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  • Paying your eligible employees

    You must pay all your eligible employees at least the JobKeeper amount per fortnight, even if they earn less than this.

    For JobKeeper fortnights starting on or after 28 September 2020, the JobKeeper amount will depend on your employee’s total hours of work, paid leave and paid public holidays during their reference period. If the total of those hours is 80 or more, then the JobKeeper amount for that employee will be the tier 1 rate. Otherwise, the JobKeeper amount will be the tier 2 rate.

    JobKeeper fortnights

    Tier 1 rate

    Tier 2 rate

    28 September 2020 – 3 January 2021

    $1,200

    $750

    4 January 2021 – 28 March 2021

    $1,000

    $650

    For JobKeeper fortnights ending before 28 September 2020, the JobKeeper amount is $1,500.

    You cannot pay your eligible employees less than the JobKeeper amount per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your eligible employee less than the JobKeeper amount per fortnight.

    The amount you pay to your employee can include 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.

    You must notify us whether the tier 1 rate or the tier 2 rate applies to your eligible employees. You must do this before you can claim a payment for a JobKeeper fortnight from 28 September 2020. For more information on how to notify us, see the relevant JobKeeper guide.

    You must notify your eligible employees in writing of which rate applies to them within 7 days of notifying us.

    On this page:

    How to pay

    You need to pay all your eligible employees at least the JobKeeper amount per 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 was from 30 March – 12 April and each JobKeeper fortnight that 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 at least the JobKeeper amount (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 at least the JobKeeper amount (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 the JobKeeper amount (gross salary inclusive of PAYG withholding) per fortnight, you must pay them at least the JobKeeper amount 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 the JobKeeper amount in each fortnight and keep the difference.

    If your eligible employees earn more than the JobKeeper amount per fortnight, you should continue to pay them their regular salary or wages. However, you will only receive the JobKeeper amount for each eligible employee. Any amount you pay above the JobKeeper amount 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 the JobKeeper amount in each fortnight to qualify for the JobKeeper payment for that employee.

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

    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 remain 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 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.

    Payment types

    These payments to employees count towards the JobKeeper amount 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 JobKeeper amount 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
    • amounts you contribute as super to meet your super guarantee obligations.

    Example 1 – Employer with employees on different wages

    Adam owns a real estate business with two employees Anne and Nick.

    Anne is a permanent full-time employee on a salary of $3,000 (before tax) per fortnight. She is eligible for the tier 1 rate.

    Nick is a permanent part-time employee on a salary of $500 (before tax) per fortnight. He is eligible for the tier 2 rate.

    Adam is eligible to receive the JobKeeper payment for both employees for the first extension period.

    Adam:

    • notifies the ATO that the tier 1 rate applies to Anne and the tier 2 rate applies to Nick.
    • advises his employees in writing which payment rate applies to them.

    Adam continues to pay Anne her full-time salary of $3,000 (before tax) per fortnight. Adam will receive $1,200 per JobKeeper fortnight between 28 September 2020 and 3 January 2021 to subsidise part of the cost of Anne’s salary. If Adam satisfies the eligibility requirements for the JobKeeper extension 2 period, he will receive JobKeeper payments of $1,000 per fortnight for Anne for fortnights between 4 January 2021 and 31 March 2021.

    Adam pays Nick his $500 (before tax) per fortnight salary and an additional $250 per fortnight before tax for the JobKeeper fortnights between 28 September 2020 and 3 January 2021, totalling $750 (before tax) per fortnight. Adam receives a JobKeeper payment of $750 per fortnight, which will subsidise the cost of Nick’s salary. If Adam satisfies the eligibility requirements for the JobKeeper extension 2 period, he will receive JobKeeper payments of $650 per fortnight for fortnights between 4 January 2021 and 31 March 2021 and will only need to top-up Nick’s salary by $150 per fortnight.

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

    End of example

     

    Example2 – 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. Zahrah’s salon is temporarily closed and her beauticians have been stood down.

    Zahrah determines that she meets the eligibility requirements and she enrols for the JobKeeper payment. Her three beauticians are all eligible employees.

