You have been paying your Team to keep them financially stable and are looking to get reimbursed ($1,500 per employee per fortnight) under the Federal Government’s Stimulus package.
For an employee stood down entirely, the payment will be worth $1,308 per fortnight after tax ($1,500 less $192 PAYG withholding; assuming claim of the tax-free threshold and no HECS debt etc).
This payment will be a challenge to manage for many payroll systems – but not for Xero!
But there is an SGC trap that comes with the JobKeeper payment that you must be wary of…
… particularly, where there is no requirement to pay SGC in relation to part of the payment to the employee.
Let’s look at three examples where SGC obligations change:
- An employee currently earning $2,000 per fortnight and kept in that job by the employer. The employer gets the payment of $1,500 per fortnight and uses it to subsidise the employee’s wage. However, SGC must be paid on the full $2,000 paid to the employee.
- An employee currently earning $1,000 per fortnight and kept in that job by the employer. The employer gets the payment of $1,500 per fortnight and must pass it on in full (ie the employee receives $1,500). SGC must continue to be paid on $1,000, but not on the additional $500.
- An employee currently stood down earning $nil per fortnight. The employer gets the payment of $1,500 per fortnight and must pass it on in full (ie the employee receives $1,500). No SGC need be paid.
JobKeeper is a welcome initiative for small business owners to help them keep their team together so that business can hit the ground running when we get back to normal trading conditions. However, it also comes with a degree of complexity, significant penalties and interest charges that hang around for five years after this scheme expires.
Make sure you get us to deal with it for you.
Have a great day!