Unpacking the JobKeeper Payment Rules

Federal Parliament has now passed laws giving effect to the Morrison Government’s historic $130 billion wage subsidy scheme, which will deliver fortnightly payments of $1,500 to an estimated six million workers affected by the COVID-19 pandemic. 

The package passed both houses of parliament with Labor support, after the Coalition rebuffed calls to expand eligibility to one million short-term casuals and to temporary visa workers.


Late Thursday night, we saw the release of the actual statutory Rules setting out the eligibility criteria and reporting obligations to be administered by the Commissioner of Tax. 

Our initial review of the Rules is that the guidelines as to eligibility generally remain consistent with the details as outlined in our earlier update of 7 April 2020. However, the Rules now introduce the level of detail that an employer must consider in determining their eligibility, and the practical processes that they will need to undertake in order to receive the payments.

The Rules impose arduous obligations and strict timeframes in which to comply, and we anticipate that this will pose an administrative burden onto some employers, who will need to ensure they have robust systems in place, in order to meet the reporting and documentation requirements on a timely basis.


Given the highly compressed timeframe toward the finalisation of the Rules and the ATO registration process, in order to receive the first JobKeeper payment employers need to:


An employee must provide their employer with written notification confirming that they meet the eligibility requirements at 1 March 2020 and that they agree to participate in the scheme.

Eligible casuals must also attest that they are not claiming the JobKeeper payment in respect of any other employer.

Australians returning home or employees seconded to Australia may not qualify

To be eligible, an employee must generally reside in Australia and be an Australian citizen or permanent visa holder, i.e. Australian residents for tax purposes. As such, employees that are non-residents or temporary residents for Australian tax purposes will not be eligible for the payments.

It should be noted however, that certain special protected visa holders (limited) and New Zealanders who are in Australia on a subclass 444 visa, who are Australian tax residents will also be eligible.

Eligibility is also open to those Australian employees temporarily working overseas for an Australian based business if they still permanently reside in Australia and qualify as an Australian tax resident.

Contractor or employee? The distinction continues to be important

The JobKeeper payments will only apply to those individuals considered to be employees, rather than contractors. The distinction between independent contractor and employee will continue to be an important factor in the working relationship. Contractors who are sole traders may be able to claim JobKeeper under the business participation provisions.


What will be the administrative load?

Employers will need to notify the Commissioner prior to the end of every fortnight that they wish to receive the JobKeeper payments. It appears that the payroll software service providers are amending their systems to assist in this regard. But it will entail prompt training of your in-house payroll officers so they are abreast of this new law so they can accurately monitor the program correctly.

For those businesses operating in Government forced shut down industries such as retail and hospitality, this onerous obligation combined with the upfront funding of employee wages will likely act as a deterrent to proceed with participation in the scheme. Where such businesses do not anticipate sufficient future cash inflows, due consideration will need to be given to the nature and the extent of future revenue derived by these impacted businesses.

Standalone eligible entities will need to consider and establish the appropriate basis for reporting their projected turnover by:

  • preparing robust cashflow projections;
  • identifying the correct methodology for determining turnover; and
  • thoroughly documenting your position to support your claims.
Turnover test only on entry

It has now been made clear by the Rules that the decline in turnover test will be a single satisfaction test on entry into the scheme.

Businesses will be required to ascertain the appropriate turnover methodology to project their future revenue to substantiate their best guess of forecasted decline in revenue at the point of entry.

For example, is the appropriate methodology for your business based on:

  • sales or services in pre-existing contracts or order?
  • agreed billing timeframes? or
  • work in progress or contracts of service?

Notably you are required to make a reasonable prediction and only need to demonstrate that you will satisfy the decline in turnover once. It won’t necessarily mean that you will lose your entitlement retrospectively if you end up having a lesser turnover decline than originally forecasted. But the onus will be on you to show robust evidence and sound use of assumptions supporting your application at the time.

The Commissioner will expect that consideration has been given to the facts and circumstances of each business. It may well be that your business will have a delayed impact and comparing predicted April 2020 to actual April 2019 won’t suggest a decline in turnover.  Instead, you can consider your projected June 2020 quarter turnover to the actual turnover from the June 2019 quarter.

Ongoing turnover disclosures

Employers will then need to provide actual and projected GST turnover information to the Commissioner each month. Without suitable revenue reporting systems and timely processes in place, this requirement may prove onerous and likely result in some businesses opting out of the scheme.

