Jobkeeper Enrolment

JobKeeper Payment – For Sole Traders with No Employees

Why is One Click Tax doing this for free?

As part of our corporate responsibility, One Click Tax believes that as Australians we should try and do our bit to help wherever we can. One Click Tax has a level of insight into the legislation not available to most, and due to the relationship we have with the ATO, we believe it is only right to provide assistance to Sole-Traders for FREE. Together we can get through this and we hope you will stay a client with One Click Tax.

What is this?

The JobKeeper Payment is put in place to support the income of sole traders and maintain connection with their employees. However, for sole traders who do not employ any employees, one eligible business participant is able to receive the JobKeeper Payment.

Who is an “eligible business participant”?

This eligible business participant must:

  • Meet all other eligibility requirements.

What are the other eligibility requirements?

Your business and you are eligible if you meet the following criteria:

  • Your business’ aggregated turnover (for income tax purposes) is less than $1 billion
  • You estimate that your business’ GST turnover has fallen or will fall by 30 per cent or more
  • You had an ABN on or before 12 March 2020, and
    • either had an amount included in their assessable income for the 2018-19 year and it was included in their income tax return lodged on or before 12 March 2020, or
    • made a supply during the period 1 July 2018 to 12 March 2020 and provided this information to the Tax Commissioner on or before 12 March 2020.
  • You were actively engaged in the business
  • You are not a permanent employee of any other employer and are not entitled to another JobKeeper Payment (either a nominated business participant of another business or as an eligible employee)
  • You were aged at least 16 years of age as at 1 March 2020
  • You were a resident for Australian tax purposes on 1 March 2020
  • You were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020
  • You are not currently receiving government parental leave pay, dad and partner pay.
  • You are not currently totally incapacitated for work and receiving payments under an Australian workers’ compensation law in respect of your total incapacity to work.

How do I estimate a fall in turnover?

Your turnover has fallen or will likely fall in the relevant month or quarter (depending on their Business Activity Statement reporting period) and is compared to your turnover in a corresponding period a year earlier.

Turnover is calculated as it is for GST purposes, and is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies.

What if I was not operating this time last year or my income was very different last year?

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 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 fall in turnover but actually experience a slightly smaller fall.

How will I get this?

Payments will be made to you as the business monthly in arrears by the ATO.

Do I get this as “cash”?

Yes. This amount will be paid to you on a monthly basis.

But I am not registered for GST and/or do not need to lodge Activity Statements, am I eligible?

As of now, to be eligible, you must have lodged a Business Activity Statement, as turnover is calculated as reported on Business Activity Statements.

 

You may still be eligible for the JobKeeper Payment if they are not yet overdue and this later time is allowed by the Tax Commissioner.

When do I get this payment?

The first payment of is to be received by sole traders in the first week of May. This is for eligible sole traders for the fortnight starting on 30 March 2020. Payments will then be made monthly in arrears .

How long for will I receive this JobKeeper Payment?

The JobKeeper payment will be active for 13 weeks, starting 30th March 2020 to 27th September 2020.

How do I apply?

Your entity can enrol for the business participation entitlement from 20 April 2020 using an online form, which will be available on the ATO website.
Alternatively, you can apply through us, find out more at here.

Your entity needs to enrol by the end of April for payments in either the fortnights starting 30 March 2020 or 13 April 2020.

You will also need to provide a monthly update to the ATO to declare continued eligibility for the payments, but a re-calculation of turnover is not required.

What are the tax implications of the JobKeeper Payment?

This JobKeeper Payment is considered as assessable income and will be taxed at your respective tax rate, dependent on your total income for the year.

I am facing liquidation or have entered bankruptcy, am I still eligible?

No. If you are in liquidation of have entered bankruptcy, you are not eligible for the JobKeeper Payment.

Case Studies:

Jameela is a sole trader and operates a cupcake business. She is an Australian resident with an ABN and has been running her business since 2017. Jameela runs her business as a sole trader with no employees.

Jameela projects a fall in turnover in her cupcake business of approximately 80% in April 2020 compared with April 2019 as a result of the coronavirus.

Jameela is an eligible business participant and qualifies for the JobKeeper scheme.

Melissa is a sole trader running a florist. She does not have employees. Melissa’s business has been in operation for several years. The economic downturn due to the coronavirus has adversely affected Melissa’s business, and she expects that her business turnover will fall by more than 30 per cent compared to a typical month in 2019.

