JobKeeper changes came into effect this week. What do they mean for sole traders impacted by COVID-19?
Big changes are happening to the Federal Government coronavirus support payment JobKeeper from this week.
The payment rates have been reduced, and it will work on a two-tiered system instead of a flat rate.
Sole traders are particularly worried about whether they’ll still be eligible for any payments.
You asked us how it will impact sole traders. Here’s what we found.
So, what’s changed this week?
The biggest change is do to with the payment rate — it has been reduced from a flat $1,500 per fortnight rate to $1,200 only for full-time workers.
Full-time means people who worked more than 20 hours per week during the reference periods of either February and/or June of this year.
The payment rate will be further reduced to $1,000 per fortnight from January.
A new two-tiered system also came into effect this week for part-time workers.
Those who worked fewer than 20 hours per week during the reference period will receive half of what they’re currently receiving, or just $750 per fortnight.
As a sole trader, am I still eligible for JobKeeper?
Yep, you and your employees may still be eligible, as long as you meet all the conditions.
From this week, the payments will be targeted to sole traders who have been most significantly impacted by COVID-19.
Firstly, you must prove you’re a sole trader (you own your business and are not an employee of your business) and meet all these requirements:
• On March 1, 2020, you carried on a business in Australia
• You had an ABN on March 12, 2020 and lodged either a 2018-19 income tax return or a recent activity statement or GST return
• You are actively engaged in your business (as at March 1, 2020 and for the fortnight you’re claiming)
• You were a sole trader at March 1, 2020 and for the fortnight you are claiming
• You are at least 18 years old and an Australian resident (or a resident for income tax purposes)
• You are not receiving Government parental leave
• You are not receiving workers’ compensation
• You are not an employee of another entity
• You have given the ATO a JobKeeper nomination notice through myGov
Secondly, from this week, you will have to demonstrate you’ve suffered a decline in turnover using actual GST turnover rather than projected turnover.
“The sole trader must have had a 30 per cent revenue drop in the September quarter compared to last year,” said small business accountant with Newmarket Accounts, Sally Xia.
She says sole traders will be able to show this through their Business Activity Statements (BAS).
Will my staff be eligible?
Your employees should still be eligible, as long as the business meets all the conditions.
However, any new staff won’t be.
Only staff that were actively employed before July 1 will be now be eligible for payments.
What if I didn’t work full-time in February — is there an alternative test?
There’s a lot of talk this week about proving you were working — or ‘actively engaged’ in government-speak.
That just means you were doing these sorts of activities — providing services or selling goods, managing record keeping and accounts, drawing up business plans, or negotiating contracts with suppliers.
So, to get the higher rate, you must have been working 20 hours or more per week during the reference period (which is February or June 2020 for most businesses).
You will also have to notify the ATO through your business monthly declaration.
If you don’t meet both those requirements, you will be entitled to the lower payment.
But, if you were sick or fighting fires, or for some reason February or June is not a fair comparison period with other months, you can potentially use an alternative period.
The alternative period is the most recent 29-day period which ended before March 1, 2020 (so January for instance).
It also has to be representative of a typical month for your business.
The Commission of Taxation also has discretion to set out alternative tests.
Is it too late for me to enrol?
The Government has extended the JobKeeper scheme for a further six months until March 28, 2021.
Obviously, you’ll still need to prove your turnover is down 30 per cent for the relevant quarters and that you meet the other eligibility conditions.
What other help is available?
If you’re having trouble with cash flow, you might be able to access working capital under the Coronavirus SME Guarantee Scheme.
A temporary Government guarantee of 50 per cent is being provided to lenders willing to give credit to sole traders.
For more help: