JobKeeper For Startups
JobKeeper For Startups Update
The Federal Government has extended the timeframe for JobKeeper on top of enabling additional tests for its JobKeeper Program which may increase the number of startups eligible for the program. Applications for JobKeeper is made by employers through the Australian Taxation Office.
Startups had previously been required to show a decrease in revenue compared to the last financial year which was a challenge for many in our sector as JobKeeper initially did not take account of the volatility in revenue of early-stage firms.
These changes may support startups and scaleups generating revenue to remain connected with their highly skilled employees. The changes do not apply to startups that are pre-revenue.
Associated changes may also benefit founders themselves, depending on how their company is structured and they are encouraged to review these measures closely and liaise with the ATO to register an application. These are limited improvements but can include Founders who have not been paying themselves a wage; such Founders can apply for JobKeeperas a Business Associate, however this is limited to only one per entity i.e. Two co-founders from a company who have not been drawing a wage cannot both apply for Jobkeeper.
Employers are required to notify their eligible employees that a firm intends to participate in the scheme and ask them if they agree to be nominated and receive payments from the firm as part of the scheme. These and other practical measures are explained on the ATO’s JobKeeper pages.
Changes that came into effect in August mean enrolment in the scheme is required by 31 August. JobKeeper will also introduce ‘tiered payments’ for eligible staff from 28 September and, currently, will exist in some form until 28 March 2021. The updated eligibility tests remain and allow startup firms greater confidence to apply in good faith. Note: applicants will need to maintain appropriate records to substantiate their claim
NEW ALTERNATE TESTS
To qualify, startups (firms) need to fulfil the criteria of just one category below. Apply for the one which is most relevant for you and for which you fulfil the criteria.
1. NEW STARTUPS
Startups that have commenced and generated revenue in the last 12 months may qualify for JobKeeper IF their turnover has declined by 30 per cent compared to either:
(a) Their average turnover for the life of the business, or
(b) Their average turnover for the last three months.
2. HIGH-GROWTH BUSINESSES
Where a firm has experienced an increase of turnover greater than:
(a) 50% or more in the past 12 months,
(b) 25% or more in the past six months, or
(c) 12.5% or more in the past three months,
The changes also suggest a firm may qualify for JobKeeper if their GST turnover has declined by 30 per cent compared to their average turnover for the prior three months.
3. STARTUPS WITH IRREGULAR TURNOVER
Where a firm has experienced turnover in one quarter of the last 12 months that is LESS THAN HALF their turnover in another quarter, they will qualify for JobKeeper IF their turnover has declined by 30 per cent compared to their average turnover for the last 12 months. Firms that experience cyclical turnover (e.g. seasonality) are unable to use this test.
1. ‘Turnover’ refers to GST turnover (tests still apply even if the business is not registered for GST), and may be measured either monthly or quarterly.
2. For firms with aggregated turnover of over $1 billion, a threshold of a 50 per cent turnover decrease applies, rather than 30 per cent
3. This is not legal advice and is not intended to be a substitute for the text of the legislative instrument, explanatory statement or ATO guidance. Startups are encouraged to assess their own eligibility and seek advice where necessary.
The full set of eligibility rules is available in the legislative instrument published here.
Explanatory statement with examples has been published here.