It is worth noting ongoing reporting obligations will not be used to test eligibility or verify projections (as this is tested only once), and nor is it intended to verify the accuracy of projections made by entities. It is instead an information gathering exercise that will allow the government to assess the economic impact of the Coronavirus on a monthly basis across Australia.

Decline in turnover test a once only test but retesting available!

The Rules provide that the requisite decline in turnover is assessed and met for eligibility entering the scheme. However, those employers whose turnover has not yet been sufficiently affected, can test in later months to determine their eligibility.

Relief for commercial tenants is linked to the scheme

Whilst the above points highlight why some employers may choose to opt out of the scheme, those employers wishing to take advantage of the Government’s commercial rent relief measures need to be aware that the mandatory code of conduct for commercial tenancies applies to those tenants that are eligible for the JobKeeper Payment scheme and it is expected that these entities will need to demonstrate their eligibility to access the rent relief.

One in all in

The JobKeeper scheme requires an employer to actively seek to participate in the scheme, however an employer cannot pick and choose which eligible employees will participate in the scheme and all eligible employees that agree to nominate for the scheme, are in.

Employer opt out rights

Given the administrative burden and the likely initial cash flow implications, employers may be reluctant or simply not able to participate in the scheme.  Each employer will need to weigh up the financial and commercial factors at play when making this decision.

The JobKeeper scheme is not mandatory and employers are required to opt-in to the scheme. Currently, no obligation appears to exist under the JobKeeper Rules in which employers are required to inform current or recently stood down employees that they will not be participating in the scheme. 

Although an employer does not need to consult with or obtain the consent from its eligible employees under the scheme, if it chooses to not participate we strongly recommend that you obtain legal employment advice as to the implications under your relevant employment agreements and awards, particularly where you have stood employees down or modified their working arrangements under the new JobKeeper stand down provisions under the Fair Work Act.

Restructure relief is currently limited to employees

It appears the concession afforded to employees under which they will be deemed to have continuity of employment where the entity operating the business has changed recently, has not been extended to the turnover test.  In the absence of any further concession, those businesses that have recently undergone restructuring will not have the necessary comparative data to demonstrate satisfaction of the turnover test.  

We suspect this is an anomaly that we hope will be addressed. Perhaps these impacted entities can use the ‘alternative decline in turnover test’ where they have access to the previous owner’s financial records to satisfy this obligation.

Commissioner’s discretion may be limited

It is expected that there will be a range of entities that do not satisfy the turnover test and while the Rules provide for this by introducing an ‘alternative decline in turnover test’, this test will apply to classes of entities and not on a case by case basis.  Based on this, the Commissioner’s discretion in granting relief does not appear to extend to an entity’s particular facts and as such, be considerably narrower than previously set out by Treasury. 

The alternative tests are to be legislated and as such there is currently limited guidance on whether these measures will apply to businesses such as junior mining or exploration companies that do not yet have any business turnover, but that may still be affected by the economic fallout from COVID-19. The Explanatory Statement to the Rules provides some examples to which this alternative test could be applied, but it is currently a case of watch this space until this legislative guidance is released.

Do you need to revisit your centralised payroll functions?

The scheme proceeds on the basis that it is a particular entity, and not a group, which is entitled to a JobKeeper payment, and further, an entity can only be entitled to the JobKeeper payment if it is the employer of the particular individual. 

It is therefore anticipated that those groups that use a centralised employment entity to employ and pay staff on behalf of the other group entities may not meet the required decline in turnover test.

Flexibility in payment type but how will it be treated for tax?

Employers must assess fortnightly whether they have paid the requisite amount i.e. $1,500 pre-tax to each eligible employee. Amounts paid are not limited to salary and wages and may include commissions, bonus or allowances, amounts withheld by the employer for PAYG withholding purposes and amounts made under a salary sacrifice arrangement.  Where an employer’s regular pay cycle is monthly, the payments in that pay cycle must be allocated on a reasonable basis when applying this test.

Payments will be taxable income for the employee and as such the employer must withhold PAYG income tax.  At this stage, the WA State Government has not finalised its position on whether the payment will be subject to payroll tax and workers’ compensation insurance purposes.

