Sage Dedicated COVID-19 Financial Resource Hub

Say goodbye to JobKeeper and hello to JobKeeper Extension

.With the current JobKeeper subsidy due to end on 27 September 2020, the AustralianFederal Government has now released amending rules setting out the detail of the six month extension to JobKeeper (dubbed JobKeeper 2.1 or JobKeeper Extension) from 28 September 2020 until 28 March 2021.

The JobKeeper Extension continues the JobKeeper subsidy, but at reduced rates from the current $1,500 per JobKeeper fortnight.

The amending rules are set out in the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No.8) 2020. The Government estimates that JobKeeper payments now total $101.3 billion.

Below we set out the key features of the JobKeeper Extension in the following areas:

• Jobkeeper Extension periods and payment rates
• Actual decline in turnover test
• The new 80 hour work test

1. JobKeeper Extension periods and payments

Under the JobKeeper Extension, JobKeeper payments are grouped into two periods:

• Period 1: Covers the period from 28 September 2020 until 3 January 2021
• Period 2: Covers the period from 3 January 2021 until 28 March 2021.

The amount of JobKeeper payment for each eligible employee or eligible business participant will depend upon the above mentioned payment periods, satisfaction of an actual decline in turnover test, and also whether an 80 hour work test is satisfied.

This can be summarised in the following table:

2. Actual decline in turnover test – September and December quarters

The JobKeeper Extension now requires an entity to test their decline in turnover based on actual turnover rather than on projected turnover as required under the initial JobKeeper rules.

The new actual turnover test will be based on two key quarterly periods – the September 2020 and December 2020 quarters compared to relevant prior period quarters.

In particular and as shown in the above table, for JobKeeper fortnights between 28 September 2020 and 3 January 2021 (Period 1), an entity must determine whether it has an actual decline in turnover for the September 2020 quarter compared to the prior September 2019 quarter and have met the relevant decline percentage – 15%, 30% or 50% depending on the type of entity as originally announced under the initial JobKeeper rules.

Similarly, for Period 2 covering JobKeeper fortnights between 4 January 2021 and 28 March 2021, an entity must determine whether it has an actual decline in turnover for the December 2020 quarter compared to the prior December 2019 quarter and have met the relevant decline percentage (15%, 30% or 50%).

Where an entity does not satisfy the actual September 2020 quarter decline in turnover test for Period 1 there is still an opportunity to satisfy the test for the December 2020 quarter under Period 2 and be entitled to JobKeeper payments in Period 2 (i.e. starting from 4 January 2021 onwards).

Conversely, an entity that satisfies the actual turnover test in Period 1 may later fail the Period 2 actual decline in turnover test. In this case, the entity would therefore only be entitled to JobKeeper payments up to the end of Period 1 (i.e. up to 3 January 2021).

3. New 80 hour work test

Assuming the actual decline in turnover test has been met, each employee must also be assessed against an 80 hour work test which then determines the rate of JobKeeper payment for an employee.

In determining whether an eligible employee has met the 80 hour work test, the JobKeeper Extension rules have reference to an entity’s pay period over the last consecutive 28 days that end before:

• 1 March 2020 and
• 1 July 2020

The above means that an employee is required to have worked at least 80 hours in a 28 day period prior to either 1 March 2020 or 1 July 2020 in order for an employer to be entitled to the higher JobKeeper payment rate as shown in the above table. If the 80 hour work requirement is not met, the relevant lower JobKeeper payment rate applies (see above table). For employees on a fortnightly payroll, this would comprise the last two consecutive pay periods that ended prior to 1 March 2020 or 1 July 2020. For other pay cycles (e.g. monthly pay periods), see our comments below.

If the 80 hour work requirement is not met, the relevant lower JobKeeper payment rate applies (see above table).

The effect of the above testing periods broadly translates the 80 hour work test over two fortnightly periods (totalling 28 days or 4 weeks) to effectively a 20 hour per week test.

Where an employee has worked the relevant fortnightly periods ending prior to both of the above key dates, the employer must choose to count either the last two fortnightly pay periods ended prior to 1 March 2020 or count the last two fortnightly pay periods ended prior to 1 July 2020 that give the most favourable work hours for the purposes of the 80 hour work test.

