, through updates in the Premier Payroll Administrator Email Alert Service.

Here’s a snapshot of some of the common questions asked in recent editions of the Email Alert Service, included as part of the Premier Payroll Administrator subscription. This is current as at 4 June and subscribe to stay update to date with all the latest changes.

We have a sole trader contractor; can we include them for JobKeeper payments?

No, JobKeeper payments can only apply to your own employees and what are known as an eligible business participant (see below). The contractor may be eligible in their own right to claim.

Can directors be eligible?

If they perform just director duties they are not “eligible employees”, but the organisation can nominate one (and only one) such individual as an eligible business participant through the Business Portal. This also applies to partners in a partnership.

We don’t expect our turnover to reduce enough until maybe June or July. What do we do?

You can enrol now at the Business Portal but indicate you won’t have any eligible employees until, say, May. You can then revisit closer to that date. Alternatively, you can wait until May or June and check your turnover.

How do we deal with employees who terminate part way through a fortnight?

If they are eligible employees and are paid in a JobKeeper fortnight, then the $1,500 applies as a minimum even if they’re not there the full fortnight. Note that any lump sum payments coded to Labels A,B,D or E or ETPs do not count towards the $1,500.

Example

Mick, an eligible employee, is retrenched and in the fortnight receives:

  • final wage – $300;
  • lump sum annual leave – $700;
  • tax free redundancy payment coded to label D – $3,000

Total – $4,000.

Whilst his exceeds the minimum required $1,500, only the $300 of wages would be counted so Mick would be paid a top up of $1,200 and the employer would still claim the $1,500 from the ATO even though employed for only part of the fortnight.

Is the JobKeeper payment included for payroll tax and workers compensation?

South Australia, Queensland, Australian Capital Territory, Western Australia and Tasmania have indicated that the whole $1,500 JobKeeper payment will be excluded from payroll tax. New South Wales and Victoria will only exclude the top up portion. Northern Territory has made non announcement therefore it is included at this stage. For workers compensation, South Australia and Queensland have announced that the whole $1,500 will be excluded. New South Wales and Victoria have announced that just the top-up portion will be excluded from workers compensation declarations. We do expect other states to make announcements shortly, though.

I heard that the rules have changed for younger employees?

Yes, the Treasurer has announced that full-time students aged 16 or 17 years are not eligible unless they are financially independent. We don’t have any more detail, but we expect this will exclude those living at home with their parents and working casually or part time.

What payments are taken into account when meeting the $1,500 per fortnight requirement?

The $1,500 includes:

  • gross wages (prior to any salary sacrifice);
  • all allowances (whether taxable and whether or not shown in STP), eg c/km, overtime meal allowances, travel allowances are included; and
  • all taxable termination payments.

The $1,500 excludes:

  • government paid parental leave;
  • tax-free redundancy payments;
  • workers compensation payments;
  • directors’ fees (non-employee);
  • employer super; and
  • foreign exempt income.

Example 1

Jenny earns the following in a fortnight:

  • wages – $1,000 (of which $100 is then sacrificed to super);
  • overtime – $50;
  • c/km – $30; and
  • overtime meal allowance – $20 (not shown in STP).

Total – $1,100.

Her STP report would initially show:

  • gross – $950 (wage after sacrifice $900 + $50 overtime); and
  • car allowances – $30.

Total – $980.

However, for JobKeeper purposes it will be the $1,100 that is relevant and the employer will pay an additional $400 as the top-up payment.

The STP report would now include:

  • gross – $980, plus a top up payment $400.

The RESC field would also show $100 for the sacrificed super.

Example 2

Mick earns the following in a fortnight:

  • wage – $400; and
  • workers compensation – $1,200 (for part of the fortnight).

Total – $1,600.

His STP report would initially show:

  • gross – $1,600

However, for JobKeeper purposes the $1,200 of workers compensation is excluded and just the $400 wage is taken into account. So, the employer would need to pay an additional $1,100.

The STP report would now include:

  • gross – $1,600, plus a top-up payment of $1,100.

If instead Mick had been in receipt of just workers compensation for the full JobKeeper fortnight, he would not have been eligible for any JobKeeper payment.

Our payroll software does not have JobKeeper functionality. What do we do?

This will depend on how many eligible employees you have.

Up to 200 employees

If it is not more than 200 employees, there should be a list available of staff at the Business Portal you can select. You will also need to add any eligible business participant (non-employee) and any other eligible employees.

Over 200 employees

If you have more than 200 eligible employees, the simplest option is to ask for a JobKeeper report from the ATO to annotate, plus add any eligible business participants. Alternatively, your software provider may provide you with instructions on how to accommodate and report JobKeeper payments and staff eligibility.


Glynn Flaherty is the Director of Payroll Matters Pty Ltd with over 28 years experience in advising and assisting clients in employment related areas with a particular focus on taxation.
He is the author of Premier Payroll Administrator and Termination Payout Calculator, which have helped subscribers remain in the forefront of legislative changes with tax requirements for the past 18 years.
Premier Payroll Administrator is more than a technical payroll manual, which also include a dedicated email assistance service direct to the authors and an email alert service on what’s changing.
Termination Payout Calculator handles any type of termination quickly and easily from redundancy through to dismissal to deal with the myriad of correct taxing and disclosures, in just a few minutes.

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