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  • Sole traders

    Media: JobKeeper Payment for sole traders
    http://tv.ato.gov.au/ato-tv/media?v=bi9or7on4zii67External Link (Duration: 1:17)

    Sole traders may be eligible for the JobKeeper payment under the business participation entitlement if their business has experienced a decline in turnover according to the eligibility criteria.

    The JobKeeper guide – sole traders provides step-by-step information on how to:

    • enrol yourself as a sole trader under the business participation entitlement
    • identify and maintain employees, and make a monthly business declaration, and
    • from 28 September 2020, check your actual decline in turnover to receive payments under the extensions to JobKeeper.

    On this page:

    Work out your eligibility

    As a sole trader, you may be entitled to the JobKeeper payment for yourself if:

    • you meet the conditions of an eligible entity
    • you are also an eligible business participant.

    An eligible business participant is an individual who is actively engaged in the operation of the business but is not:

    If you are eligible, you can claim the JobKeeper payment for yourself as the eligible business participant.

    For JobKeeper fortnights to 27 September 2020, you are entitled to one $1,500 JobKeeper payment per fortnight for yourself as the eligible business participant.

    For fortnights from 28 September 2020, the JobKeeper amount will reduce and depends on whether you satisfy the 80-hour threshold. If you satisfied the 80-hour threshold, the higher tier 1 rate will apply. If you did not satisfy the 80-hour threshold, the lower tier 2 rate will apply.

    You satisfy the 80-hour threshold if you:

    • were actively engaged in your business for 80 hours or more during your reference period, and
    • have notified us of this in your business monthly declaration.

    If you have employees, you may also be able to claim JobKeeper payments for each eligible employee.

    See also:

    Next steps:

    Work out if you are an eligible entity

    To claim JobKeeper payments, an entity must satisfy certain eligibility requirements. As a sole trader, you are an eligible entity if:

    • on 1 March 2020, you carried on a business in Australia
    • you satisfy the relevant decline in turnover tests.
    • you satisfied certain conditions at 12 March 2020, being  
      • you had an ABN on 12 March 2020, and
      • you had lodged, on or before 12 March 2020, at least one of    
        • a 2018–19 income tax return showing an amount included in your assessable income for carrying on a business, or
        • an activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing you made a taxable, GST-free or input-taxed sale.
         
       
    • you are not an approved provider of child care serviceExternal Link (from 20 July 2020 onwards).

    Note: 'tax period' has a specific meaning. For example, if you report GST on a quarterly basis, your last tax period before 12 March 2020 would be the quarter ended 31 December 2019. If you are not registered for GST, the quarter ended 31 December 2019 will be taken to be your last tax period.

    If you did not meet 12 March deadline

    We have discretion to grant further time, but only in limited circumstances, to:

    • hold an ABN where an ABN was not held on 12 March 2020
    • provide notice of assessable income or taxable supplies during the relevant period to us where notice was not provided by 12 March 2020

    Your circumstances may fall within a category where we have exercised discretion to grant you further time. If so, you do not need to apply for the Commissioner's discretion.

    If your circumstances do not fit within one of those categories, and you meet all other JobKeeper requirements, then you can consider applying to the Commissioner to exercise his discretion to grant further time.

    You cannot enrol to receive a JobKeeper payment until you are notified that the Commissioner has granted you the further time requested.

    See also:

    Ineligible entities

    A sole trader is not eligible for the JobKeeper payment if they have entered bankruptcy.

    Child care sector

    From 20 July 2020, a sole trader who is an approved providers of child care servicesExternal Link cannot claim JobKeeper payments for themselves as an eligible business participant or their employees whose ordinary duties relate principally to the operation of the child care service.

    However, Family Day Care educators (that are not approved providers of a child care service) may still meet eligibility requirements for JobKeeper. For example, a family day care educator who is a sole trader may have a contract to provide child care services to an approved provider organisation. The changes apply to the organisation, not to the family day care educator who is working as a contractor. Find out about other changes that affect the child care sector on the Department of Education, Skills and Employment web pageExternal Link.

    Work out if you are an eligible business participant

    If you are a sole trader – that is, you own your business and are not an employee of your business – only you can be the eligible business participant.

    You will qualify as an eligible business participant provided you satisfy all the following conditions:

    • You are actively engaged in your business (at 1 March 2020 and for the fortnight you are claiming).
    • You were a sole trader at 1 March 2020 and for the fortnight you are claiming.
    • At 1 March 2020, you are both    
      • at least 18 years old. If you are 16 or 17 you can also qualify if you are independent or not studying full time.
      • an Australian resident (under 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.
       