Consider the following example:

Bob works part time for XYZ Ltd. Bob’s last two fortnightly pay periods prior to 1 March 2020 shows that he has worked 70 hours. Further, in the last two fortnightly pay periods prior to 1 July 2020 Bob has worked 85 hours. In this regard, XYZ Ltd can choose for Bob the 1 July 2020 reference date meaning that Bob has worked 85 hours and has met the 80 hour work test. As such, XYZ Ltd is entitled to JobKeeper payments under a higher JobKeeper payment rate for Bob (see above table).

In situations where an employee’s pay cycle is longer than two fortnights (i.e. longer than 28 days) such as a monthly pay cycle, a pro-rated calculation is required.

Consider the following example:

Mary is paid on a monthly basis on the 15th of each month. For the last pay cycle for Mary prior to 1 March 2020, this falls on 15 February 2020 covering a period of 31 days. Mary worked 90 hours during this pay cycle. For the purposes of the 80 hour work test, Mary’s work hours is pro-rated as follows: 90 hours / 31 days x 28 days = 81 hours. Based on this pro-rated approach, Mary has met the 80 hour work test (81 hours) and it is not necessary to further test for the pay period prior to 1 July 2020.

Other key observations:

• Entities which have not previously participated in the current JobKeeper scheme are required to satisfy both the original decline in turnover test and the new actual decline in turnover test for a particular JobKeeper fortnight. Where the original decline in turnover test has been previously met, there is no requirement to retest eligibility for the original test (only the new ‘actual’ test).
• The Commissioner’s power to specify alternative decline in turnover tests and modified test for certain group structures also carry over to the new actual decline in turnover test. However, if an alternative test is used, it must be based on a quarterly testing period. The ATO has not yet released alternative tests specifically applying to the extension period.
• The difference between the new ‘actual’ turnover test and the original ‘projected’ turnover test is that certain sales of capital assets and supplies made in winding down an enterprise may be included in turnover under the new ‘actual’ turnover test. This potentially makes it more difficult to pass the test if these supplies occur in the September 2020 or December 2020 quarters.
• The wage condition that employers must meet under the JobKeeper Extension compared to the current JobKeeper rules now effectively falls from $1,500 fortnight to $1,200 / $750 per fortnight or $1,000 / $650 per fortnight depending on the JobKeeper fortnight period and whether the 80 hour work test is met.
• For the purposes of the 80 hour work test, an employee’s actual hours worked and any hours for which they received paid leave (e.g. annual leave, long service, sick leave or other types of paid leave) or paid absence for public holidays can be counted.
• For eligible business participants the 80 hour work test is not based on pay cycles. Rather the calendar month of February 2020 is used as the reference period having regard to total hours of active engagement. The Commissioner is able to set an alternative reference period if the month of February is not considered appropriate.
• Entities must notify individuals in writing within 7 days of advising the Commissioner of the JobKeeper payment rate that applies to an individual.

JOB KEEPER ALERT –

Immediate change to relevant date for Eligible Employees

Over the past 2 weeks with the growing restrictions applied to Victorian based businesses the Government have announced a series of changes to Job Keeper (now often referred to as Job Keeper 2.0 and Job Keeper 3.0).  Most changes come into effect from 28th September 2020 when Job Keeper 1 ceases.

There is however one immediate change which may impact businesses and employees in a specific set of circumstances.  From 3 August 2020, the relevant date of employment (which is used to determine an employee’s eligibility to Job Keeper) has moved from 1 March 2020 to 1 July 2020.  This now means that an eligible employee will need to have satisfied one of the following 2 tests:

• Have been a permanent full time or permanent part time employee of the business in receipt of Job Keeper as at 1 July 2020 AND not be in receipt of Job Keeper from another employer
• Have been a casual employee engaged on a regular and systematic basis for a minimum 12 month period prior to 1 July 2020 AND not be in receipt of Job Keeper from another employer

If you are already receiving Job Keeper you will need to update your Payroll System immediately for any employees who now qualify for Job Keeper that previously didn’t qualify.

We will continue to advise on Job Keeper changes as it evolves in the coming weeks.

Summary of all COVID-19 Incentives

Business, Individuals, ATO measures

State by State Summary

Home Builder Scheme

JobKeeper 2.0 and Other Measures

Yesterday, the Australian Federal Government released new rules on the JobKeeper wage subsidy scheme to effectively extend the scheme for a further six months until 28 March 2021. With new testing requirements and reduced cash payments, the government has dubbed this ‘JobKeeper Version 2’ or the ‘JobKeeper Extension’.

