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JobKeeper – Positive Update Could Benefit Your Horse Business

Media Release - Monday April 20

Of all the recent Government Covid-19 initiatives recently announced, it is generally thought that the JobKeeper payment for employers is only available to profitable horse businesses that have established employees.

If you thought this was the case, read on, upon review of the recently announced JobKeeper legislation, I have some pleasant surprises for you.

Below I will work through the four common business structures and explain that it is possible for business owners that operate as sole traders or through trusts, partnerships and companies, to be eligible for JobKeeper even if their businesses are currently in losses and/or they aren’t being paid wages.

JobKeeper payment – quick overview

A JobKeeper payment is a minimum payment ($1,500 per fortnight) the Government will pay to eligible businesses (defined below) to ensure they are able to keep their eligible employees (defined below) employed by them during this Covid-19 period.

The first payment will be received by employers from the ATO in the first week of May 2020 and will be backdated to be payable from the scheme commencement of 30 March 2020. Payments under JobKeeper can be received up to 27 September 2020.

Eligible employers

All businesses who meet the turnover tests below can now register their interest with the ATO to receive the JobKeeper payment for their employees.

Update to “Turnover tests” for employers

All businesses (including sole traders) can now register their interest to receive the JobKeeper payments for their employees (or themselves if sole traders) if they meet the various turnover tests, the most applicable test to the horse industry is that their turnover has been reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month).

Since our original release on JobKeeper a few weeks ago, the ATO has given more details as to how to apply the “turnover test”. This a crucial consideration for employers and is noted below.

How to calculate a fall in turnover for the first fortnight starting 30 March 2020

To work out your fall in turnover, you can compare either:

GST turnover for March 2020 with GST turnover for March 2019
projected GST turnover for April 2020 with GST turnover for April 2019
projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.

How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier.

If you work out that you qualify for the JobKeeper payments for the first fortnight because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover in following months. However, you will have ongoing monthly reporting requirements. More information will be provided soon.

The ATO also has the discretion to set out alternative tests that can establish your eligibility when turnover periods are not appropriately comparable (for example, if your business has been in operation less than a year). We will provide more information soon about alternative tests.

Eligible employees

Eligible employers will be able to receive and pay the JobKeeper payments to various employee categories, including, but not limited to:

Employees who were employed by you as employees as at 1 March 2020;
Employees currently employed by you (including those stood down or re-hired);
Employees who are full-time, part-time, or long-term casuals (to get the payment for a casual employee, they must have been employed by you on a regular basis for longer than 12 months as at 1 March 2020); and
Employees who are not in receipt of a JobKeeper Payment from another employer.

Special eligibility for horse business structures with no employees

Presuming the above eligibility conditions for employers and employees are satisfied, note below how a “nominated” employee for the following common business structures are eligible to receive JobKeeper.

Sole traders

The proprietor will be eligible if they do not receive JobKeeper from another source.

Another reminder…for verification purposes, businesses without employees, such as a sole trader:

will need to provide an ABN for their business;
nominate an individual to receive the payment;
provide that individual’s Tax File Number; and
provide a declaration as to the recent business activity of that business.

Sole traders are easily the most common horse structures and, as such, it is worth sharing that if you are also employed on a wage and would like to receive JobKeeper as a sole trader, rather than through your employer, you can nominate yourself as the “eligible business participant” under the business participation rules and give appropriate notice to the ATO. In this scenario, your employer cannot nominate you for JobKeeper payments.

Partnerships

A single partner in a partnership can be nominated. This single partner must not be receiving JobKeeper from another source.

Trusts

A single individual beneficiary of a trust can be nominated to receive JobKeeper payments. This individual beneficiary must not be receiving JobKeeper from another source.

The beneficiaries of a trust are outlined and defined within its trust deed.

Companies

A single director or shareholder of a company can be nominated. These businesses will also receive JobKeeper payments for their other eligible employees.

This single director must not be receiving JobKeeper from another source.

These initiatives are a step forward, but it is noted by accounting bodies, such as CPA Australia, that they have limitations in ensuring equitable access to JobKeeper within trust, partnership, and company structures. They will recommend to Government that the ‘business participant’ test be extended to all actively engaged persons in trusts, partnerships and companies.

For more details on JobKeeper, please refer to our recent release titled “JobKeeper subsidy for businesses and employees” on the Carrazzo blog at www.carrazzo.com.au

PAUL CARRAZZO CA & MARIA COLEMAN CA

CARRAZZO CONSULTING PTY LTD