    • You are not receiving government parental leave or Dad and Partner Pay
    • You are not totally incapacitated for work and receiving payments under an Australian workers’ compensation law in respect of your total incapacity to work
    • You are not an employee (other than a casual employee) of another entity
    • You have given us a JobKeeper nomination notice  
      • as a sole trader, this is done during the online enrolment process in the Business Portal or in ATO online services using myGov. You do not need to complete a separate nomination notice for yourself.
       
    • You have not previously given another entity, or us, a JobKeeper nomination notice.

    There is a limit of one JobKeeper payment per fortnight for the eligible business participant.

    Actively engaged

    As a sole trader – that is, you own your business and are not an employee of your business – you will be actively engaged in your business if you regularly:

    • Perform, or manage the performance, of services the business provides
    • sell or manage the sale of goods of the business
    • perform other activities associated with managing the business
    • exercise control over activities related to business strategy and growth.

    You will not be actively engaged in the business simply because you:

    • own an interest in the business or invest capital in it
    • provide advice or other assistance to the business from time to time.

    Example 1 – Actively engaged business participant

    Eleanor owns a tourism business associated with Australian ski resorts.

    During the ski season Eleanor works long hours managing all aspects of ski holidays for her clients.

    During the off-season Eleanor works on marketing, building business partnerships, securing future bookings and bookkeeping.

    Eleanor is actively engaged in the business.

    End of example

    From 28 September 2020, the JobKeeper payment rate will depend on whether you were actively engaged in your business for at least 80 hours in your reference period (generally February 2020).

    The hours that you spent actively engaged in your business can include, but are not limited to, time spent on the following activities:

    • providing services, or selling goods
    • supervising and managing the performance of employees
    • negotiating contracts with suppliers and customers including providing quotes
    • drawing up business plans and planning or budgeting reports
    • managing the record keeping and accounts, including the use of the documents for analysis
    • making financial, legal and tax decisions, including time spent on obtaining professional advice (for example ensuring the business complies with legal and regulatory obligations)
    • managing commercial risks of the business

    You would not be actively engaged in the business whilst doing personal (non-business) activities, merely because you think about your business during this time.

    Example 2 – Hours actively engaged in a business

    Nishanth is a plumber carrying on a business. His business has grown and since hiring 2 plumbers he has spent less time providing the services personally and spends the day providing quotes, dealing with suppliers and managing employees. These activities would still be counted towards the calculation of hours actively engaged in Nishanth's business.

    End of example

    If you don't have employees

    As a sole trader, you can only nominate yourself as the eligible business participant. Where you meet the eligibility requirements, you can qualify for the JobKeeper payment.

    Example 2 – Sole trader eligibility

    Jameela is a sole trader and operates a cupcake business. She is an Australian resident with an ABN and has run her business since 2017. Jameela runs her business as a sole trader with no employees.

    Jameela projected a decline in turnover of about 80% in April 2020 compared with April 2019 as a result of COVID-19.

    Jameela is an eligible business participant and qualified for JobKeeper payments from 30 March 2020 until 27 September 2020.

    On 1 October 2020 Jameela calculates that she has an actual decline in turnover of 60% for the quarter ending 30 September 2020, compared with her quarter ending 30 September 2019.

    Jameela continues to be eligible for JobKeeper payments for JobKeeper Extension 1 from 28 September 2020 until 3 January 2021.

    From 1 January 2021 Jameela can check if she meets the actual decline in turnover test for the quarter ending 31 December 2020 to continue to receive JobKeeper payments for JobKeeper extension 2 from 4 January until 28 March 2021.

    The actual decline in turnover test does not require Jameela to project sales. It is calculated using her actual current GST turnovers in the relevant quarter and comparison period.

    End of example

    Work out if you have eligible employees

    If you are a sole trader with employees, you may also be able to claim additional JobKeeper payments for your eligible employees.

    If you have employees you wish to claim the JobKeeper payment for, you need to:

    • Check your employees meet the eligibility requirements.
    • Pay at least the relevant JobKeeper amount to every eligible employee per JobKeeper fortnight.
    • Re-hire or re-engage employees you let go or stood down and pay them if you want to claim the JobKeeper payment for them.
    • Send a JobKeeper employee nomination notice to all your eligible employees to complete and return to you before you claim JobKeeper payments for those employees. You can either      
    • Each eligible employee must agree to be nominated by you. They do this by completing the JobKeeper employee nomination notice and returning it to you for your records before you claim the payment for that employee. Keep the employee nomination notice on file.
    • For JobKeeper fortnights from 28 September 2020 you must notify us whether the tier 1 or tier 2 rate applies to each of your eligible employees. You need to do this in your monthly declaration before you can claim a JobKeeper payment.
    • You must notify each employee in writing of which rate applies to them within 7 days of notifying us.