Key points to note:

1. The existing JobKeeper rules will continue to apply as originally introduced until 27 September 2020
2. The new JobKeeper Extension will apply for an additional 6 months from 28 September 2020 until 28 March 2021
3. The current $1,500 per fortnight JobKeeper subsidy is to be reduced with effect from 28 September 2020 under a two tiered approach and also based on average working hours as at 1 March 2020 (see below for further details)
4. Under the JobKeeper Extension, the decline in turnover tests will now be based on actual rather than projected turnover (see below for further details).
5. The existing JobKeeper and JobKeeper Extension will continue to be available to new participants in the scheme provided they meet the relevant tests. This includes carrying on a business and having eligible employees as at 1 March 2020.

If your business currently receives JobKeeper, your arrangements will generally remain unchanged until 27 September 2020. From 28 September 2020, employers seeking to claim JobKeeper payments will need to reassess their eligibility and prove an actual decline in turnover.

Eligibility

To continue receiving JobKeeper payments, employers will need to reassess their eligibility with reference to actual GST turnover for the June and September 2020 quarters (for payments between 28 September to 3 January 2021), and again for the June, September and December 2020 quarters (for payments between 4 January 2021 to 28 March 2021).

Eligible employers

The broad eligibility tests to access JobKeeper remain the same with an extended decline in turnover test.

• On 1 March 2020, carried on a business in Australia or was a non‑profit body pursuing its objectives principally in Australia; and
  • before the end of the JobKeeper fortnight, it met the decline in turnover test*:
    • >15% for an ACNC-registered charity (excluding universities, or schools within the meaning of the GST Act – these entities need to meet the basic turnover test)
    • > 50% for large businesses:
      • aggregated turnover for the test period is likely to be $1 billion or more, or aggregated turnover for the previous year to the test period was $1 billion or more (a small business that forms part of a group that is a large business must have a >50% decline in turnover to satisfy the test).
    • ­>30% for all other qualifying entities.
  • And, was not:
    • on 1 March 2020, subject to Major Bank Levy for any quarter ending before this date, a member of a consolidated group and another member of the group had been subject to the levy; or
    • a government body of a particular kind, or a wholly-owned entity of such a body; or
    • at any time in the fortnight, a provisional liquidator or liquidator has been appointed to the business or a trustee in bankruptcy had been appointed to the individual’s property.

1 March 2020 is an absolute date. An employer that had ceased trading, commenced after 1 March 2020, or was not pursuing its objectives in Australia at that date, is not eligible.

*Additional tests apply from 28 September 2020.

Additional decline in turnover tests

To receive JobKeeper payments from 28 September 2020, businesses will need to meet the basic eligibility tests and an extended decline in turnover test based on actual GST turnover. 

* Alternative tests potentially apply where a business fails the basic test and does not have a relevant comparison period.

Most businesses will generally use their Business Activity Statement (BAS) reporting to assess eligibility. However, as the BAS deadlines are generally not due until the month after the end of the quarter, eligibility for JobKeeper will need to be assessed in advance of the BAS reporting deadlines to meet the wage condition for eligible employees. However, the ATO will have discretion to extend the time an entity has to pay employees in order to meet the wage condition.

Alternative arrangements are expected to be put in place for businesses and not-for-profits that are not required to lodge a BAS (for example, if the entity is a member of a GST group).

Alternative tests

The Commissioner of Taxation will have discretion to set out alternative tests that would establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019, in line with the Commissioner’s existing discretion.

Eligible Employees

Employee eligibility will remain broadly the same but the value of the payment will change from 28 September based on average weekly hours in February 2020.

• On 1 March 2020:
  • Was aged 16 years and over; and
  • If the individual was aged 16 or 17, was either financially independent or was not undertaking full-time study;
  • Was an employee other than a casual, or was a long-term casual*; and
  • Was an Australian resident (under the meaning of the Social Security Act 1991), or a resident for tax purposes and held a Subclass 444 (Special category) visa**.
• And, at any point during the JobKeeper fortnight:
  • Was an employee of the employer; and
  • Was not an excluded employee:
    • An employee receiving parental leave pay or dad and partner pay; or
    • An employee receiving workers compensation payments in relation to total incapacity.
• And, has provided the JobKeeper Payment Employee Nomination to the employer:
  • Agreeing to be nominated by the employer as an eligible employee under the JobKeeper scheme; and
  • Confirming that they have not agreed to be nominated by another employer; and
  • If they are a long-term casual, they do not have permanent employment with another employer.

