• JobKeeper Payments Scheme

The JobKeeper Payments Scheme

20 April 2020

The Federal Government JobKeeper payments scheme is a significant social welfare program to provide financial support to those impacted by COVID-19. The scheme provides eligible employers with a wage subsidy for wages paid to eligible employees during the six-month period starting on 30 March 2020. 

For employees who are working, the scheme provides a wage subsidy to the employer. For employees who are not working because they have been stood down or terminated and rehired, it provides a minimum wage for the employee and an ongoing connection with their employer. These connections will enable businesses to reactivate their operations quickly, without having to rehire employees, when the crisis is over. The JobKeeper payment to the employer is fixed at $1,500 per fortnight, per employee. The payment is also available to business participants who are not employees, and who satisfy the relevant eligibility requirements.

Importantly the scheme is voluntary. Notwithstanding an employer may satisfy the eligibility requirements, they do not have to apply for JobKeeper payments under the scheme and thus do not have to make payments to employees. However, particularly in the case where employees have been stood down or terminated, employers can expect pressure to participate in the scheme. The scheme is being administered by the Australian Taxation Office (‘ATO’), and includes stringent reporting and record keeping obligations.


There are three steps to determine eligibility for a JobKeeper payment:

  • Employer eligibility
  • Employee eligibility
  • JobKeeper payment eligibility

To assist in assessing eligibility, BDO has created flowcharts to guide employers through each of the steps.

Note - the flowcharts deal with more common scenarios and do not cover all possible cases, in particular:

  • Employers who do not satisfy the standard requirements for eligibility may nevertheless be eligible by applying to the Commissioner of Taxation to exercise various discretions which are available to create and administer the scheme rules
  • Individuals who operate a business, but who are not employees, may be eligible for JobKeeper payments under special rules for business participants
  • Employers and employees are both required to provide notifications in relation to participation under the scheme in order to be eligible

Additional information is available on the Treasury and ATO websites.

Click here for the JobKeeper flowcharts

  • Step 1: JobKeeper – Employer eligibility

  • Step 2: JobKeeper – Employee eligibility

  • Step 3: JobKeeper – Payment eligibility

Further details on the eligibility requirements can be found in BDO’s Tax Technical Updates for JobKeeper.

Employer Eligibility

The key requirement for employer eligibility is whether the employer has suffered a sufficient decline in turnover in the month or quarter test period.

The rules use two concepts of ‘turnover’ for separate purposes.

  • The employer entity will need their ‘GST turnover’ to decline by an amount which exceeds the ‘specified percentage’. GST turnover is limited to the Australian turnover of the employer and, for JobKeeper purposes, includes intra-group transactions.
  • The specified percentage is determined based on the ‘aggregated turnover’ of the entity and its affiliates. Aggregated turnover is per the income tax definition, not GST turnover, and includes the annual global turnover of all connected entities and affiliates regardless of location. The specified percentage is 30% where the ‘aggregated turnover’ of the entity and affiliates for the current or prior income year is up to A$1 billion, and 50% where it exceeds A$1 billion. 

Note the specified percentage for registered charities, excluding universities and schools, is 15%.

Where separate businesses are conducted through a single entity, and only one of those businesses is experiencing a decline in turnover, the entity may not be eligible for the JobKeeper payment as the whole entity needs to satisfy the decline in turnover test.

If an entity does not satisfy the decline in turnover test in the first month or quarter, it can re-test in a subsequent month or quarter and become eligible to JobKeeper payments from that later point in time. Once the decline in turnover test is satisfied in a particular month or quarter, this eligibility condition is satisfied and does not need to be re-tested in a later period.

The rules provide for a basic test to determine the decline in GST turnover, which in practice will use information contained in the Business Activity Statement. Refer to BDO’s Tax Technical Update for details.

There is an alternative test, which relies on the Commissioner of Taxation exercising a discretion, if the employer cannot satisfy the basic test. Examples of when an employer might not satisfy the basic test and be able to apply for eligibility under an alternative test include:

  • Newly started businesses
  • Acquisitions during the year
  • Employers who were scaling up
  • Businesses with highly variable turnover

The ATO is expected to provide guidance in relation to more common scenarios but can also make specific determinations in respect of unusual cases upon application by the employer.

Employee Eligibility

In relation to employee eligibility, the employer will need to record details of all employees as at 1 March 2020 and then assess the eligibility of each of those employees at that time and during each of the fortnights when JobKeeper payments are payable. 

The employer must receive and retain written confirmation from each employee that the employee is an eligible employee and that they agree to be nominated by the employer.

JobKeeper Payment Eligibility

In addition to satisfying the employer and employee eligibility requirements, employers must satisfy the JobKeeper payment eligibility requirements. 

One of the key requirements is that the employer has paid the employee at least $1,500 in gross remuneration before the end of the fortnight (note for the first two fortnights this requirement is satisfied provided the payments are made by the end of April). Prior to COVID-19 there was significant focus on paying employees correctly, in a large part driven by employee complaints of underpayment. While the immediate focus has moved from this to dealing with the pandemic, it is now more important than ever that employers ensure employees are being correctly assessed and paid under the JobKeeper scheme.

The ATO must be notified of all eligible employees for the first JobKeeper payment fortnight, and notified of any changes to eligible employees in subsequent fortnights. 

Reporting and Record Keeping

To ensure integrity, employers will be required to regularly report information to the ATO and retain records to evidence eligibility for JobKeeper payments. 

Treasury has already flagged that the ATO will conduct compliance and audit activities in relation to the JobKeeper scheme, with potential penalties for non-compliance.

BDO has developed a tool to assist employers record, assess and retain supporting information for the eligibility determinations.

Where BDO is tax agent for the entity, we will be able to enrol and apply for the JobKeeper payment on behalf of clients.

The information in this article does not cover all aspects of the matters discussed and it should not be taken as advice from BDO. If users of this article require specific advice in relation to their particular fact patterns they should contact their local BDO office.

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