    If you are both a sole trader and employee of another business

    As a sole trader you cannot receive JobKeeper payments if you are also an employee (other than a casual employee) of another entity.

    If you are both a long-term casual employee of another business and also an eligible sole trader, you can choose to either let your employer claim the JobKeeper payments on your behalf or you can claim as a sole trader but not both.

    Example 3 – Sole trader and employee

    Zora is a sole trader and actively manages her florist business, Flowers by Zora. She is also employed in another business owned by another entity on a permanent part-time basis as an administrative assistant.

    Flowers by Zora has suffered a significant decline in turnover due to COVID-19. Zora's hours at her permanent part-time job have also been reduced.

    Zora is an eligible employee for the purpose of the JobKeeper Payment scheme for her permanent part-time job, and her employer qualifies for a JobKeeper payment.

    Zora, in her capacity as a sole trader, isn't eligible for the JobKeeper payment because she is a permanent (not casual) employee of another entity. This conclusion would be the same whether her employer qualifies for JobKeeper payments or not.

    End of example

    If you are a sole trader with more than one business

    A sole trader can only receive one JobKeeper payment per fortnight as an eligible business participant, even if you operate more than one business as a sole trader.

    You can only be an eligible business participant for one entity. If you nominate yourself as an eligible business participant as a sole trader, you can’t be an eligible business participant for any other entity.

    Example 4 – Sole trader with more than one business

    Matthew is a sole trader and actively manages two businesses:

    • Matt’s Sculptures – which sells Matthew’s sculptures at markets and galleries
    • Matt’s Designs – which is Matthew’s graphic design business.

    Both businesses are operated in Australia with annual turnovers from $60,000 to $80,000. Matthew has an ABN, is 43 years old and is an Australian resident.

    Matt’s Sculptures and Matt’s Designs have both experienced a decline in turnover as a result of COVID-19. Matt's Sculptures has stopped selling at markets and galleries while they're closed, but continues to sell sculptures online, and uses a delivery service. Matt’s Designs also continues to operate online.

    In April 2020, Matthew projected his turnover would fall by 45% in April 2020 compared with April 2019. This was due to a reduction in work contracts and discretionary spending by customers.

    Matthew is an eligible business participant for the purpose of the JobKeeper Payment scheme for fortnights up to 27 September 2020, satisfying all requirements. He cannot however qualify for the JobKeeper payment twice on the basis that he runs two businesses. He can only nominate under the JobKeeper Payment scheme as the eligible business participant for one entity (himself as sole trader).

    If Matthew instead operated Matt’s Designs through a company, Matt’s Designs Pty Ltd, the outcome would still be the same in that only one JobKeeper payment can be claimed.

    This is because only one entity (Matthew as sole trader, or Matt’s Designs Pty Ltd) may be entitled to the JobKeeper payment for the one individual who is the eligible business participant (that is, Matthew).

    If both Matthew in his capacity as a sole trader and shareholder or director of Matt’s Designs Pty Ltd satisfies the eligibility conditions for a JobKeeper payment, he would need to decide whether he becomes entitled to the JobKeeper payment as a sole trader, or Matt's Designs Pty Ltd becomes entitled to the JobKeeper payment.

    End of example

    Fortnights from 28 September 2020

    For fortnights from 28 September 2020, there are two payment rates. Both payment rates decrease from JobKeeper fortnight 21, starting on 4 January 2021.

    JobKeeper fortnights tier 1 and 2 rates

    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

    The tier 1 rate of the JobKeeper payment will apply to you if you satisfy the 80-hour threshold. You satisfy this if you:

    • were actively engaged in your business for 80 hours or more in your 29-day reference period, and
    • have notified us of this in your business monthly declaration.

    If you do not meet both these requirements you will be entitled to the tier 2 rate.

    It is important that you accurately work out whether you were actively engaged for 80 hours during your reference period. There are penalties for making a false or misleading declaration.

    Reference period

    Your reference period will usually be the month of February 2020.

    There may be circumstances where February 2020 is not a suitable reference period for you. If you do not satisfy the 80-hour threshold in February 2020, you should consider whether you satisfy it using an alternative reference period.

    If more than one reference period can apply to you, you only need to satisfy the 80-hour threshold for one of those reference periods for the tier 1 rate to apply to you.

