Thanks to our friends at Xero. Visit the Business Chicks Small Business Hub for more.
Disclaimer: The Federal Government is currently conducting a review within the Treasury, so there may be changes to the JobKeeper scheme down the track. Business Chicks and Xero are providing advice of a general nature – for tailored personal financial advice please consult a professional.
Along with “pivot” and “social distancing”, “JobKeeper” has got to be one of the most repeated terms of the past three months. Workers across the country are eligible for (and many are receiving) payments of $1500 per fortnight (before tax), however there are still a lot of questions about how the scheme works. We talked to Matthew Prouse, Head of Industry at Xero, to unpack JobKeeper and find out how business owners can make their bookkeeping a whole lot easier during this time.
Firstly, what is JobKeeper?
The JobKeeper Payment scheme is a temporary subsidy paid to businesses who have incurred significant economic change as a result of the health and economic crisis caused by COVID-19. Eligible employers, sole traders and other entities can apply to receive $1,500 per eligible employee per fortnight.
It’s worth noting that it can be a significant administrative burden for business owners to actually receive the subsidy. Business owners, accountants and bookkeepers around the country are hard at work making the case for JobKeeper eligibility and administering it every month.
I’m a business owning employing staff. Am I eligible for JobKeeper, and how do I go about applying for it?
There is a turnover test for businesses applying for JobKeeper. They must be able to prove a fall in turnover of 30% or more compared to the same month in 2019. If you’re using accounting software like Xero, there’s an in-built calculator that can help you work out your eligibility for the program.
If you can demonstrate the significant fall in turnover, you then need to register an intent to claim through ATO online services, which is the portal to access taxpayer and client information.
You also need to identify your eligible employees. Once again, if you’re using accounting software, it can estimate your eligible employees for you. The governing rules are that full time and part time staff must have been employed by 1 March 2020 to be eligible for JobKeeper, and casual staff need to have been employed for more than 12 months.
All eligible staff will need to complete an eligibility nomination form. While these are not submitted to the ATO right now, employers must collect all of those forms and store them in a safe, secure place. STP-enabled software will automatically withdraw those employees from JobKeeper once the scheme is over.
Alternately, business owners can submit details manually through the ATO portal every month.
I’m a business owner without eligible employees. Can I apply for JobKeeper?
Individual sole traders are classed as eligible business participants and can apply for JobKeeper.
What if my business is new, has been acquired, or has changed its structure in the last 12 months and does not meet the criteria test for JobKeeper?
The ATO recognises that some businesses cannot compare their turnover to the same month last year to prove a 30% fall in turnover.
In the last twelve months you may have transitioned from sole trader to a company, your business may been bought or sold, you may be a fast growing start up, or you may have been devastated by fires and floods last year. The ATO has introduced seven alternative tests, all with different rules and eligibility. Each one of these tests has their own complex calculations to work through, which is why in almost every case, business owners should seek the support of a qualified accountant or bookkeeper.
Does JobKeeper need to be paid back in the future?
JobKeeper is unlike a university loan debt – it does not need to be paid back. It is a subsidy paid by the government, an income for the business, an income to cover the wages of employees to keep them employed during this period. The Federal Government is effectively borrowing by issuing bonds to fund the JobKeeper scheme.
Does JobKeeper accrue tax?
As it’s viewed as income for the business, business owners must pay income tax on the JobKeeper payments they receive.
How will JobKeeper impact the end of financial year?
JobKeeper should not change tax time for anyone. Businesses will still need to finalise their payroll and conduct STP finalisation. Employees will still receive their employee information statement (which used to be called a payment summary.)
JobKeeper will pre-fill on their tax returns, so there should not be any additional work required by business owners.
Of course if business records are not clear or if you’ve changed systems through the year it can be a little trickier.
What’s the benefit of using an online accounting solution and Single Touch Payroll (STP) during this time?
Businesses across Australia are adapting to the new normal and trying to stay afloat. At the same time, this economic challenge requires us to have the most up to date information at our fingertips. There are huge benefits for using modern, online, connected accounting software, as it saves an enormous amount of precious time for small businesses.
Accounting software like Xero has things like daily bank feeds, so business owners can log in and do daily bookkeeping, reconcile bank accounts and have a view of all invoices that are due to send out and all the bills that need paying.
Accounting software also helps when claiming JobKeeper and turning in your eligibility. A platform like Xero provides reports that you can compare, or in some cases it provides a calculator to determine how you are going to pay or register staff.
Xero allows you to register all of your employee details for JobKeeper in a couple of clicks, which is far more efficient and secure than having to key in their bank account, name, tax file number and date of birth manually.
By using Xero you can also automatically calculate things like allowances and the top up payment for JobKeeper. If an employee is going to receive more than $1,500, Xero will also calculate the tax withholding and superannuation payments owing
Finally, when business owners file their pay run, Xero will automatically send the relevant reports to the government to ensure the monthly requirements have been met to receive JobKeeper.
Do you have any parting advice for business owners right now?
Are there superheroes here to help you? Yes there are. There are thousands of accountants and bookkeepers in Australia here to help. They are a bit sleep deprived at the moment because they’ve been working the longest hours of their career in the last couple of months, but this is their bread and butter. If you have not got yourself an advisor, now is the time.
Born in the cloud, Xero is a beautiful, easy-to-use platform for small businesses and their advisors. It connects you with your business numbers anytime, anywhere and on any device, and offers features such as payroll, invoicing, payments and bank reconciliation. Xero also provides its subscribers with connections to a thriving ecosystem of more than 800 third-party apps (including Shopify) and more than 200 banks and financial service providers.