*A ‘long term casual employee’ is a person who has been employed by the business on a regular and systematic basis during the period of 12 months that ended on 1 March 2020 (1 March 2019 to 1 March 2020). These are likely to be employees with a recurring work schedule or a reasonable expectation of ongoing work.

JobKeeper payments

Assessing if an employee has worked 20 hours or more

JobKeeper payments from 28 September 2020 are paid at a lower rate for employees who worked less than 20 hours per week on average in the four weeks of pay periods before 1 March 2020.

The Commissioner of Taxation will have discretion to set out alternative tests for those situations where an employee’s or business participant’s hours were not usual during February 2020. Also, the ATO will provide guidance on how this will be dealt with when pay periods are not weekly.

Can I keep getting JobKeeper until September?

If your business and your employees passed the original eligibility tests to access JobKeeper, and you have fulfilled your wage requirements, you can continue to claim JobKeeper up until the last JobKeeper fortnight that ends on 27 September 2020. 

ATO assistant commissioner Andrew Watson said in a recent interview, “Once you’re in, you’re in to the end of September. If you meet the eligibility test once, you’re in it for the whole time.” The original eligibility test was a once only test although there are ongoing conditions that need to be satisfied for each JobKeeper fortnight.

JobKeeper and other support

Coronavirus supplement

The Coronavirus supplement will continue, albeit on a reduced rate of $250 per fortnight (from $550), from 25 September until 31 December 2020 for eligible individuals.

Eligibility remains the same. That is, those receiving:

• JobSeeker Payment (and all payments transitioning as a result of JobSeeker Payment)
• Youth Allowance
• Parenting Payment (Partnered and Single)
• Austudy
• ABSTUDY Living Allowance
• Farm Household Allowance
• Special Benefit
• Eligible New Enterprise Incentive Scheme participants
• Department of Veterans’ Affairs Education Schemes

The eligibility criteria and some of the tests for access to income support is changing.

Eligibility and access

The expanded eligibility criteria for the Jobseeker Payment and the Youth Allowance Jobseeker will continue to apply until 31 December 2020:

• Permanent employees who have been stood down or lost their jobs (and are not receiving payments from an employer or through insurance),
• Sole traders, the self-employed, casuals or contractors who meet the income and assets tests.

In addition, if you receive JobSeeker or Youth Allowance payments, the amount you can earn before impacting income support has been increased to $300 per fortnight from 25 September 2020 until 31 December 2020.

However, a number of restrictions have been reintroduced.

Reintroduction of assets and partner income tests

From 25 September 2020, the assets test and the Liquid Assets Waiting Period (applies to those with assets such as cash savings worth over $5,500 for singles or $11,000 for singles with children and partnered people) will be reintroduced for access to income support payments.

In addition, partner income testing will resume from 25 September, albeit with higher thresholds than those pre coronavirus. That is, you will not be eligible for income support if you are not earning an income but your partner earns $3,086.11 per fortnight or $80,238.89 per annum. The partner income test taper rate will increase from 25 cents for every dollar of partner income earned over $996 per fortnight to 27 cents for every dollar of partner income earned over $1,165 per fortnight.

Reintroduction of job seeking requirements

Job seeking requirements that were suspended from 24 March 2020 have been introduced from 9 June 2020. The mutual obligation requirements include:

• Voluntary job searches
• At least one phone or online appointment with a jobseeker’s employment services provider
• Voluntary participation in activities, either online or in person, and
• No payment suspensions or penalties for failure to comply

Waiting periods continue to be waived

Some waiting periods for access to income support will continue to be waived until 31 December 2020:

• The one-week ordinary waiting period is waived.
• The newly arrived resident’s waiting period for new migrants (previously four years). Claimants will still need to meet residency requirements, that is they will need to hold a permanent visa. Affected claimants will need to serve the remainder of this waiting period at the end of the period the Coronavirus Supplement is paid for.
• The Seasonal Work Preclusion Period for those who are eligible for the Coronavirus supplement -this applies to those who finished seasonal, contract or intermittent work in the six months prior to claiming income support.