Business participation

Further to our comments in Tuesday’s Update  7 April 2020 regarding unpaid owner managed and family employees, the Rules confirm that the JobKeeper payments will apply to such entities under the business participant provisions, but further clarifies that the following entities will not be eligible to receive the JobKeeper payments:

  • Unit trusts with non-individual unitholders such as family trusts; and
  • Companies with non-individual shareholders again such as family trusts.

In the latter case, these companies may be able to rely on the director provisions that allow for one director to receive the payment.

Such businesses are only entitled to receive the JobKeeper payment in relation to one nominated eligible participant.  Similarly, an individual can only create an entitlement for one entity and must not have been nominated by another employer. 

It is worth noting Treasury has inserted an integrity rule for business participants in the scheme that restricts the payments to participants of active businesses only.  We will be interested to watch out for further clarification by the Commissioner as to whether this will extend to all Landlord businesses. We will provide more details regarding this new measure in our updates to follow.

Overpayments and entitlement

The new law provides rules for overpayments, including the application of interest and the requirement to repay amounts, with joint and several liability rules also introduced, where for example an employee may have made a false or misleading statement to an employer.

Furthermore, the Rules make it clear that just because the Commissioner pays an entity a payment does not mean the entity is entitled to it, therefore ensuring the door to recovery is kept well open. It is expected that ATO audit activity will be increased over the coming periods to ensure compliance with the Rules.

No records – No payment

Employers are warned that pre-payment and post-payment record keeping requirements exist and must be met.  Where an employer does not keep the correct records for the required amount of time (5 years), they may be taken to be ineligible to receive the payments and will likely be required repay the amount plus interest.

Serious penalties for contrived schemes

The legislation also makes clear that anyone who enters or carries out a scheme for the sole or dominant purpose of obtaining a COVID-19 payment will face a wide range of administrative and criminal sanctions, including up to 10 years’ imprisonment.


To facilitate the introduction of the JobKeeper Payment program combined with the immediate need for many employers to manage their workforce obligations in these unprecedented times, changes have also been made to the Fair Work Act. These changes aim to provide employers with a level of flexibility over the coming 6 month period with a view to retaining their workforce for a longer term.

For those employers that are eligible and participate in the JobKeeper Payment program, they will be afforded protection within the Fair Work Act to modify the working arrangements of their employees over the 6 month period to which the JobKeeper program will operate, by enabling them to make Jobkeeper Stand Down Directions to their employees who are in receipt of JobKeeper payments.

In brief, an employer will have the ability to:

  • Modify the usual workdays of an employee to be less than normal.
  • Reduce the usual work hours of an employee.
  • Make temporary or partial stand down orders to an employee (no work at all).
  • Direct the employee to perform other duties or at a different location, where safe to do so.
  • Request an employee to take paid annual leave, so long as it does not reduce an employee’s accrued entitlements to less than 2 weeks.
  • Request an employee to take twice as much annual leave at half pay.

The employer must ensure that it is necessary to make the direction, in order to continue the employment of the employee(s) and must be reasonable in the circumstances.

The amendments require an employer to undertake a consultation process with the employee, and generally must provide notice in writing of at least 3 days to the employee and must maintain written record of such consultation.

In addition, the employer must ensure that wage conditions such as maintaining the same hourly base rate of pay applies, as if the direction had not been made.

An employee that is subject to a JobKeeper stand down direction, will still be entitled to accrue normal leave entitlements as if the direction had not been given, and any period under which a direction applies (including a formal stand down) continues to be counted as service.  It is noted that this may prove to be an added disincentive for certain impacted employers to take up the JobKeeper Scheme.

An employee subject to a direction, may request the employer the ability to engage in reasonable secondary employment, training or development, which the employer must similarly consider and not unreasonably refuse.

More information with regard to these changes is available at the Fair Work Ombudsman site.


  • We can assist with assessing eligibility for the JobKeeper Payment, including cashflow forecasting and preparation of the program application.
  • We can conduct independent reviews on the first round of reporting and claims to ensure accurate and within the Rules of eligibility.
  • We can prepare submissions to the Tax Commissioner to apply discretion regarding eligibility.

This newsletter is current as of 10 April 2020, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Please contact us to discuss.

Please contact us to discuss. Cooper Partners is committed to providing general advice to our clients at no charge as part of our commitment to assist you through this period.