JobKeeper from 28 September 2020
Business owners and sole traders
The reference period for business participants is the month of February 2020 (the whole 29 days).
A business participant is a sole trader or self-employed with an ABN, or one partner in a partnership, adult beneficiary of a trust, director or shareholder who works in the business (i.e., only one person in a partnership, one beneficiary of a trust, or one director / shareholder can be eligible for JobKeeper payments for a particular entity).
The test to determine eligibility is based on the hours of active engagement in the business carried on by the entity. This requires an assessment of the hours that the business participant was actively operating the business or undertaking specific tasks in business development and planning, regulatory compliance or similar activities in an applicable reference period.
Other than sole traders and self-employed, a business participant must provide a declaration to the business entity confirming their hours worked over the reference period.
For JobKeeper payments from 28 September 2020, the business must notify the Tax Commissioner about whether the higher or lower rate applies to the business participant and notify the participant within 7 days of providing this notice to the Commissioner.
Where February 2020 was not typical of the participant’s hours, an alternative test can be used:
· Not typical - use the next typical 29 day period
· Commenced work during February 2020 – use March 2020
· Not employed by the employer but still an eligible religious practitioner for JobKeeper purposes - use March 2020
What happens if employee salary is not linked to hours?
Some employees will automatically qualify for the higher JobKeeper payment rate. Broadly, this applies if the employer has incomplete records of total hours of work and paid leave, including where salary, wages, commissions, bonuses etc are not tied to an hourly rate or contracted rate.
The employee must also fall within specific categories, including:
· They were paid at least $1,500 in the reference period;
· They were required to work at least 80 hours under an industrial award, enterprise agreement or contract; or
· It is reasonable to assume that they worked at least 80 hours during the applicable period.