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Australia just threw a $130 billion lifeline to employers. Here’s what to do next

Posted 7 months ago in Small business by Angus Capel
Posted by Angus Capel

This article was published on Tuesday 31 March 2020. As the COVID-19 situation continues to develop, you can find the information you need on government support at the ATO’s dedicated page. 

The JobKeeper stimulus program just announced by the Australian government will help small businesses retain staff amid the COVID-19 slowdown. Read on to find out whether your business qualifies, what steps to take, and when you’ll see payment. 

Note that the details and specifics of JobKeeper will become clearer over the next few days. We’ll update you as we learn more.

Where do I start?

The first step is to register your interest at the ATO’s JobKeeper website. At this point, the ATO is only asking for your contact info and ABN. They’ll update you on what comes next.

If you’re an eligible employer, the ATO is promising to pay you $1,500 a fortnight for every worker who has been on the books since 1 March. You must then pass this amount directly to the employee.

If your worker normally receives less than $1,500 a fortnight in wages, they effectively get a raise: you’ll pay them the full $1,500 you receive, minus PAYG withholding. If the employee normally receives more than $1,500 a fortnight, you’ll need to continue paying their normal wages. You’ll simply be subsidised by $1,500.

JobKeeper payments apply to full-time and part-time workers as at 1 March, and casuals who have been on the books for more than 12 months from the start of March. If you stood down any staff since 1 March, you can also choose to reinstate them and pay them the $1,500 subsidy. 

When will I see the aid?

The tax office will begin reimbursing employers from the first week of May. But if you have the means, you can start paying your staff the subsidy now. The ATO will include monthly arrears from 30 March and continue the payment for up to six months.

Am I eligible?

There are several criteria for determining whether an employer is eligible for the JobKeeper payment. The first is that you must have suffered a 30 percent fall in turnover since 1 March  compared to the previous year. You’ll need to measure and report this drop over at least one month.

The JobKeeper payment is available to employers operating from most business or non-profit entities including companies, partnerships, trusts and sole traders. If you’re self-employed, you’re also eligible for JobKeeper payments.

If you’re confused as to whether your particular business structure fits the ATO requirements, things will become clearer in the coming days. Check the ATO website for updates about JobKeeper. It’s also an excellent time to engage an accountant or bookkeeper to help navigate the subtleties of your setup. 

How do I prove it?

This is where technology plays a big role. To prove your eligibility, you’ll need to document your 30 percent drop in revenue. This is easily done through cloud-based accounting software. One advantage of cloud-based accounting software is that an accountant or bookkeeper can remotely check your financial figures to ensure everything is in order, and correct them if necessary. No need to leave the house or visit an office.

You’ll also need to share payroll details to qualify for JobKeeper payments. This information should already be with the government, care of Single Touch Payroll (STP). This government-led initiative has been required of all employers since mid-2019. 

For those who are yet to adopt STP, now is the time to do so using up-to-date accounting software. If there are future stimulus packages for employers, they too will almost certainly rely on payroll details captured by STP. If you are yet to activate STP, you can do so in a matter of minutes within your Xero account.

Is there any other help?

The JobKeeper program is just the latest federal stimulus aimed at small businesses. Last week, we saw the government offer a cash-flow boost of up to AU$100,000 to employers. And the states are lending a hand too. Victoria, for example, is offering AU$10,000 grants to small employers that have had to close or been highly impacted by shutdown restrictions.

With government support, the assistance of a trusted accountant or bookkeeper, and the latest technology, small businesses stand a better chance of making it through this trying time. We’re with you, and as we learn more about JobKeeper and other government support, we’ll post updates here. Also, be sure to visit Xero’s Business continuity hub for more resources on how to keep your business healthy, including daily webinars starting from tomorrow.

16 comments

Laura
April 1, 2020 at 9.55 am

Will Xero release a P&L with a comparison by percentage to help prove the drop so it doesn’t need to be manually added if it’s not already a feature.
To add to the blog you could then instruct how to create the correct report. For example a ‘how to produce a monthly comparison by % P&L’

ML
April 1, 2020 at 6.17 pm

How would you account for these payments in Xero, whether it’s the JobKeeper payment or cash-flow boost? Would it go against the “Other Revenue” account?