    Alternative reference period – less than 80 hours and not representative

    Use this alternative reference period if your:

    • total hours of active engagement in your business was less than 80 hours in February 2020, and
    • when compared to earlier 29-day periods (each wholly within a calendar month), February is not representative of your typical number of hours of active engagement in your business.

    For example, you were sick or injured during February 2020, so that period is not representative of your typical time spent actively engaged in your business.

    The alternative reference period is the most recent 29-day period (wholly within a calendar month):

    • ending before 1 March 2020
    • in which your total hours of active engagement in your business was representative of a typical 29-day period.

    Example 5 – Less than 80 hours and not representative

    Coco runs an interior design business as a sole trader.

    Throughout 2019, Coco was typically actively engaged in her business for 50 hours a week.

    From 6 January 2020 until 3 August 2020, Coco was a full-time carer for an ill relative which significantly reduced the time Coco was actively engaged in her business.

    As a result, the total number of hours that Coco was actively engaged in her business in February 2020 (being the reference period) was less than 80 hours. This means Coco has met the first condition for this alternative reference period to apply.

    Coco was typically actively engaged in her business 50 hours a week (over 200 hours in a 29-day period) before 6 January 2020. Therefore, February 2020 did not represent a typical 29-day period for the number of hours she was actively engaged in her business. This means Coco has met the second condition for this alternative reference period to apply.

    The alternative reference period for Coco will be the period from 3 December 2019 to 31 December 2019. This period is used because it is the most recent 29-day period, wholly within a calendar month, in which Coco’s total hours of active engagement in her business were typical.

    The tier 1 rate of the JobKeeper payment will apply to Coco because she:

    • was actively engaged in her business for 80 hours or more in the period from 3 December 2019 to 31 December 2019, and
    • has notified us in her business monthly declaration.
    End of example

    Alternative reference period – drought and natural disaster

    Use this reference period if you conducted business or some of your business in a declared drought zone or declared natural disaster zone during February 2020.

    The alternative reference period is the most recent 29-day period, wholly within a calendar month, ending before 1 March 2020 during which you did not conduct business or some of your business in a declared drought zone, or declared natural disaster zone.

    Record keeping

    If the tier 1 rate applies to you as an eligible business participant, you must keep records. These records will show how you made your assessment of the hours that you were actively engaged in your business. These records might include:

    • business diaries
    • appointment books
    • log books
    • hours billed
    • invoices issued
    • time sheets or attendance records
    • records prepared for other business or statutory purposes.

    There are penalties for making a false or misleading declaration.

    Enrol for the JobKeeper payment

    How to prepare

    When you, as a sole trader, have worked out that you satisfy the eligible entity requirements, as well as the eligible business participant requirements, you need to enrol.

    To claim the JobKeeper payment for a fortnight you must enrol before the end of the month in which the fortnight ends.

    As a sole trader, you can nominate yourself as the eligible business participant during the online process. You do this in the Business Portal, in ATO online services using myGov or your registered tax or BAS agent can do it for you.

    Note: Sole traders do not need to complete a separate nomination notice for themselves but do need to notify us if they are eligible for the tier 1 or tier 2 rate.

    There are steps you will need to take before you can receive JobKeeper payments.

    • Step 1: If you are joining JobKeeper for the first time you need to enrol
    • Step 2: Identify and maintain your eligible employees or business participant
    • Step 3: Make a business monthly declaration

    If you are currently enrolled and would like to continue to claim JobKeeper extension one, you will need to check your continuing eligibility from 1 October 2020.

    To claim JobKeeper extension two, you will need to check your continuing eligibility again from 1 January 2021.

    For detailed instructions on how to enrol, identify and maintain employees and make a monthly business declaration, see the JobKeeper guides.

    See also:

    How to stop receiving JobKeeper payments

    You can choose to stop receiving JobKeeper payments at any time. For more information on how to do this refer to JobKeeper guide – sole traders.

    JobKeeper and your tax return

    If you are a sole trader who has received JobKeeper payments, you need to include them as business income in your individual tax return. Include the amounts paid to you at the label 'Assessable government industry payments'.

    If you have any employees, JobKeeper payments are treated the same as their usual salary or wages from their employer. It will be included in their income statement as either salary and wages or as an allowance, depending on their circumstances. If they self-prepare their tax return, we will automatically include this information once their income statement is finalised. For most people this will occur by the end of July. A registered BAS or tax agent will also have access to this information to complete their client’s tax returns.

    Last modified: 21 Sep 2020QC 62190