Law firms run on people. Staff costs represent the largest expense and can be between 30 per cent and 60 per cent of revenue. From this perspective, the JobKeeper package is particularly significant for professional services businesses. There is a lot of money at stake for every firm with payments being offered until 27 September 2020.

As at 13 April 2020, the government has had three attempts at publishing information about eligibility criteria for businesses. Instead of finalising details, the government has handed the responsibility of detailed administration to the ATO. Each time the government has updated official information about the scheme, they have clarified some aspects and made other aspects vaguer. 

The most important aspect, the eligibility criteria, is still unclear.  “Employers … will be eligible for the subsidy if … their GST turnover has fallen or will likely fall by 30 per cent or more.” What does “will likely” mean? Is it an estimate over a month or a quarter? Presumably the ATO will let us know asap.

SUMMARY OF JOBKEEPER

The government will subside your employer’s wages payments if your firm meets eligibility criteria.

Eligible employers will receive the payment for each eligible employee that was on their books on 1 March 2020 and continues to be engaged by that employer — including full-time, part-time, long-term casuals and stood down employees. Casual employees eligible for the JobKeeper Payment are those employees who have been with their employer on a regular and systematic basis for at least the previous 12 months as at 1 March 2020.

Turnover is calculated as it is for GST purposes

The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (for example, eligibility may be established as soon as a business ceases or significantly curtails its operations). There will be some tolerance where employers, in good faith, estimate a 30 per cent or more or 50 per cent or more fall in turnover but actually experience a slightly smaller fall.

Eligible employers will be paid $1,500 per fortnight per eligible employee. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax, and employers are able to top-up the payment.

Above summarised from (version 11 April 2020):

https://treasury.gov.au/sites/default/files/2020-04/Fact_sheet_supporting_businesses_2.pdf

FAQs

Employers (including not-for-profits) will be eligible for the subsidy if their business has an aggregated turnover of less than $1 billion and estimate their GST turnover has fallen or will likely fall by 30 per cent or more.

Employers can only claim JobKeeper payment for eligible employees if they pay the $1,500 per fortnight (before tax) to each eligible employee. These payments should be made using your payroll system and reported to the ATO via Single Touch Payroll. This will support the online claim process when it is available.

The first payments by the ATO will be received by employers from the first week of May. The payments will be made by the ATO monthly in arrears.

To establish that a business has faced or is likely to face a 30 per cent or more or 50 per cent or more fall in turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or quarter (depending on the Business Activity Statement reporting period of that business) relative to their turnover in a corresponding period a year earlier.

Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (for example, because there was a large interim acquisition, they were newly established, were scaling up, or their turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (for example, eligibility may be established as soon as a business ceases or significantly curtails its operations). There will be some tolerance where employers, in good faith, estimate a 30 per cent or more or 50 per cent or more fall in turnover but actually experience a slightly smaller fall.

MY BUSINESS HAS ONLY JUST STARTED OR MY BUSINESS HAS ‘LUMPY’ INCOME. HOW CAN I SELF-ASSESS THAT MY TURNOVER HAS FALLEN?

To establish that a business has faced or is likely to face a 30 per cent or more or 50 per cent or more fall in turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or quarter (depending on the Business Activity Statement reporting period of that business) relative to their turnover in a corresponding period a year earlier.

Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (for example, because there was a large interim acquisition, they were newly established, were scaling up, or their turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.

The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (for example, eligibility may be established as soon as a business ceases or significantly curtails its operations). There will be some tolerance where employers, in good faith, estimate a 30 per cent or more or 50 per cent or more fall in turnover but actually experience a slightly smaller fall.

MY TURNOVER HAS NOT DECREASED BY 30 PER CENT THIS MONTH, BUT I BELIEVE IT WILL IN THE COMING MONTH. AM I ELIGIBLE?

You can apply for the payment if you reasonably expect that your GST turnover will fall by 30 per cent or more (or 50 per cent or more for businesses with an aggregated turnover of $1 billion or more) relative to your GST turnover in a corresponding period a year earlier. The ATO will provide guidance about self-assessment of actual and anticipated falls in turnover.

IT IS UNLIKELY THAT MY TURNOVER WILL DECREASE BY 30 PER CENT IN THE COMING MONTH, BUT CAN I APPLY LATER IF MY TURNOVER DECREASES IN ONE OF THE SUBSEQUENT MONTHS?

If a business does not meet the turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment at a later time once the turnover test has been met. In this case, the JobKeeper Payment is not backdated to the commencement of the scheme. Businesses can receive the JobKeeper Payments up to 27 September 2020.

WHAT IF I PAY MY EMPLOYEES LESS THAN $1,500 PER FORTNIGHT BEFORE TAX?

To be able to claim the JobKeeper payment for an eligible employee, that employee must be paid a minimum of $1,500 income per fortnight, before tax is withheld. If you want to claim the subsidy for an eligible employee and they have not been paid $1,500 per fortnight since 30 March 2020, employers must pay a ‘top-up’ payment to employees so that they are eligible. The ATO will provide further guidance on how this will work. The employer will be reimbursed $1,500 per fortnight for each eligible employee.

Employers cannot pay their employees less than $1,500 per fortnight and be entitled to a payment for that employee.

WILL MY EMPLOYER PAY SUPERANNUATION ON THE JOBKEEPER PAYMENT?

No superannuation guarantee payments are required to be paid on any additional payment made because of the JobKeeper Payment.

MY BUSINESS IS A PARTNERSHIP. CAN EACH PARTNER RECEIVE A JOBKEEPER PAYMENT?

No. Only one partner can be nominated to receive a JobKeeper Payment along with any eligible employees, noting a partner cannot be an employee.

CAN TRUSTS RECEIVE THE JOBKEEPER PAYMENT?

Trusts can receive the JobKeeper Payments for any eligible employees. Where beneficiaries of a trust only receive distributions, rather than being paid salary and wages for work done, one individual beneficiary (that is, not a corporate beneficiary) can be nominated to receive the JobKeeper Payment

Above summarised from (version 11 April 2020):

https://treasury.gov.au/sites/default/files/2020-04/JobKeeper_frequently_asked_questions_2.pdf