JobKeeper

Under the JobKeeper payment, businesses impacted by COVID-19 will be able to access a subsidy to continue paying their employees. The Government will provide a fortnightly payment of $1500 per eligible employee until 27 September 2020.  Employers need to pay eligible employees a minimum of $1500 (before tax) per fortnight to claim the JobKeeper payment. This will be paid to the employer in arrears each month. The first payments to eligible employers commenced in the first week of May 2020. JobKeeper payments can be made for the period beginning 30 March 2020.  The JobKeeper payment is administered by the Australian Taxation Office (ATO). You now have until 31 May 2020 to enrol for the initial JobKeeper periods.

JobKeeper Payments Overview - https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_JobKeeper_Info_for_Employers.pdf

Eligible Employees -  https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet__JobKeeper_Info_for_Employees.pdf

How to enrol and apply for JobKeeper Payments - https://www.ato.gov.au/general/jobkeeper-payment/employers/enrol-for-the-jobkeeper-payment/?=redirected_URL

Information for Self-employed - https://www.ato.gov.au/General/JobKeeper-Payment/Sole-traders-and-other-entities/

Alternative Turnover Test - https://www.legislation.gov.au/Details/F2020L00461

Employee Nomination Form - https://www.ato.gov.au/assets/0/104/300/362/004e4999-5aee-480a-a38e-a668d9078aa0.pdf

How to process JobKeeper Payments in Xero - https://central.xero.com/s/article/Process-JobKeeper-payments

Information available to small business

The Victorian Government has launched the $500 million Business Support Fund to help small businesses survive the impacts of coronavirus (COVID-19) and keep people in work.

Assistance for Victorian Small Businesses impacted by coronavirus - https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-support-fund?

$5,000 State Government Grant under the Business Support Fund - Expansion - https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-support-package/business-support-fund

ATO FAQ's for Businesses - https://www.ato.gov.au/General/COVID-19/COVID-19-frequently-asked-questions/?=redirected_URL

Calculate the Cash Boost Available to Your Business - https://www.ato.gov.au/General/COVID-19/COVID-19-frequently-asked-questions/?=redirected_URL

Asset Instant Write Off - https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/

PAYG Withholding Credit - https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/

Apprenticeship/Trainee Relief - https://www.australianapprenticeships.gov.au/node/3939

Loan Repayment Deferral - https://www.ausbanking.org.au/banks-small-business-relief-package/

Payroll Tax Refunds - https://www.abc.net.au/news/2020-03-20/victorian-government-to-pay-back-business-payroll-tax/12076956

Insolvency and Bankruptcy relief-  https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf

Tax Planning & Tips for Small Business

COVID-19 will be a shock to many businesses that could place their immediate future in serious jeopardy, and there is no way of knowing how long this pending crisis will last. As part of a comprehensive risk management strategy there are a range of actions you should consider taking now to prepare your business for COVID-19, to place it in the best possible position to not only navigate through the crisis but to also be better prepared to take advantage of the recovery. Fundamental to your preparations is keeping up to date with official information on COVID-19 and any directions public health authorities may issue. It is therefore important to follow the website of your local health authority. 

Tips for small business to prepare for COVID-19 

Accounting for Covid-19 incentives

Accounting treatment for the Cash Flow Boost receipts

The Cash Flow Boost scheme provides temporary cash flow support to small and medium enterprises to help meet wage and other commitments.

The Cash Flow Boost Stimulus is paid across the June and September 2020 quarters.

There are 2 tranches of Boost: the first is paid on lodgement of the March BAS and is paid as a credit into the ICA account and is income tax free and free from GST (as the amount does not represent a taxable supply).

It is quite unusual in nature being income tax free and is important to properly record it in a client’s books of account.

The amount of Cash Flow Boost is not turnover so is not taken into account as turnover for PAYG Instalment purposes nor is it taken into account when measuring turnover for JobKeeper eligibility.

Example - Cash Flow Boost #1

Lydia’s Lighting Shop lodges its March BAS has $3,000 PAYGW and $2,000 net GST owing to the ATO (the normal period BAS totals).

When submitted the BAS, Lydia receives a $10,000 credit of the first Cash Flow Boost and her ICA account results in a $5,000 credit which is ultimately refunded.

Q: What are the entries to record the Cash Flow Boost payment?

A: Firstly we establish a general ledger account to post the Cash Flow Boost stimulus benefit to.

For the sake of this fact sheet we have called it “Cash Flow Boost” and it is an income account in the profit & Loss statement.

