The JobKeeper Payment: Are you a Sole Trader or Other Entity?
Updated: Oct 8
Something we have not gone into too much detail on yet is the question of registering for the JobKeeper payment as a sole trader or through another entity (partnership, trust or company) where there might not be any employees.
So, if you are a sole trader, partnership, trust or company, and you do not have any employees, can you register for the JobKeeper payment? The answer is a resounding YES, provided you meet the remaining eligibility criteria.
Let us look at this in more detail.
As a sole trader or other entity without employees, you can still be eligible for the JobKeeper Payments as an Eligible Business Participant if you:
Have a non-employee individual who is actively engaged in the operation of the business. This person is referred to as the Eligible Business Participant; and
Meet the other relevant eligibility requirements.
A limit applies of one $1,500 JobKeeper payment per fortnight for the Eligible Business Participant. This covers one person in a partnership, one beneficiary of a trust, or one director of a company (NB: if you are in receipt of wages as a director, you would qualify for normal registration as an eligible employee).
A sole trader, being an individual operating a business in their own name under their own ABN, is by definition both a Business Entity and Eligible Business Participant and will receive the JobKeeper Payment directly.
Here is the important information you NEED TO KNOW right now…
Before you enrol: Work Out Your Eligibility
You need to be both an Eligible Business Entity and have an Eligible Business Participant.
Eligible Business Entity
Your entity is eligible if:
- on 1 March 2020, it carried on a business in Australia.
- it satisfies the fall in turnover test for the relevant period.
- it satisfied certain conditions at 12 March 2020, being:
it had an ABN on 12 March 2020, and
it had lodged, on or before 12 March 2020, at least one of:
a 2018–19 income tax return showing it had an amount included in its assessable income in relation to it carrying on a business, or
an activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing it made a taxable, GST-free or input-taxed sale.
The Australian Taxation Office has the discretion to give further time, but only in limited circumstances, including if you:
did not have a requirement to lodge your 2018–19 return until after 12 March 2020.
have deferred your lodgment under an extension of lodgment date the ATO initiated.
your business is included in a registered agent’s lodgment program where the lodgment due date is after 12 March 2020.
your business has an automatic ATO lodgment deferral in place if it was affected by the Australian bushfires in late 2019, and you are not registered or required to be registered for GST, so will not have lodged a BAS before 12 March 2020.
If the Business Entity and the Eligible Business Participant meet all JobKeeper eligibility requirements, other than the requirements to hold an ABN and/or provide notice to the Commissioner of income or taxable sales by 12 March 2020, you should consider applying to the Commissioner to exercise his discretion to grant further time.
Note: You cannot enrol to receive a JobKeeper payment until you are notified that the Commissioner has granted the further time requested.
Eligible Business Participant
You are an Eligible Business Participant of your entity for the fortnight if you meet ALL the following conditions:
- You are not an individual employed by your entity.
- You are:
actively engaged in the business carried on by your entity (at 1 March 2020 and for the fortnight you are claiming); or
a sole trader as at 1 March 2020 and for the fortnight you are claiming.
- As at 1 March 2020, you are both:
aged at least 18 (or over 16, not studying full-time and financially independent)
an Australian resident (within the meaning of section 7 of the Social Security Act 1991), or a resident for income tax purposes and the holder of a special category (Subclass 444) visa.
- not currently receiving government parental leave or Dad and Partner Pay.
- not currently totally incapacitated for work and receiving payments under an Australian workers’ compensation law in respect of your total incapacity to work.
- not an employee (other than a casual employee) of another entity.
- you have given the Australian Taxation Office a JobKeeper nomination notice for this entity.
- you have not previously given another entity, or the Australian Taxation Office, a JobKeeper nomination notice for another entity.
If you have employees
If you also have employees, you may also be able to claim additional JobKeeper payments of $1,500 per fortnight per eligible employee.
Please review our previous blog entries with regards to the steps required for handling your employee registrations.
Step 1: Enrol for the JobKeeper Payment
When you have worked out that your business is an Eligible Business Entity and you are an Eligible Business Participant, you need to enrol. This process is completed through the Business Portal by you, or through our Tax Agent Portal if you do not have Business Portal access.
Your business will need to enrol by 31 May 2020 in respect of claims for the JobKeeper fortnights ending in April and May 2020. Your business will also need to provide details of the Eligible Business Participant.
As a sole trader, you can nominate yourself as the Eligible Business Participant through your Business Portal or by us through our Tax Agent Portal.
Step 2: Identify and maintain your eligible employees
This process is completed after enrolment, through one of the Portals. If you have employees, you will need to identify each one by name, Tax File Number and Date of Birth (see our previous Blog for more details regarding STP-enabled software).
You will also need to know your GST Turnover for April, and your projected GST Turnover for May as part of this process.
If you are a sole trader with no employees, you can complete this process through MyGov.
Step 3: Make a business monthly declaration
Each month you need to make your claim to receive that month’s payment. You will need to declare your GST turnover for each relevant month (this is not a re-testing of your eligibility, so don’t worry if your income increases again) and also provide your projected GST turnover for the next month.
To receive the payments each month, it is very important that you remember to lodge the monthly declaration!
NOW – complete Step 1: Enrol for JobKeeper Payment
NOW – complete Step 2: Identify and maintain your eligible employees and eligible business participant
Before 31 May – you need to have completed Steps 1 & 2
Each month – complete Step 3 to claim your payment
As always, we are here to help, if you have any questions in relation to the JobKeeper process please contact our office.