    To be eligible for the JobKeeper payment for her employees, Zahrah must pay each of her three beauticians at least $1,500 (before tax) per fortnight for the period up to 27 September

    Some of 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.auExternal Link or by phone to avoid incurring a debt that they will need to repay.

    For fortnights after 28 September, Zahrah will need to determine whether she meets the eligibility requirements for the JobKeeper extension. The amount she must pay her employees to be eligible for JobKeeper payments from 28 September will depend on the payment tier that applies to each employee.

    End of example

     

    Example 3 – Monthly pay cycles if employees ordinarily earn less than the JobKeeper amount 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, except for 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 workdays falling in a JobKeeper fortnight in each month (for example, if her usual work fortnight has 10 working days, this would be $150 per workday).

    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.

    For fortnights after 28 September, Zahrah will need to determine whether she meets the eligibility requirements for the JobKeeper extension. The amount she must pay her employees to be eligible for JobKeeper payments from 28 September will depend on the payment tier that applies to each employee.

    End of example

     

    Example 4 – 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). Mabel has notified the Commissioner that the tier 1 rate applies to Benita.
    • Fernando works part time and is paid a monthly salary of $2,000 (before tax). Mabel has notified the Commissioner that the tier 2 rate applies to Fernando

    In October, 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 more than the JobKeeper amount per fortnight and is entitled to receive JobKeeper payments for each employee.

    Mabel’s business has a critical project due on 11 November. Fernando works additional hours in early November to help meet the deadline. He is given an equivalent amount of time off in lieu in late November. 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 starts a period of extended unpaid leave from the middle of November. Mabel therefore only pays her $3,500 for that month. Considering 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 $1,200 for the second JobKeeper fortnight in November.

    End of example

    Tax consequences

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

    If your employees are paid wages to construct or create assets, the normal rules apply for:

    • the cost of depreciating assets and capital works, and
    • the cost base of CGT assets.

    Subject to those rules, the fact that wages have been subsidised by JobKeeper payments does not prevent them from being included in the relevant tax cost of an asset.

    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 the JobKeeper amount (less PAYG withholding and any salary sacrificed amounts) to the employee for the fortnight.

    In some cases, the JobKeeper amount 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 notified the ATO that the tier 1 rate applies for Antonio. L&E pays him gross salary or wages of $850 per fortnight, which is all for ordinary hours of work performed in the fortnight.

    In order to qualify for the JobKeeper payment for fortnights between 28 September 2020 and 3 January 2021, L&E also pays Antonio an additional amount of $350. This brings the total payment to Antonio for the fortnight to $1,200. If L& E satisfies the eligibility requirements for the JobKeeper extension 2 period, then for fortnights between 4 January 2021 and 31 March 2020 L&E will have to pay Antonio an additional amount of $150 per fortnight to bring the total payment up to $1,000.

    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 amounts 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. Shine is eligible for the first extension period and has notified the ATO that the tier 2 rate applies for Melissa. She is usually paid $205 per fortnight for the performance of work.

    Shine pays Melissa an additional $545 per fortnight to meet the JobKeeper wage condition. Melissa is paid a total of $750 per fortnight during the JobKeeper extension 1 period. If Shine satisfies the eligibility requirements for the JobKeeper extension 2 period, then for fortnights between 4 January 2021 and 31 March 2020 Shine will need to pay Melissa an additional $445 to bring the total payment to the $650 for this period.

    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 gross amounts which equal the JobKeeper amount each fortnight.

    Mohammed agreed to be nominated by CPS as an eligible employee for the JobKeeper scheme.

    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 amounts paid to Mohammed each fortnight are reasonably attributable to it satisfying the wage condition.

    For SG purposes, CPS is not required to make super contributions for Mohammed 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 the JobKeeper amount (before tax) during each JobKeeper fortnight or in advance. The JobKeeper payment is a reimbursement from us to an employer in arrears and cannot be paid in advance in any circumstance.

    Last modified: 21 Oct 2020QC 62135