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  • Paying your eligible employees

    You need to pay all your eligible employees at least the minimum amount of $1,500, even if they earn less than this per fortnight. You cannot pay your employees less than $1,500 per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 per fortnight.

    The amount of $1,500 includes gross salary, wages, commission, bonus payments and allowances, inclusive of PAYG withholding, and any fringe benefits or superannuation contributions provided under an effective salary sacrifice agreement.

    On this page:

    How to pay

    You need to re-start or continue to pay all your eligible employees at least $1,500 a fortnight in line with your existing pay cycle through your existing payroll solution.

    When to pay

    You should pay your employees for each JobKeeper fortnight you plan to claim for. The first fortnight is from 30 March – 12 April and each JobKeeper fortnight follows after that.

    If you usually pay your employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. See How much to pay for further information on reasonable manner of allocation.

    If your eligible employees change or leave your employment, you need to notify us.

    How much to pay

    You must pay the minimum $1,500 (gross salary inclusive of PAYG withholding) to each eligible employee in each fortnight to claim the JobKeeper payment for that fortnight. You should also consider your obligations under the Fair Work Act 2009 to pay each eligible employee the minimum $1,500 (gross salary inclusive of PAYG withholding) each fortnight. For more information, see JobKeeper changes to the Fair Work ActExternal Link.

    If your eligible employees earn less than $1,500 (gross salary inclusive of PAYG withholding) per fortnight, you must pay them at least $1,500 in each fortnight to claim the JobKeeper payment. This is a ‘top up’ of their salary or wages and will ensure you remain eligible.

    You cannot pay your employees less than $1,500 in each fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 (gross salary inclusive of PAYG withholding) in each fortnight.

    If your eligible employees earn more than $1,500 per fortnight, you should continue to pay them their regular salary or wages. However, you will only receive $1,500 for each eligible employee. Any amount you pay above $1,500 in a fortnight is not subsidised by the JobKeeper payment.

    If an employee was stood down after 1 March 2020, you can start paying them $1,500 in each fortnight to qualify for the JobKeeper payment for that employee.

    If an employee ceased working for you after 1 March 2020, you can re-engage them and pay them at least $1,500 in each fortnight. You will only be eligible to claim for the fortnights after you re-engaged your employee.

    What if you pay monthly?

    If you usually pay your employees monthly, the payment can be allocated between fortnights in a reasonable manner. What is reasonable will depend on your particular circumstances. There might be more than one reasonable method of allocation and what is reasonable in one context may not necessarily be reasonable in another.

    In many circumstances, an allocation that fairly reflects what the employee would have been paid in each relevant fortnight had the employer had a fortnightly rather than a monthly pay cycle would be considered reasonable.

    If an employee's work pattern and employment status remains constant throughout the relevant period, it will be reasonable to allocate a monthly payment equally to each fortnight. We will also accept an equal allocation as reasonable even if there is only minor variation between fortnights.

    However, if the work performed by the employee differs significantly over the period, it may not be reasonable to allocate a monthly payment equally to each fortnight. An equal allocation is more likely to be unreasonable in cases where the difference is caused by a change to the employee’s usual work patterns or employment status – for example, the employee is stood down or their usual hours of work are significantly reduced during the month.

    In some cases, employers who have paid at least $3,000 before tax to employees in a four-week period may have, in good faith, simply allocated that payment equally to each fortnight. There may be some circumstances where that allocation is not reasonable (for example, because the work performed by the employee significantly differed between the two fortnights). In these cases, for JobKeeper fortnights ending in April or May, we will allow you until the end of June to make any additional payments necessary to ensure that a reasonable allocation of the payments you have made is at least $1,500 per fortnight.

    Payment types

    These payments to employees count towards the $1,500 per fortnight:

    • salary and wages covered by section 12-35 of Schedule 1 to the Taxation Administration Act 1953
    • all allowances other than a reimbursement of expenses or a fringe benefit
    • overtime, shift and penalties
    • bonuses and commissions
    • PAYG withholding amounts under section 12-35 of Schedule 1 to the Taxation Administration Act 1953
    • amounts applied under an effective salary sacrifice arrangement.

    These payments do not count towards the $1,500 per fortnight:

    • Government Paid Parental Leave (GPPL)
    • workers’ compensation absence (not able to work)
    • reimbursements of expenses incurred by employees’
    • directors’ fees (that are not salary and wages)
    • lump sum payments (lump sum A, B, D and E)
    • exempt foreign income (exempt from pay as you go withholding)
    • employment termination payments
    • fringe benefits provided to an employee which are not part of an effective salary sacrifice arrangement.

    Tax consequences

    All JobKeeper payments are assessable income of the business that is eligible to receive the payments. The normal rules for deductibility apply in respect of the amounts your business pays to its employees where those amounts are subsidised by the JobKeeper payment.

    The JobKeeper payment is not subject to GST.

    Operating on an accruals basis

    For a business entity which operates on an accruals accounting basis, JobKeeper payments will be derived when the entity provides a valid completed business monthly declaration to us.

