The JobKeeper Payment Scheme has many intricacies and complexities. This is particularly true for not-for-profit entities, universities and religious institutions who are subject to additional rules and considerations in relation to the scheme.
As most readers would be aware, the JobKeeper Payment (JKP) scheme has been a major focus for all pockets of Australia since its announcement on 30 March 2020. Under this scheme, employers who have suffered a prescribed downturn in turnover are able to access a wage subsidy of $1,500 per eligible employee per fortnight for a maximum of six months to assist entities to retain staff.
We have provided summaries and updates on the JKP scheme via our recent special update (which provided access to TaxBanter’s detailed blog on the JKP scheme) and last months’ article.
The purpose of this article is to highlight some of the key considerations unique to not-for-profit entities, universities and religious institutions. However, it is not intended to be an in-depth analysis of the JobKeeper Scheme.
In order for an employer to be eligible for the JKP scheme, there are a number of eligibility requirements that they must satisfy. One key requirement is that on 1 March 2020, the entity met any of three conditions:
- it carried on business in Australia, or;
- it was a NFP that pursued its objectives principally in Australia; or
- it was a DGR that was endorsed either as a public fund, or for a public fund it operated, under the Overseas Aid Gift Deductibility Scheme (DGR item 9.1.1) or for developed country disaster relief (DGR item 9.1.2).
Accordingly, NFPs can qualify as eligible employers for JKP purposes. Importantly, there is no requirement for a NFP to also be an ACNC-registered charity to be eligible for the JKP scheme. However, any NFP established after 1 March 2020 will not be eligible for the JKP scheme.
Charities and calculating the decline in turnover
As mentioned above, there is no requirement for a NFP to be an ACNC-registered charity in order to access the JKP scheme. However, there are a number of aspects of the JKP scheme that apply only to such charities.
For example, one of the key eligibility requirements for employers to access the JKP scheme is that they must have suffered a specified downturn in GST turnover based on a comparison of the projected GST turnover for the relevant turnover test period (either a specified month or quarter) and the current GST turnover for the equivalent period in 2019. The specified downturn in GST turnover depends on the size and type of entity, as follows:
- 15% – for ACNC-registered charities other than schools and universities (specifically, entities that are Table A and Table B providers within the meaning of the Higher Education Support Act 2003);
- 50% – for other employers with aggregated turnover of greater than $1 billion;
- 30% – for all other employers.
Additionally, while there are several broad modifications to the definition of both projected and current GST turnover for JKP purposes, there are also a few modifications that are only relevant for ACNC-registered charities, including:
- An ACNC-registered charity that is a DGR must include gifts in its GST turnover (unless the gift is from an associate) regardless of whether the gift is tax deductible to the donor or not. In this instance, an ACNC-registered charity will be a DGR for JKP purposes even if it is not endorsed as a DGR as a whole, but operates a fund, authority or institution endorsed as a DGR.
- Non-DGR ACNC-registered charities must include gifts of money, property with a market value of more than $5,000 or listed shares in its turnover, unless the gift is from an associate.
- An ACNC-registered charity (other than a relevant university or school) can elect to exclude a supply it makes from its GST turnover calculation if the consideration for the supply is provided by an Australian government agency, a local government body, the United Nations, or an agency of the United Nations (i.e. government grants). This is an irrevocable election. For charities that have enrolled for the JKP scheme on or before 13 June 2020, the election can be provided by 20 June 2020. If the charity enrols for the scheme after 13 June 2020, the election must be given to the ATO within seven days of enrolment. Please note, the ATO has confirmed (discussed in an accompanying article) that an ACNC-registered charity cannot exclude from its GST turnover any payments received for providing NDIS services. This is on the basis that such payments are considered to be made from the NDIS participant’s funds, even if an NDIS participant selects the NDIS to manage their plan and pay the charity.
- A relevant university (i.e. a Table A or Table B provider) are required to include in their GST turnover amounts received under the Higher Education Support Act 2003 or the Australian Research Council Act 2001.
Employees funded by government grants
One of the changes to the JKP scheme rules (the Rules) was the introduction of the requirement for an employer to notify all ‘relevant employees’ that the employer had elected to participate in the JKP scheme and provide details of how the employee could agree to be nominated as an eligible employee. This notification must occur within seven days of the employer electing to participate.
However, this is subject to a carve-out for ACNC-registered charities who have elected to exclude government grants from their turnover. For such entities, employees whose wages are fully funded by the excluded government grants are not considered relevant employees. Accordingly, the employer is not required to seek JKP in relation to those employees and is not required to provide notification to them.
This is a choice the charity makes – if the charity does choose to receive JKP for these employees, then it must follow the same notification requirements as for other employees.
Turnover test for universities
As mentioned above, universities that are Table A and Table B providers within the meaning of the Higher Education Support Act are not able to access the lower decline in turnover test threshold that an ACNC-registered charity would otherwise apply.
In addition, unlike other entities whose turnover test periods are months or quarters (based on the entity’s choice), Table A providers are subject to a different turnover test period for the purposes of the decline in turnover test. Specifically, such universities are required to compare their GST turnovers for the period 1 January 2020 to 30 June 2020 against 1 January 2019 to 30 June 2019. In other words, unlike other entities, universities are required to test their turnover over a six month period.
Originally, both Table A and Table providers were to be subject to this six month turnover period – however this was changed as part of the Treasurer’s amendments registered on 22 May 2020.
What about religious institutions?
Under the original Rules, there were no special rules in relation to the treatment of religious institutions for JKP purposes. Accordingly, such institutions could only claim JKP in relation to any eligible employees (assuming the institution satisfied the other eligibility criteria).
However, the Rules were amended to extend to entitle a religious institution to a JKP for eligible religious practitioners (subject to the entity qualifying as a religious institution and satisfying the other eligibility requirements).
In addition to the eligibility criteria that apply to other employers, in order for a religious institution to be eligible for the JKP for its religious practitioners, it must also have been a registered religious institution (i.e. an ACNC-registered charity registered under the sub-type ‘advancing religion’) on 12 March 2020 and in the fortnight for which it is seeking the JKP.
In essence, for an individual to qualify as an eligible religious practitioner of a religious institution, they must:
- not be employed by the religious institution;
- be a minister of religion or a full-time member of a religious order and undertake activities in pursuit of their vocation as a member of the religious institution – the individual must satisfy this requirement both as at 1 March 2020 and for the fortnight being claimed;
- be remunerated by the religious institution in one or more of the following ways: a payment for undertaking activities in pursuit of their vocation as a religious practitioner and as a member of the religious institution; the provision of a fringe benefit; the provision of a benefit that is exempt form fringe benefits tax;
- as at 1 March 2020 be aged at least 18 (or were 16/17 and independent or not undertaking full-time study) and be an Australian resident (as per section 7 of the Social Security Act) or an Australian tax resident and the holder of a special category (Subclass 444) visa;
- not be in receipt of government parental leave or Dad and Partner Pay;
- not be currently totally incapacitated for work and receiving workers’ compensation payments in respect of their total incapacity to work;
- not be an employee of another entity (other than as a casual employee);
- provide the religious institution with a signed JKP nomination form (this is a different form to the one filled in by eligible employees); and
- not have provided anyone else with a JKP nomination form.
As can be seen above, the JKP scheme, whilst beneficial for many employers and entities, needs to be considered carefully and closely as there are many intricacies and complexities, including for NFP entities, universities and religious institutions.
This article provides a general summary of the subject covered and cannot be relied upon in relation to any specific instance. It is not intended to be, nor should it be relied upon as, a substitute for professional advice. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use.