It is best to record it in the Other Income section to avoid it interfering with presentation of Gross Profit in your Profit & Loss Statement.

Deposits to the account are BAS Excluded and do not get reported on the BAS so select the appropriate GST tax code to suit your software.

There are a number of different ways practitioners typically deal with the posting of BAS Payments, so firstly we have focussed on the outcome that is required moreso than the means of achieving it as there are several ways of getting to a correct outcome.

Ultimate Outcome for Cash Flow Boost Stimulus Refund

Debit: PAYGW Payable              $3000

Debit: GST Collected/Paid     $2,000

Debit: Bank                                    $5,000*

Credit: Cash Flow Boost           $10,000

*Please note this is the accounting outcome, not a general journal to post as we all know you don't post general journals to bank - read on

There are a number of ways to get to the above end, including but not limited to:

• A journal entry to record the extinguishment of the BAS Liability

Debit: PAYGW Payable               $3,000

Debit: GST Collected/Paid      $2,000

Credit: Cash Flow Boost            $5,000*

*The cash receipt of $5,000 into the bank account is posted to Cash Flow Boost (Other income account - details above)

• If the Integrated Client Account (ICA) is set up as a bank account all above entries could be treated as cash receipts or payments. •Some may have established a general ledger Control Account for the clients ICA where the entries would be:

Debit: PAYGW Payable               $3,000

Debit: GST Collected/Paid        $2,000

Credit: Control Account - ICA    $5,000

Debit: Control Account - ICA     $10,000

Credit: Cash Flow Boost             $10,000

*On receipt of $5,000 into the bank account it is posted to Control Account - ICA

There are no doubt other possible treatments used in dealing with a client’s period end BAS posting that get to the same outcome; but the important outcomes are:

• The creation of an Other Income account appropriately titled that records and isolates the full amount of the government’s Boost Stimulus payment;

• The income account would ideally be kept separate from other income accounts and titled to clearly identify it as the accountant will give Cash Flow Boost receipts a unique treatment in the year end Income Tax Return. For this reason, it is best not to simply lump it into a miscellaneous income account where its identity could be overlooked at year end;

• The clearing of normal period end GST and PAYGW control accounts;

• The income account is not subject to GST nor is it a GST-Free supply it is simply not a taxable supply (BAS Excluded) and thus is not recorded on the BAS.

Further Cash Flow Boost # 1 amounts could be received on monthly IAS and BAS for the months of April May and June (in the case of a monthly lodger) or on the June BAS (in the case of a quarterly lodger).

The accounting, BAS and income tax treatment would be the same as above.

The total amount of Cash Flow Boost # 2 received is the same as Cash Flow Boost #1. 

It is received in four equal monthly instalments on lodgement of June – September BAS and IAS (for monthly lodgers), or 2 equal instalments on lodgement of June and September BAS (for quarterly lodgers).

The accounting, BAS and income tax treatment would be the same as Boost #1 above.

Accounting treatment for JobKeeper stimulus receipts

The JobKeeper scheme provides a wage subsidy to Covid affected employers for certain Eligible Employees and Eligible Business Participants.

Its purpose is to help keep employees connected with employers during the period of Covid-induced downturn and into the recovery phase.

The JobKeeper stimulus is paid as a subsidy for wages paid for the 6 months April to September 2020.

The amount of the payment is $1500 per eligible employee per fortnight.

The same amount is paid for one Eligible Business Participant per entity.

An eligible Business Participant could be a sole trader, a partner in a partnership, a beneficiary of a trust or a shareholder/director of a company that are not already included as an eligible employee. 

The JobKeeper subsidy is paid directly into a nominated bank account on lodgement of a monthly ‘claim’ form.

The JobKeeper Subsidy is:

- assessable income and included in the recipient’s tax return;

- not subject to GST;

- not reportable on BAS.

JobKeeper payments are expected to be paid by the ATO within 14 days of the end of each calendar month (subject to the requirements being met) and the monthly lodgement being completed.

Firstly we establish a general ledger account to post the JobKeeper stimulus benefit to.

For the sake of this fact sheet we have called it “JobKeeper Subsidy” and it is an Other Income account in the profit & Loss statement.

It is best to record it in the Other Income section to avoid it interfering with presentation of Gross Profit in your Profit & Loss Statement.

Deposits to the account do not get reported on the BAS (they are BAS Excluded) so select the appropriate GST tax code to suit your software.