    This means that JobKeeper payments for fortnights ending in June will generally be derived in July (or a later month) and will be assessable in the 2020–21 income year.

    This is because the payments are derived when the entity has a legal entitlement to those payments. It is the ATO’s receipt of the business monthly declaration that triggers an entity’s entitlement to JobKeeper and payment of that entitlement.

    Operating on a cash accounting basis

    For a business entity which operates on a cash accounting basis, the payments for a JobKeeper fortnight are derived when the entity receives those payments.

    For JobKeeper fortnights ending in June, those payments will be made in July (or later), following receipt of the entity’s business monthly declaration, and will be assessable in the 2020–21 income year.

    Superannuation guarantee

    One of the conditions that employers must satisfy to receive the JobKeeper payment for eligible employees is called the wage condition.

    This is when the employer must have already paid at least $1,500 (less PAYG withholding and any salary sacrificed amounts) to the employee for the fortnight.

    In some cases, the $1,500 the employer pays will be more than the amount it is required to pay its employee solely in relation to the performance of their work and any paid leave they take for that fortnight.

    For the purposes of calculations made under the super guarantee (SG) legislation, this additional amount is excluded from being salary and wages and is not included as part of the employee's ordinary time earnings. This is provided that the additional amount was reasonably attributable to the employer satisfying the wage condition of the employee for a particular fortnight. The additional amount will be reasonably attributable to the employer satisfying the wage condition where the employer has a reasonable belief that it is entitled to a JobKeeper payment. It does not matter if it is ultimately determined that the employer was not entitled to a JobKeeper payment (for example, where the employer has acted on an incorrect statement made by an employee).

    For SG purposes the employer does not need to make any super contributions in respect of that additional amount in order to avoid a super guarantee charge (SGC) liability – though the employer can choose to do so.

    Employers may have other super obligations under an industrial agreement, award or contract.

    Examples of super guarantee

    Example 1 – Earnings in respect of work performed

    Sophisticated Software Solutions (SSS) has a variety of employees servicing the business, including a full-time technical consultant, Dinesh.

    Dinesh is an eligible employee of SSS for the purposes of the JobKeeper scheme. He receives a gross salary of $2,800 per fortnight, all of which is for the performance of ordinary hours of work.

    SSS continues to make SG contributions on Dinesh's ordinary time earnings of $2,800 in order to avoid an SGC liability.

    End of example

     

    Example 2 – Employee receives an additional amount arising from the JobKeeper scheme

    Landscape & Earthworks (L&E) has several employees including a long-term casual employee, Antonio.

    Antonio was stood down by L&E due to a reduction in trade. He is later provided work by L&E, but with reduced work hours. Antonio is an eligible employee of L&E for the purposes of the JobKeeper scheme. L&E pays him gross salary or wages of $850 which is all for ordinary hours of work performed in the fortnight.

    In order to qualify for the JobKeeper payment, L&E also pays Antonio an additional amount of $650. This brings the total payment to Antonio for the fortnight to $1,500.

    L&E continues to make SG contributions on Antonio's ordinary time earnings of $850 in order to avoid an SGC liability. However, it does not have to make superannuation contributions for SG purposes with respect to the additional amount of $650 in order to avoid an SGC liability.

    End of example

     

    Example 3 – Less than $450 per calendar month

    The hair and beauty salon Shine has a number of long-term casual employees including Melissa.

    Melissa is an eligible employee of Shine for the purposes of the JobKeeper scheme. She is usually paid $205 per fortnight for the performance of work.

    Shine pays Melissa an additional $1,295 per fortnight to meet the JobKeeper wage condition. Melissa is now paid $1,500 per fortnight.

    For SG purposes, super contributions do not need to be paid for employees who are paid less than $450 in a calendar month. The additional payments Shine makes to Melissa to qualify for the JobKeeper payment are not for the performance of work.

    As the remaining amount for the calendar month is less than $450, the hair and beauty salon does not need to make superannuation contributions for SG purposes for that month in order to avoid an SGC liability.

    End of example

     

    Example 4 – Employee agrees to be nominated by more than one employer

    In February 2020, Mohammed is stood down by ClearSky Parachuting School (CPS). It continues to pay him a gross amount of $1,500 per fortnight.

    Mohammed agrees to be nominated by CPS as an eligible employee for the JobKeeper scheme. He provides an employee nomination notice to CPS on 9 April 2020.

    Unknown to CPS, Mohammed has also previously given an employee nomination notice to another employer of his.

    Although these circumstances result in CPS not being entitled to a JobKeeper payment for Mohammed, the gross amount of $1,500 it pays to Mohammed each fortnight is reasonably attributable to it satisfying the wage condition.

    For SG purposes, CPS is not required to make super contributions for Mohammed for the $1,500 to avoid an SGC. The payment does not relate to his performance of work or paid leave. It is reasonable for CPS to consider that, based on the information Mohammed has provided, it is eligible for a JobKeeper payment for him. Accordingly, the payment CPS makes to Mohammed is reasonably attributable to CPS satisfying the wage condition and will be excluded salary or wages.

