Who gets taxed, who come out better off?


The government has released three different stimulus payments: the $550 Coronavirus Supplement that you get if you’re on JobSeeker, the one-off $750 Economic Support Payment, and the $1,500 JobKeeper wage subsidy.

If you’ve been wondering about the tax rules around your JobSeeker or JobKeeper payments, H&R Block’s Mark Chapman breaks it down.

JobKeeper payments

JobKeeper is an ambitious wage subsidy scheme to provide payments of $1,500 per fortnight to millions of Australians.

Payments will be made via businesses impacted by the Coronavirus. These businesses will be able to access a subsidy from the Government to continue paying their employees. 

Affected employers will be able to claim a taxable fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months which must then be passed on to employees.

The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May. 

Payments will be made to the employer monthly in arrears by the ATO. These will then be paid on to eligible employees with PAYG tax deducted in the normal way.

Note: A person receiving the JobKeeper payment cannot also receive the JobSeeker payment for those who have lost their jobs, announced several days before. People who have already applied for JobSeeker can withdraw and shift to JobKeeper payments if they are re-engaged by their employer.

Who is eligible to benefit?

You are eligible if you: 

  • are currently employed by an eligible employer (including if you have been stood down or re-hired); 

  • were employed by the employer at 1 March 2020;

  • are full-time, part-time, or a long-term casual (a casual employed on a regular basis for longer than 12 months as at 1 March 2020). Casuals employed for less than 12 months are currently excluded; 

  • are at least 16 years of age; 

  • are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder. New Zealand citizens will qualify but other temporary visa holders are currently excluded; and 

  • are not in receipt of a JobKeeper Payment from another employer. You can only receive the payment from one employer so if you have multiple jobs, you will need to nominate one employer as the one to make the JobKeeper payments to you.

Which employers are eligible?

Employers will be eligible for the subsidy if: 

  • their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or

  • their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and

  • the business is not subject to the Major Bank Levy (so, employees of the big banks are not eligible). 

For businesses that are not able to demonstrate that their turnover is down 30% compared to a comparable period a year ago (for instance, new businesses that did not exist a year ago), the Commissioner of Taxation will have the discretion to consider additional information that the business can provide to establish that they have been significantly affected by the impacts of the Coronavirus.

Qualifying businesses must register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline. They will also need to provide information to the ATO on their eligible employees, including the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired).

What will I get?

Qualifying recipients will be able to receive this payment in a number of different ways.

  • If you ordinarily receive $1,500 or more in income per fortnight before tax, you will continue to receive your regular income. The JobKeeper Payments will subsidise part or all of your income.

  • If you ordinarily receive less than $1,500 in income per fortnight before tax, your employer must pay you, at a minimum, $1,500 per fortnight, before tax. This means your normal income will rise to $1,500 per fortnight.

  • If you have been stood down, your employer must pay you, at a minimum, $1,500 per fortnight, before tax. 

  • If you were employed on 1 March 2020, subsequently ceased employment and then were re-engaged by the same eligible employer, you will receive, at a minimum, $1,500 per fortnight, before tax. 

Your employer must continue to pay the superannuation guarantee on your regular wages but it is up to your employer whether they pay superannuation on additional JobKeeper payments.

Your employer will notify you that you will receive the JobKeeper Payment if you are eligible.

I’m self-employed. Do I qualify?

Businesses without employees, such as the self-employed, can take part in the scheme and will need to register with the ATO. 

If you meet the criteria, you will need to:

  • provide an ABN for your business;

  • nominate yourself to receive the payment

  • provide your Tax File Number and provide a declaration that your turnover has dropped by 30% compared to a comparable period (say, this time last year). 

You will need to provide a monthly update to the ATO to declare their continued eligibility for the payments.

Payments of $1,500 per fortnight will be made monthly to your bank account.

Businesses that will potentially qualify for payments include contractors, self-employed tradies and workers in the “gig” economy, such as ride-sharing drivers.

Jobseeker payments

What is it?

The government is to pay a supplement of $550 per fortnight, effectively doubling the current payment, for new and existing social security recipients from 27 April 2020. These amounts are taxable. 

This Coronavirus supplement will be paid for 6 months to both existing and new recipients of the JobSeeker Payment, Sickness Allowance, Youth Allowance for jobseekers, Parenting Payment Partnered, Parenting Payment Single, Partner Allowance, Sickness Allowance and the Farm Household Allowance. 

Eligible recipients of these payments will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.

Who is eligible?

Access to Jobseeker has also been expanded. From 27 April 2020, the eligibility and qualification criteria have been expanded for 6 months to include:

  • a sole trader, self-employed, a casual or contract worker whose income has reduced

  • a permanent employee who has been stood down or lost their job; 

  • people caring for someone infected or in isolation as a result of contact with Coronavirus. 

  • students who receive Youth Allowance (Student), AUSTUDY and ABSTUDY (Living Allowance)

Some eligibility conditions have been waived temporarily, including the:

From 27 April 2020, the requirement for an Employment Separation Certificate, proof of rental arrangements and verification of relationship status has been temporarily removed. 

The partner income test has been relaxed to ensure that an eligible person can receive the JobSeeker Payment providing their partner earns less than $3,068 per fortnight, around $79,762 per annum, about double the previous figure.

Remember, if you’re also eligible for the JobKeeper payment, you can’t claim both!

How do I claim?

To claim the supplement online, people who do not already deal with Services Australia will need to:

Applicants will need to make an initial declaration about their identity, residency status, income and that they have been made redundant, or had their hours reduced (including to zero) as a result of the economic downturn due to coronavirus.

In the case of sole traders and the self-employed, applicants will make a declaration that their business has been suspended or had turnover reduced significantly.

Which is better?

As a general comment, the JobKeeper payment is preferable:

  • The amount you’ll receive is generally higher

  • The fact that you’re receiving the JobKeeper payment means that you are still in work and in a better place to ride out the crisis.

Mark Chapman is the director of tax communications at H&R Block.

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