Government unveils $130 billion wage subsidy for small business, including sole traders

The $130 billion funding marks a third tranche of stimulus designed to limit the fallout of the coronavirus pandemic on the country’s economy

Under the $130 billion plan, which was announced on Monday, businesses will be given the fortnightly wage subsidy to help pay their employee’s wages for at least six months. 

People eligible to receive the $1,500 fortnightly payments include:

• Full-time workers
• Part-time workers
• Sole traders
• Casuals who have been with their employer for 12 months+
• New Zealanders on 444 visas
• Not-for-profit entities

Those who are eligible for the wage subsidy will be able to apply to the Australian Tax Office (ATO) via the ATO’s JobKeeper page which means that employers and employees will not have to deal with Centrelink to access the funds.

The fortnightly $1,500 payment will start to be issued from May 1 and will be backdated to March 30th. If employees have been stood down by their employer since March 1, they are still eligible for these payments.

Businesses which can show they’ve lost at least 30% of their turnover due to the coronavirus will be eligible to access the payments, which will be backdated to March 30th and begin being paid in the first week of May.

Businesses with more than $1 billion in annual turnover will be required to show a 50% reduction in turnover. Employers have been encouraged to register their interest online, rather than calling the ATO.

How much is the payment worth?

The federal government will pay eligible employers $1,500 per fortnight for each eligible worker, about 70% of the national minimum wage.

JobKeeper is about $400 a fortnight more than the $1,100 JobSeeker payment with the coronavirus supplement for those out of work.

Who is eligible for JobKeeper?

In order to receive a payment, both the employer and employee must meet eligibility criteria.

Eligible employers are businesses (including companies, partnerships, trusts and sole traders), not-for-profits and charities:

• With a turnover of less than $1bn that have lost 30% or more of their revenue compared to a comparable period a year ago.
• With a turnover of $1bn or more and with at least a 50% reduction in revenue compared to a comparable period a year ago.

Am I an eligible employee?

• Were employed by an eligible employer at 1 March 2020
• Can be sole traders, full-time, part-time, or long-term casuals employed on a regular basis for longer than 12 months as at 1 March 2020
• Are at least 16 years of age
• Are an Australian citizen, the holder of a permanent visa, a protected special category visa, a non-protected special category visa who has been residing continually in Australia for 10 years or more, or a New Zealander on a special category (subclass 444) visa

The government estimates that six million workers will receive this payment

How will it be paid?

Eligible employers will be paid $1,500 per fortnight per eligible employee from 30 March 2020, for a maximum of six months

Eligible employees will receive from their employers a minimum of $1,500 per fortnight, before tax. Employers are able to top up the payment

Employers will pay employees as usual and payments will be made to the employer monthly in arrears by the Australian Tax Office

Will I receive $1,500 even if I ordinarily earn less?

If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay them, at a minimum, $1,500 per fortnight, before tax. It is therefore possible for a long-term casual or part-time worker to receive more than their ordinary pay.

When will it start being paid?

The subsidy will start on 30 March, with the first payments to be received by employers in the first week of May. In the meantime, employers must continue paying their employees and then claim the money from the first week of May.

Businesses will be able to register their interest in participating in the payment from 30 March on the ATO website.

What about superannuation?

Employers must continue to pay the superannuation guarantee on regular wages, but it is up to employer whether they pay superannuation on additional job keeper payments.

For example, a worker who ordinarily receives $1,000 a fortnight plus superannuation will receive the $1,500 JobKeeper payment, with superannuation paid on the first $1,000 and the employer able to decide whether to pay it on the last $500.

Can I get JobKeeper and other payments?

A person receiving the JobKeeper payment cannot also receive the JobSeeker payment (formerly Newstart). People who have already applied for JobSeeker can withdraw and shift to job keeper payments if they are re-engaged by their employer.

A person cannot be in receipt of JobKeeper payments from two or more employers.

What about eligibility for JobSeeker payments?

Eligibility has been expanded. At the moment, Australians out of work are not eligible for the JobSeeker payment if their partner earns $48,000 or more.

Under changes made on Monday, people will be eligible for job-seeker payments unless their partner earns $79,762 or more.

Further information regarding the JobKeeper payment can be found here, alternatively contact your accountant.