    End of example

    What you can’t do

    You cannot claim the JobKeeper payment on behalf of employees who were not paid at least $1,500 (before tax) during each JobKeeper payment period.

    You cannot claim the JobKeeper payment in advance. The JobKeeper payment is a reimbursement from us to an employer in arrears, and cannot be paid in advance in any circumstances.

    Examples

    Example 5 – Employer with employees on different wages

    Adam owns a real estate business with two employees. The business is still operating at this stage, but Adam expects that GST turnover will fall by more than 30% in the coming months. The employees are:

    • Anne, who is a permanent full-time employee on a salary of $3,000 (before tax) per fortnight and who continues working for the business, and
    • Nick, who is a permanent part-time employee on a salary of $1,000 (before tax) per fortnight and who continues working for the business.

    Adam is eligible to enrol and receive the JobKeeper payment for each employee.

    Adam must provide both Anne and Nick with a JobKeeper payment – employee nomination notice within seven days of enrolling, and Anne and Nick need to complete and return to Adam to confirm they agree to be nominated.

    Adam then identifies his eligible employees to the ATO by providing Anne's and Nick's details (and keeping a record of their completed employee nomination notice). In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment.

    The business continues to pay Anne her full-time salary of $3,000 (before tax) per fortnight, and the business will receive $1,500 per fortnight from the JobKeeper payment to subsidise part of the cost of Anne’s salary.

    The business continues to pay Nick his $1,000 (before tax) per fortnight salary and an additional $500 per fortnight before tax, totalling $1,500 (before tax) per fortnight. The business receives $1,500 per fortnight from the JobKeeper payment, which will subsidise the cost of Nick’s salary.

    Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

    End of example

     

    Example 6 – Employer with employees who have been stood down without pay

    Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.

    Zahrah’s turnover will likely fall by more than 30%, so she can be eligible to enrol for the JobKeeper payment for each employee, and pay at least $1,500 (before tax) per fortnight to each of her three beauticians for the period up to 27 September.

    If Zahrah chooses to enrol in the JobKeeper scheme, she must provide each of her employees with a JobKeeper payment – employee nomination notice within seven days of enrolling, which states that they must complete and return the notice if they agree to be nominated as an eligible employee, and describes steps they need to take.

    If Zahrah’s employees have already started receiving income support payments like the JobSeeker payment when they receive the JobKeeper payment, they should advise Services Australia of their change in circumstances online at my.gov.au or by phone to avoid incurring a debt that they will need to repay.

    End of example

     

    Example 7 – Monthly pay cycles if employees ordinarily earn less than $1,500 per fortnight

    Following from the above example, if Zahrah usually pays her employees on a monthly basis, the monthly payment can be allocated between JobKeeper fortnights in a reasonable manner.

    As her employees have been stood down and are not working, they will not be receiving their ordinary wages. Zahrah calculates how much she must pay her employees each month in order to be eligible for JobKeeper payments.

    She could pay each employee at least $3,000 (before tax) for each month of April to September, with the exception of August, which has three JobKeeper fortnights where (using this method), Zahrah would need to pay each employee at least $4,500 (before tax).

    Instead, Zahrah could work out her minimum monthly payments to each employee by looking at the work days falling in a JobKeeper fortnight in each month (for example, if her usual work fortnight has 10 working days, this would be $150 per work day).

    Zahrah could also consider paying $3,300 (before tax) to each employee for each month of April to August, and $3,000 (before tax) in September.

    In Zahrah's circumstances, any of these methods would be accepted as allowing a reasonable allocation that results in Zahrah paying $1,500 (before tax) to each employee for each JobKeeper fortnight.

    End of example

     

    Example 8 – Reasonable allocation of monthly payments

    Mabel runs a publishing business and is eligible to enrol and receive JobKeeper payments for her employees.

    She has two eligible employees who are paid a monthly salary:

    • Benita works full-time and is paid a monthly salary of $7,000 (before tax).
    • Fernando works part time and is paid a monthly salary of $4,000 (before tax).

    In April, Fernando and Benita continue to work their regular hours. It would be reasonable to allocate each employee’s monthly payments evenly between the two fortnights. Mabel is taken to have paid each employee at least $1,500 each fortnight and is entitled to receive JobKeeper payments for each employee.

    Mabel’s business has a critical project due on 11 May. Fernando works additional hours in early May to help meet the deadline. He is given an equivalent amount of time off in lieu in late May. As a result, Fernando works a slightly unequal number of hours each fortnight. However, in the circumstances, it is still reasonable to allocate Fernando’s monthly pay equally between the two JobKeeper fortnights.

    Benita commences a period of extended unpaid leave from the middle of September. Mabel therefore only pays her $3,500 for that month. Having regard to the days Benita worked in each fortnight, it would not be reasonable to allocate the $3,500 evenly across the two JobKeeper fortnights. Mabel needs to make a top-up payment to Benita so that Benita receives at least $1,500 for the second JobKeeper fortnight.

    End of example
    Last modified: 06 Aug 2020QC 62135