JobKeeper – Remember to claim for your eligible business participant

The JobKeeper payment scheme was announced on 30 March 2020 with the objective of providing financial support to entities to assist with the impact of COVID-19. Since that time, there has been a significant amount of information released to explain the complex operation of the scheme, including Treasury Rules, Australian Tax Office (ATO) rulings and guidelines, together with amendments to the Fair Work Act 2009 to enable employers to temporarily vary work arrangements for eligible employees.

Given the overwhelming amount of information that has recently been released, businesses may inadvertently omit claiming the JobKeeper subsidy for an ‘eligible business participant’.

Who is an eligible business participant?

In addition to providing the JobKeeper subsidy to eligible employers, the scheme also enables entities to claim the subsidy in respect of a non-employee individual who is actively engaged in the operation of the business – i.e. an ‘eligible business participant’.

An eligible entity can only nominate one business participant (who is not an employee) for whom to receive JobKeeper payments. Non-profit bodies are not eligible to claim the subsidy for a business participant.

An individual will constitute an eligible business participant if the following conditions are satisfied:

• the individual is not employed by the business;
• the individual satisfies the business participation requirements (discussed below);
• the individual is at least 18 years of age, or 16 or 17 years of age and financially independent or not undertaking full-time study;
• the individual is an Australian resident within the meaning of the Social Security Act 1991 or an Australian resident for income tax purposes and the holder of a special category (Subclass 444) visa; and
•  the individual is not an eligible employee or eligible business participant of another entity.

Business participation requirements

Under the business participation requirements, the individual must be actively engaged in the operations and business activities of the entity (both at 1 March 2020 and in the JobKeeper fortnight).

The individual must also be one of the following:

• a sole trader;
• a partner in a partnership;
• an adult beneficiary of a trust; or
• a director or shareholder in a company.

Additionally, the individual must not be employed by another entity (other than on a casual basis), must not be currently receiving government parental leave or Dad and Partner Pay, or be currently totally incapacitated and receiving payments under an Australian workers’ compensation law in respect of their total incapacity to work.

The individual must provide the entity with a JobKeeper nomination notice or, in the case of a sole trader, provide the notice directly to the ATO.

Other eligibility requirements for the business entity

In order to nominate an eligible business participant, the entity must satisfy the following eligibility requirements:

• on 1 March 2020, the entity carried on a business in Australia;
• the entity satisfies the fall in turnover test (i.e. a 30% fall in turnover if its aggregated turnover is $1 billion or less, or otherwise a 50% fall in turnover);
• it had an ABN on 12 March 2020 and had lodged its 2018-19 income tax return or an activity statement which demonstrates it has derived income or made business supplies.

We make the following additional points:

• The ‘wage condition’ does not apply to eligible business participants. This means there is no requirement to pay your business participant at least $1,500 per fortnight to remain eligible to obtain the JobKeeper payment.
• It is the actual business entity, not the eligible business participant, that receives the JobKeeper payment (the exception being a sole trader). There is no requirement to pass the subsidy onto the individual.

Talk to our Tax and Wealth team to understand how the JobKeeper scheme applies to your business.