Australia just threw a $130 billion lifeline to employers. Here’s what to do next
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.
Written by Angus Capel – Xero