The JobKeeper scheme is well underway and payments are flowing through to medico businesses.  It may now be time for medico businesses to reassess their risk level.  It is also timely to be reminded of the various ongoing requirements and deadlines to help reduce the chances of either missing out on payments your business is entitled to, or having to repay funds in the future due to inaccurate eligibility testing or record keeping.

The decline in turnover test

As the various updates to the JobKeeper rules have been released, the issue of the turnover test has become more complex. However, medico businesses who are satisfied that they met the requisite decline in turnover for a previous period need not retest their eligibility, provided that the projections used were reasonable and robust. Certainly, keeping records of the assumptions behind those projections at the time they’re made is a critically important measure.

In relation to the turnover test, the Australian Taxation Office (ATO) has repeatedly said they will generally not seek to compare “actuals” and scrutinise projections in the light of hindsight. The main areas of concern for the ATO are contrived schemes designed to make a business eligible for the payment.

The ATO has the power to “claw back” the JobKeeper payments plus interest and penalties where the turnover projections were not reasonable, or a scheme was entered into. The ATO is expected to take a hard-line approach in these situations.

Where a medical business has calculated its GST turnover using a cash or accruals basis that’s appropriate and consistent, and a reasonable projection was made in good faith given information available at the time, the ATO has indicated that they will use limited compliance resources in these situations.

It’s also worth noting that although many medico businesses may find they did not meet the test from the start of the scheme, for March 2020 or April 2020, they might be eligible for June 2020 or July 2020 for example. Medico businesses should therefore keep a watch on their potential eligibility each month to September 2020, under the ordinary decline in turnover test and the alternative tests.

Completing the monthly declarations on time

An important step in the JobKeeper registration process is completing the monthly declaration. This is required for each month starting April 2020 and must be completed within 14 days following the end of each month up to and including the month of September 2020.

Failure to complete these monthly declarations on time will lead to employers being ineligible to receive the payment for that month. This could leave medico businesses who’ve already topped up their eligible employees out of pocket.

Medico businesses should also remember to remain consistent in terms of the method used when reporting their actual and projected turnover each month.

Further, it is essential that medico businesses update their employees’ eligibility either through JobKeeper enabled Single Touch Payroll (STP) software each pay run or on the monthly declaration form available via ATO online services through myGov to reconfirm their eligibility.

What happens if my employees become ineligible?

If an employee fails to remain eligible for the payment (for example, their employment terminates) the most important factor to consider is the last fortnight they were eligible under the rules. For example if the current JobKeeper fortnight ends 7 June 2020 and the employee ceased employment during that fortnight, then that fortnight becomes the last fortnight they are eligible for (provided they were paid at least $1,500 for that fortnight). In the case of an employee becoming ineligible for another reason (for example they started receiving paid parental leave) then they are ineligible for the fortnight the change in eligibility occurs (not the next fortnight).

Recently, changes to the JobKeeper eligibility requirements mean that some employees aged 16 and 17 that are not independent or are studying full time may no longer be eligible. Therefore the last fortnight a payment can be claimed for these employees is the fortnight ending 10 May 2020.

As the rules are subject to change, it is essential medico businesses review employee eligibility at least each month as a “set and forget” approach may lead to potentially costly errors and risk.

Key takeaways

Largely, the biggest risk in the JobKeeper scheme is missing out on payments you are entitled to, whether that be through not exploring all avenues of qualifying and testing or missing critical monthly deadlines. Medico businesses need to be vigilant around changing employee eligibility requirements along with effective record keeping to lower the risk of getting it wrong. Reviewing JobKeeper compliance (or eligibility) should be a regular occurrence.

If you would like to discuss the JobKeeper requirements and risks, please contact Kristy Baxter or Angela Stavropoulos on [email protected] or (07) 3023 1300.