On 30 March 2020, the Federal Government announced the introduction of an Australian Government wage subsidy known as the JobKeeper scheme. The JobKeeper scheme is aimed at helping employers significantly affected by coronavirus to keep paying their employees and give them the ability under the Fair Work Act to give directions and make agreements with their employees to help manage their business in certain circumstances. As part of the scheme, provision is made for a wage subsidy to be paid by the Government to eligible businesses which have been significantly impacted by the Coronavirus.
In order to be eligible for the employers for the wage subsidy under the JobKeeper scheme the employer:
- Must be a business:
a. which has an aggregated turnover of less than $1 billion and they estimate their GST turnover has fallen or will likely fall by 30 per cent or more; or
b. which has an aggregated turnover of $1 billion or more and they estimate their GST turnover has fallen or will likely fall by 50 per cent or more; and
c. which is not subject to the Major Bank Levy. - Must have been in an employment relationship with eligible employees as at 1 March 2020 who must:
a. be currently employed by the eligible employer (including those stood down or re-hired);
b. have been employed by the employer at 1 March 2020;
c. be full-time, part-time, or long-term casuals (a casual employed on a regular and systemic basis for longer than 12 months as at 1 March 2020);
d. be a permanent employee of the employer, or if a long-term casual employee, not a permanent employee of any other employer;
e. have been are at least 16 years of age at 1 March 2020, with the exception of full-time students who are 17 years old and younger and who are not financially independent,
f. be an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020;
g. have been a resident for Australian tax purposes on 1 March 2020; and
h. are not in receipt of a JobKeeper payment from another employer.
A further requirement of the JobKeeper scheme is that employers must pay their employees at the least the minimum amount of $1,500 before tax a fortnight (even if they earn less than this per fortnight). Where an employee is paid less than $1,500 per fortnight the employer is not entitled to the JobKeeper payment in respect of that employee. Where the employee being paid under the JobKeeper scheme usually earns less than $1,500.00 the difference between their ordinary wage and the JobKeeper scheme is considered a ‘top up’ of their salary or wages.
Employers must continue to pay Superannuation Guarantee
Regardless of the JobKeeper payment employers are still required to comply with their legal obligations and in particular employers must continue to pay the compulsory super contributions known as the Superannuation Guarantee on its employee’s ordinary income.
In respect of those employees whose ordinary income is less than the JobKeeper payment both the Treasury and the Australian Tax Office (ATO) have advised that the employer is not obliged (but may choose do so) to pay the superannuation guarantee on additional payments that are being made to employees as a result of the JobKeeper payment. We do note however at that at the time of writing, no amendments to legislation or the regulations have been made which provide for the superannuation guarantee amount to only be paid in respect of the employee’s usual wage excluding any increase payments to the employer as a result of the JobKeeper scheme.
As an example of an employee if an employer is eligible for the Jobkeeper scheme and has an employee, who is a permanent part-time employee on a salary of $800 per fortnight before tax and who continues working for the business the employer must:
• pay the employee their part-time salary of $800 per fortnight before tax;
• pay the employee an additional $700 per fortnight before tax in order to achieve the minimum $1,500 before tax payment;
• pay the superannuation guarantee on the $800 per fortnight that the employee is earning. The employer has the option of choosing to pay the superannuation guarantee on the additional $700 (before tax) paid to the employee under the JobKeeper payment;
• in order to receive the JobKeeper payment (on a monthly in arrears basis) the employer will need to register their interest in the scheme, make an application to the ATO, advise their employees that they have been nominated as eligible employees and provide information to the ATO each month.
If you are not sure whether your employer is keeping up to date with your Superannuation Payments, see our article – Is your boss paying your Super?
If you have any questions about the application of Superannuation to your JobKeeper payments, please contact us here at Superannuation Advice Australia, to speak to one of our advisors.