The Government is providing vital support for not-for-profits (NFPs) to withstand the economic impacts of the Coronavirus
The JobKeeper Payment will provide a wage subsidy to eligible employers and the self-employed, who have experienced a decline in turnover as a result of the Coronavirus. NFPs (including charities) are eligible to apply for the Scheme. The JobKeeper Payment will help to offset the cost of ongoing employees and will encourage employers to maintain a connection with employees that have been stood down. Under this Scheme, employers impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged to receive the JobKeeper Payment.
NFPs (excluding charities) will be eligible for the JobKeeper Payment if, at the time of applying:
- they have an aggregated turnover of less than $1 billion (for income tax purposes) and they estimate their GST turnover has fallen or will likely fall by 30 per cent or more; or
- they have an aggregated turnover of $1 billion or more (for income tax purposes) and they estimate their GST turnover has fallen or will fall by 50 per cent or more.
Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) will be eligible for the subsidy if they estimate their turnover has or will likely fall by 15 per cent or more relative to a comparable period. This lower turnover decline test does not apply to universities and non-government schools that are registered charities, who will remain subject to the turnover decline tests set out above for other not-for-profits.
Employing charities (excluding universities and non-government schools) registered with the Australian Charities and Not-for-profits Commission (ACNC) can elect to exclude government revenue (including revenue from the United Nations and its agencies) from the turnover test. This change would maintain the 15 per cent turnover test for these charities but will allow them to use either their total turnover or turnover excluding government revenue for the purposes of assessing eligibility for the JobKeeper Payment.
Registered religious organisations, that meet the turnover test, will be able to receive a JobKeeper Payment for each eligible religious practitioner (with the exception of those that are students only) for which they are responsible under the tax law.
The Australian Government and its agencies, State and Territory governments and their agencies, foreign governments and their agencies, local governments and wholly-owned corporations of these bodies are not eligible for the JobKeeper Payment.
To establish that a not-for profit has faced or is likely to face the relevant fall in turnover, most would be expected to establish that their turnover has or will likely fall in the relevant month or quarter relative to their turnover in the corresponding period a year earlier. Turnover is generally calculated as it is for GST purposes, and is reported on Business Activity Statements, with some modifications to ensure it can be applied appropriately to individual entities in respect of the periods being tested by the JobKeeper rules. It includes all taxable supplies and all GST free supplies but not input taxed supplies. For consistency, NFPs 2 who do not report through a Business Activity Statement are required to use the same rules for calculating their turnover.
For registered charities, they may also include donations they have received or are likely to receive in their turnover for the purpose of determining if they have been adversely affected.
Where a not-for-profit was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established, were scaling up, or their turnover is typically highly variable), the Tax Commissioner has discretion to set out alternative tests that would establish eligibility in specific circumstances.
NFPs that have had a liquidator appointed are not eligible for this payment.
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 systemic basis for at least the previous 12 months as at 1 March 2020 and who are not the permanent employee of another employer. To be eligible, an employee must be an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder. The employee must also be an Australian tax resident as at 1 March 2020. Employees receiving Parental Leave Pay from Services Australia are not eligible for the JobKeeper Payment. However, employees on parental leave from their employer will be eligible.
Where a charity has employees that are fully funded from government revenue and the charity meets the decline in turnover test by excluding that revenue, the charity may choose not to nominate those employees.
Eligible employers who have stood down their employees before the commencement of this scheme will be able to participate. Employees that are re-engaged by a NFP that was their employer on 1 March 2020 will be eligible.
Where an employee is accessing support though Services Australia and the employer will be eligible for the JobKeeper Payment, the employee should advise Services Australia of their change in circumstances online at my.gov.au or by telephone.
To participate in the Scheme, employers must:
- Register an intention to apply on the ATO website and assess that they have or will likely experience the required turnover decline.
- Provide information to the ATO on eligible employees. This includes information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired).
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). Employees who receive $1,500 per fortnight or more from their employer will continue to receive their regular income according to their prevailing workplace arrangements. For employees that have been receiving less than this amount, the employer will now need to pay them, at a minimum, $1,500 per fortnight before tax.
- Notify all eligible employees that they are receiving the JobKeeper Payment.
- Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.
Employees will receive a notification from their employer that they are receiving the JobKeeper Payment. The majority of employees will need to do nothing further.
Employees in the following circumstances will have additional obligations:
- Employees that have multiple employers must notify the employer that is their primary employer.
- Employees that are not Australian citizens must notify their employer of their visa status, to allow their employer to determine if they are an eligible employee.
- Employees that are currently in receipt of, or have applied for, an income support payment must advise Services Australia of their new income.
The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May. Businesses will be able to register their interest in participating in the JobKeeper Payment from 30 March 2020 on the ATO website.
How can we help?
If you need assistance with the Jobkeeper Payment or other tax advice for your Not For Profit or Charity, please feel free to give us a call so that we can discuss in more detail.