Divya Shah
April 2, 2020 at 5.07 pm

Hi
Firstly BRAVO to Xero for getting on to this in such a timely manner and offering so much support.

I really feel for the tradies who are in most part one-man show. They have not registered under the PAYG system, don’t have STP and yet have suffered terrible losses in revenue. The way I see it – apart from relief hopefully from electricity bills etc, they have no means to access the government stimuli.

Is there anything I have missed that they could access?

Demian Mclean in reply to Divya Shah
April 7, 2020 at 3.10 pm

Hi, Divya. Sole traders and self-employed workers are eligible to apply for JobKeeper payments. You can see the details in the ATO’s FAQ sheet at this page. Just bear in mind these FAQs are dated 5 April, and many details of JobKeeper are still evolving. This page is a good one to bookmark for the latest on JobKeeper.

Stuart Scowcroft
April 2, 2020 at 5.18 pm

Very helpful at a stressful time. This means we will be able to survive and keep our people working. No revenue but we can at least pay them and we can do development work.

Tonia
April 3, 2020 at 1.19 pm

What happens if the company commenced operation on 24/6/2019 and therefore, was not operating as at 1 March? Does it still qualify?

Demian Mclean in reply to Tonia
April 7, 2020 at 2.13 pm

Hi, Tonia. The rules on JobKeeper are evolving but here’s what the ATO had to say on 5 April 2020 in its helpful JobKeeper FAQs:

Q: MY BUSINESS HAS ONLY JUST STARTED OR MY BUSINESS HAS “LUMPY” INCOME. HOW CAN I SELF-ASSESS THAT MY TURNOVER HAS FALLEN 30 PER CENT?

A: Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established, were scaling up, or their turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.

There’s more detail at the FAQs link above.

Note this was as of 5 April, and there may be more up-to-date info at this ATO page.

Jane King
April 3, 2020 at 4.06 pm

How do we enter this on a pay run please?

Nigel Berridge
April 3, 2020 at 6.56 pm

To make any employee eligible I understand that they must be on our books as of 1 March 2019 to 1 March 2020
Is this correct

Demian Mclean in reply to Nigel Berridge
April 7, 2020 at 2.02 pm

Hi, Nigel. This page has the dates you need. Because the information is changing rapidly, I’d suggest you bookmark the link and check it regularly.

Michelle
April 3, 2020 at 8.41 pm

Hi,

Is the funding only to businesses that employee people? What about sole trader with no employees and their income has decreased?

Thanks

Michelle Le

Demian Mclean in reply to Michelle
April 7, 2020 at 1.59 pm

Hi, Michelle. The government has set up a page here to answer just that question about sole traders. Hope you find it helpful.

Kathy Lidstone
April 6, 2020 at 1.21 am

Thank you Xero for the information in a clear and precise manner. I do have one major question re Jobkeeper – for employees who earn less than 750.00 per week gross, how do you enter that into the system, without mucking up your annual leave etc etc.
A screen shot would be helpful. I originally entered it in two lots of hours, (ordinary and overtime – same hourly rate) this way super and A.L. accrual remained the same. The company accountant said that was wrong.
Could you please help. How do we need to do it to satisfy the ATO.

Beeny Atherton in reply to Kathy Lidstone Xero
April 6, 2020 at 9.00 pm

Hi Kathy, please can you contact our support team via this link -> http://support.xero.com, with as much information as possible, and someone will get in touch to give you a hand. Thanks, ^BA

Kellie Mundt
April 7, 2020 at 12.10 am

Hi, was wondering , Like Kathy how we account for this in Xero. We don’t have to pay super or leave entitlements so do we just put it as overtime? We are suppose to start paying if we can but if we can’t account for it I don’t want to pay yet.

Demian Mclean in reply to Kellie Mundt
April 7, 2020 at 2.15 pm

Hi, Kellie. Several commenters have posed this question. For the moment, we’re adivising that Xero customers process payroll as normal while we await confirmation from the ATO on how this will be reported and classified. We also strongly suggest employers ensure they have opted into Single Touch Payroll (STP). Being opted in to STP will provide the most streamlined process once we get the final details of what JobKeeper will look like in Xero.

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