Melissa will be able to apply for the JobKeeper Payment and would receive $1,500 per fortnight before tax, paid on a monthly basis.

Boosting Cash Flow for Employers:

What is this?

The Government is providing temporary cash flow support to small and medium businesses and not-for-profit organisations that employ staff during the economic downturn associated with COVID-19 (novel coronavirus).

How will I get this?

This will be done through two sets of cash flow boosts delivered from 28 April 2020 to support employers to retain employees. The Government will provide tax-free cash flow boosts of between $20,000 and $100,000 to eligible businesses, delivered through credits in the activity statement system, when eligible businesses lodge their activity statements.

Am I eligible?

  • You have an aggregated annual turnover of less than $50 million
  • You held an ABN as on 12 March 2020.
  • You made payments to employees subject to withholding (even if the amount you withheld is zero), such as:
    • Salary and wages
    • Director fees
    • Eligible retirement or termination payments
    • Compensation payments
    • Voluntary withholding from payments to contractors.
  • You have lodged, before 12 March 2020, at least one of:
    • A 2018–19 income tax return showing that you had an amount included in your assessable income in relation to you carrying on a business.
    • An activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing that you made a taxable, GST-free or input-taxed sale.

Do I get this as cash?

No. These amounts are not cash but instead are credits to be applied to in the activity statement system, when you lodge your activity statements. However, if there is credit remaining on your Activity Statement, you will receive this amount as a refund to your account, within 14 business days.

But I am not registered for GST and/or do not need to lodge Activity Statements, am I eligible?

If you are not required to be registered for GST, special rules apply. The ATO will soon provide more information about your eligibility and how you can provide evidence that you had assessable income or made sales in the relevant periods.

For now, you do not need to do anything.

I have not lodged my Income Tax Return or BAS as they are not yet overdue, am I eligible?

Yes, you are still eligible to receive the cash flow boost as long as you lodge your 2018–19 tax return or 2018–19 annual GST return before the due date.

However, if they are overdue and you did not lodge them as of 12th March 2020, you are not eligible.

How is this calculated?

You can use our calculator here to calculate your expected Boosting Cash Flow.

When do I get this credit?

The cash flow boost will automatically be credited to your account when you lodge your activity statement for Q4 2019 and Q1 2020. .

The first credit will occur on or after 28 April 2020. Therefore, if you lodge before 28 April 2020, you will not be credited with the cash flow boost.

How do I apply?

You would need to lodge your Activity Statement for Q4 2019 after the 28th of April in order to have this credit applied to your Activity Statement.

Case Studies:

Robert has operated a small restaurant in Adelaide since 2015. He has had an ABN since then and pays wages to his chefs every week.

Robert’s income tax return for 2018–19 is not due until May 2020. However, he has lodged all his activity statements since July 2018.

Robert meets all the criteria and is eligible to receive a cash flow boost.

Carmel applied for an ABN and started a food delivery business in February 2020. She has one employee that she pays wages fortnightly.

Carmel’s business was not operating in the 2018–19 year so she has not lodged an income tax return. Because she reports GST quarterly, Carmel also has not lodged an activity statement for a tax period that ended before 12 March 2020.

Carmel has not lodged an Income Tax Return nor an Activity Statement, so she is not eligible to receive a cash flow boost.

Angela runs a small convenience store in Darwin using a trust as her business vehicle. She is the only person who works in the business. She provides for her own remuneration by making trust distributions during the year and does not pay any wages.

As Angela does not make eligible payments to employees, she is not eligible to receive the cash flow boost.

On 15 March 2020, Angela realises her business is not eligible and applies to become registered for PAYG withholding, backdated to 1 March 2020. She changes her business records to reclassify some trust distributions as wages.

Angela is still not eligible to receive the cash flow boost because she has changed the way her business operates for the purpose of receiving a cash flow boost that she was not otherwise entitled to receive.

Harry uses a tax agent to prepare his business income tax and annual GST returns. He had not lodged his 2018–19 tax return or his 2018–19 annual GST return by 12 March 2020 because his due date for these lodgements is 15 May 2020.

Harry remains eligible to receive the cash flow boost as long as he lodges his 2018–19 tax return or 2018–19 annual GST return before his due date.