Example – JobKeeper Wage Subsidy

Lydia’s Lighting Shop (a sole trader business) has two Eligible Employees as well as Lydia working in the business who is an Eligible Business Participant.

Each employee earns more than $1500 per fortnight.

Lydia receives a JobKeeper stimulus amount of $9000 for the month direct into her nominated account.

Q: What are the entries to record the JobKeeper Receipt?

A: There are a number of different ways practitioners might deal with the posting of JobKeeper Stimulus receipts so we will focus on the outcome that is required more so than the means of achieving it as there may be several ways of getting to a correct outcome.

Ultimate entry for Cash Boost Stimulus Refund

Debit: Bank                                   $9,000

Credit: JobKeeper Subsidy     $9,000

There are a number of ways to get to the above end, including but not limited to:

• Simply posting the amount as a cash receipt to the newly created general ledger account;

• Posting an entry to accrue the amount due in the relevant claim month either through a receivables module or as a general journal. If posting through an integrated receivables module then use normal invoicing process and if using an unlinked Other Receivable account (perhaps a separate general ledger account titled “JobKeeper Subsidy Receivable” – or similar) then a General journal will suffice – effect:

Debit: Receivables                     $9,000

Credit: JobKeeper Subsidy     $9,000

* Then on collection post the actual receipt of JobKeeper money to the linked receivables module or to the general ledger receivable account (depending on the approach you have selected).

The important outcomes are:

• The creation of an income account appropriately titled that records and isolates the full amount of the JobKeeper stimulus payment;

• No GST is recorded nor does the amount get reported on a BAS;

• The receipt is not set off against a wage expense as that will make it difficult to reconcile wages at year end;

• The amount is not treated as a clearing account where funds are received on behalf of an employee and simply passed onto them, such as PPL. It is a subsidy that has the character of income.

Accounting treatment for Covid Apprentice Subsidy

The Covid-based apprenticeship scheme sees a 50% subsidy in apprentice wages up to a maximum of $7000 per quarter for the 9 months ended 30 September 2020.

Its accounting treatment is essentially the same as for the JobKeeper stimulus (outlined above). We would advocate establishing its own unique general ledger account titled “Covid Apprentice Subsidy” or similar.

Information relating to Self Managed Super Funds (SMSF)

Providing rent relief for a tenant in SMSF property - https://www.accountantsdaily.com.au/smsf/14192-ato-clarifies-covid-19-rent-relief-concerns

ATO FAQ's for SMSFs - https://www.ato.gov.au/General/COVID-19/COVID-19-frequently-asked-questions/Self-managed-super-funds-frequently-asked-questions/

Information relating to Superannuation 

Important Superannuation measures - https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?anchor=Minimumannualpaymentsforsuperincomestrea

Early access to Super rules relaxed - https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/early-access-to-your-super/

Reduction to minimum pension withdrawal requirements from Superannuation - https://moneysmart.gov.au/retirement-income/account-based-pensions

Early access to Super - https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-using-your-super/COVID-19-early-release-of-super/

Information available for Individuals

Increased income support payments - https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet-Income_Support_for_Individuals.pdf

Applying for Newstart - https://www.abc.net.au/news/2020-03-24/coronavirus-how-to-apply-for-centrelink-jobseeker-newstart/12083948

Bonus for Social Security Recipients - https://treasury.gov.au/sites/default/files/2020-03/factsheet6providingsupportforretireestomanagemarketvolatility-25march2.pdf

Bonus Phone Data for those working from home

Telstra - https://www.telstra.com.au/covid19/supporting-you-during-covid-19

Optus - https://www.optus.com.au/for-you/support/answer?id=20066

Covid-19 and Workplace Law

Many business owners are asking questions around leave attached to incidents and periods of time away from work linked to the Coronavirus and times of self isolation.  Knowing this can impact so many of our clients and knowing that Sage Business Group are not employment experts who can provide expert advice in this field we thank Rosa Raco of WR Law for providing us with permission to publish this recently produced article on the matter.  Clearly no article for general publication can provide definitive outcomes for each situation so if you are an employer and have questions pertaining to this you may choose to contact a specialist in the field such as Rosa Raco at WR Law.

Understanding workplace obligations and entitlements

OH & S Matters to consider when employees are working from home

If you need assistance with any matter relating to COVID-19 please don't hesitate to contact us via the link here