All the days are really blending into one right now and I am very aware that we are right in our usual tax planning time and our awesome IQ clients have heard NOTHING from us about tax planning. Well, that will change this week – keep an eye on your IQ portals, we will be giving you all the tax planning details and begin taking appointments. The delay has been obvious…….we’ve been super busy helping everyone with COVID related work but also, I needed to make sure we didn’t start tax planning too early this year and not include JobKeeper which is a taxable payment and will make a BIG difference to the year end tax payable.
I assisted countless clients with JobKeeper last week and was surprised and concerned about some of the myths and facts that are being shared. I want to clear some of these up as well as let you all know about a new change that the Treasurer announced late Friday.
- MYTH – I will receive JobKeeper first and then I will pay myself and/or my staff. This is incorrect – JobKeeper is a reimbursement system and if you are an employer who pays wages, you must first pay yourself wages. To be eligible to be paid for the first tranche (30/3 – 26/04) you must pay wages prior to the end of April, meet all of the eligibility tests as an employer and employee and enroll.
- FACT – I can back-pay my staff as long as I do this prior to the end of April. Yes, so time is ticking. Usual eligibility and enrollment criteria apply but there is a concession allowing the back-pay for the first two JobKeeper fortnights only.
- MYTH – All of my staff under 18 can receive JobKeeper as long as they meet the long term casual test or are permanent part-time or full time employees. Late on Friday, there was a change to the JobKeeper rules (I know – welcome to my life.) The rules will be changed prospectively so that full time students aged 16 and 17 years old, that are not financially independent are not eligible for the JobKeeper payment. You will need to retest every employee under 18 years of age. If you have already paid them $1,500, this will be reimbursed but future payments will not be reimbursed.
- FACT – I can use either CASH or ACCRUALS to calculate the decline in turnover test. In another change, the ATO has now updated the information to show that despite the GST registration – either cash or accruals reports can be used but consistency is key, make sure you are comparing accruals with accruals and cash with cash.
- MYTH – If I use the JobKeeper alternative test – this is the only test I need to meet. The alternative test sets out the available alternative options for the “decline in turnover ” calculation however all other eligibility criteria still apply.
- FACT – I need to make sure I meet all of the eligibility criteria as an employer, employee and/or eligible business participant and understand how to enroll and claim as well as what administrative documentation should be held. This is complex legislation and while it is a wonderful and welcomed wages subsidy, there is an incredible amount of administrative pressure on business owners to ensure this is rolled out correctly. Please do not get this wrong.
- MYTH – Once I’ve enrolled, I don’t need to do anything else. No – if you have employees you need to notify them they have been nominated as an eligible employee within 7 days of notifying the ATO of their individual details (I expect this will happen at claim time.) Also, don’t forget to claim! This is how you are reimbursed for the JobKeeper payments you are making for your employees or if you do not pay wages – this is how you will receive the JobKeeper payments.
- FACT – I can enroll by the end of May and still receive the full payment. Yes, this is true. Originally the ATO information said April 26th, then April 30th and now it is the end of May however the process is check eligibility, enroll and then claim (as well as a heap of other processes along the way.) Claim’s open on May 5th so there is no benefit in waiting until the end of May to enroll.
If you are uncertain about these issues above or any of the JobKeeper information – here’s how you can find out more information:
- ATO JobKeeper Information
- Treasury JobKeeper Information
- IQ Phonecall assistance – can be booked in 15 minute blocks. There are no “quick questions” with JobKeeper. $55
- IQ E-meeting – discuss eligibility and/or ad hoc questions. $110
- IQ Accountants JobKeeper supplement. This is a step by step guide for the JobKeeper process – separate process for those with employees and separate process for those who do not pay wages. The document will be updated as changes are made and the updated document provided at no further cost – $195