A sole traders guide to JobKeeper

Unlike other entities, an eligible self-employed business which could be a sole trader or freelancer (that has an ABN) receives the JobKeeper payment themselves as they are both the business entity and an eligible business participant. Whereas, other entities receive the JobKeeper payment directly. 

What is a sole trader? 

The Australian Tax Office (ATO) defines a sole trader as: 

• an individual running a business
• one owner that controls and manages the business
• legally responsible for all aspects of the business, including debts and losses that can't be shared with other individuals, and
• able to employ workers, except themselves.

A sole trader is responsible for paying any worker's and their own superannuation.

What entities are eligible for the JobKeeper payment?

An entity, including a sole trader or freelancer, is eligible for the JobKeeper payment if they meet the following requirements:

• on 1 March 2020, it carried on a business in Australia
• it satisfies the fall in GST turnover test for the relevant period
• as at 12 March 2020 the entity had:
  • an ABN on 12 March 2020, and
  • lodged, on or before 12 March 2020, at least one of the following:
    • a 2018–19 income tax return showing that 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 that it made a taxable, GST-free or input-taxed sale.

How to determine a fall in turnover?

The fall in turnover calculation is based on GST turnover and required only once at the time of enrolling for the JobKeeper payment. Then, each month the entities’ current and projected turnover is to be provided.

A sole trading business will need to confirm in a relevant period it has had, or is likely to have, a:

• 30% fall in turnover (for an aggregated turnover of $1 billion or less)
• 50% fall in turnover (for an aggregated turnover of more than $1 billion), or
• 15% fall in turnover (for ACNC-registered charities other than universities and schools).

How to calculate a fall in turnover for the first fortnight starting 30 March 2020

To work out a fall in turnover, a sole trader can compare either calculate:

• GST turnover for March 2020 with GST turnover for March 2019
• projected GST turnover for April 2020 with GST turnover for April 2019
• projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.

A fall in GST turnover is not dependent on whether you report a quarterly or monthly BAS, although if it is easier, that can be done, and it applies even if a sole trader is not registered for GST. 

It is important to note that if a sole trader or freelancer qualifies for JobKeeper payments for the first fortnight (it meets the applicable fall in turnover), they are eligible and are only required to submit current and projected turnover each month. 

The Commissioner of Taxation has determined alternative tests that can establish eligibility for some cases when turnover periods are not appropriately comparable. No alternative tests are required if an entity meets the basic test. 

Key JobKeeper Payment dates

1. Enrol for the JobKeeper payment from 20 April 2020.

2. Identify any employees from 4 May 2020 onwards.

3. By 8 May 2020, pay your employees $1,500 for each fortnight to claim JobKeeper payments for April. 

4. 31 May 2020 is the final date to enrol to claim for JobKeeper fortnights in April. You can get stated here. 

5. On an ongoing monthly basis, reconfirm eligibility, providing current and projected turnover.

What entities are not eligible for the JobKeeper Payment?

Entities not eligible for the JobKeeper payment for the following reasons: 

• if the Major Bank Levy was imposed on the entity or a member of its consolidated group for any quarter before 1 March 2020
• is a not for profit organisation
• is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997)
• is a local governing body
• is wholly owned by an Australian government agency or local governing body
• is a sovereign entity
• is a company in liquidation
• is an individual who has entered bankruptcy
• is a freelancer without an ABN. 

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