The Australian Taxation Office has released details regarding the Federal Government’s JobKeeper payment for sole traders, trusts, partnerships, and share holders and directors of limited companies.
Sole traders and entities such as partnerships, trusts or limited companies can be entitled to the JobKeeper Payment scheme.
Such an entity can be eligible for the JobKeeper Payment scheme where it:
- Has a non-employee individual who is actively engaged in the operation of the business. This individual is called the eligible business participant, and
- Meets other relevant eligibility requirements.
There is a limit of one $1,500 JobKeeper payment per fortnight for the eligible business participant.
If the entity also has employees it should also be able to claim additional JobKeeper payments of $1,500 per fortnight per eligible employee.
As a rule the entity – not the eligible business participant – will receive the JobKeeper payment in the business bank account.
The exception is a sole trader, where the business entity and the eligible business participant are the same person, and will receive the JobKeeper payment directly.
Eligible business participants
An eligible business participant of an entity for the applicable fortnight meets all of the following:
- The individual is not employed by the entity.
- S/he is actively engaged in the business carried on by the entity as at the 1st of March 2020, and for the fortnight for which the JobKeeper payment is being claimed.
- The individual is one of the following as at the 1st of March 2020, and for the fortnight for which the JobKeeper payment is being claimed:
- a sole trader
- a partner in a partnership
- an adult beneficiary of a trust
- a shareholder or director in a limited company.
- As at the 1st of March 2020 s/he is both:
- aged at least 16 years old
- an Australian resident (within the meaning of section 7 of the Social Security Act 1991), or a resident for income tax purposes and the holder of a special category (Subclass 444) visa.
- The individual is not currently receiving Government parental leave or Dad and Partner Pay.
- The individual is not currently totally incapacitated for work and receiving payments under an Australian workers’ compensation law in respect of their total incapacity to work.
Eligible business entities
An entity is an eligible business if:
- It carried on a business in Australia on the 1st of March 2020, and
- It satisfies the fall in turnover test for the relevant period, and
- It satisfied the following conditions as at the 12th of March 2020:
- It had an ABN, and
- It had lodged at least one of:
- A 2018/19 income tax return showing that it had an amount included in its assessable income in relation to it carrying on a business, or
- An Activity Statement or GST return for any tax period that started after 1st of July 2018 and ended before 12th of March 2020 showing that it made a taxable, GST-free, or input-taxed sale.
The ATO has advised that there is a discretion to give further time, including where the business:
- Did not have a requirement to lodge the 2018/19 return until after the 12th of March 2020, or
- Have deferred lodgment under an extension of lodgment date initiated by the ATO.
Examples here include:
- The business is included in a registered tax agent’s lodgment program whereby the lodgment due date is after the 12th of March 2020.
- An automatic ATO lodgment deferral is in place as the business was affected by the Australian bushfires in late 2019, and is not registered or required to be registered for GST, so will not have lodged a Business Activity Statement before the 12th of March 2020.
Enrolling for the JobKeeper Payment
If a business is an eligible entity and the individual non-employee is an eligible business participant, there is a need to enrol and then identify and maintain eligible employees.
If the business is a sole trader the sole trader can nominate him/herself as the eligible business participant during the online enrolment process using the ATO Business Portal, or in ATO online services using myGov.
If the individual is an eligible business participant such as a partner, adult beneficiary of a trust, or a shareholder in/director of a limited company s/he must complete the Eligible business participant nomination notice (excluding sole traders) to record that s/he has agreed to be nominated to receive JobKeeper payments through an eligible business.
Importantly, the entity must enrol by the end of April 2020 for payments in respect of the fortnights starting 30th March 2020 or 13th April 2020.
While employers have a wage condition that must be met which requires them to pay a minimum of $1,500 per fortnight to eligible employees there is no equivalent condition that applies for the entities that are eligible based on business participation.
The JobKeeper payment received from the ATO then represents assessable income of the entity.
Enrolment for the JobKeeper payment began on the 20th of April 2020 through the ATO’s website.
If you are the owner of a business in Australia and would like to discuss your entitlement to the JobKeeper payment please complete the enquiry form on this page or contact us by telephone at your nearest bdh Tax office for a free no obligation initial discussion.