Sole traders and other entities and JobKeeper scheme entitlement

The ATO has put out guidance on how sole traders and some other entities such as partnerships, trusts or companies may be entitled to the JobKeeper payment scheme.

Entitlement may be possible for an “eligible business participant” (more below), according to the ATO. The JobKeeper payment scheme may be open to entities if they:

  • have a non-employee individual who is actively engaged in the operation of the business (which it refers to as being a business participant), and
  • meets some other relevant eligibility requirements (see below).

An entity will be 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 as 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 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.

The ATO maintains that a limit of one $1,500 JobKeeper payment per fortnight applies for the eligible business participant, but that if the business has employees it may also be possible to claim additional JobKeeper payments (if they are eligible).

The entity, not the eligible business participant, receives the JobKeeper payment. The exception is a sole trader, who is both the business entity and an eligible business participant, and so receives the JobKeeper payment themselves.

Eligible business participant
Entities covered by these rules include sole traders, a partner in a partnership, an adult beneficiary of a trust, and a shareholder or director of a company.

The non-employee individual is an eligible business participant of the entity (for the in question) if they meet all of the following (as at 1 March 2020):

  • they are an individual not employed by the entity
  • they are actively engaged in the business carried on by the entity
  • they are both aged at least 16 and are 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.

They must also not be currently receiving government parental leave or dad and partner pay, and not presently be incapacitated for work and receiving workers compensation.

The ATO has further guidance specifically for sole traders, and for partnerships, trusts and companies.

Website Comments

  1. Dean
    Reply

    I think a fundamental aspect of this provision worthly of prominent note is that once the sole trader, beneficiary, partner has either full-time or part-time employment (irrespective of whether they receive JobKeeper from that employer), they are ineligible to claim JobKeeper under these provisions. Only casual employees with a sole trader business (or just sole traders with no separate employment) are eligible (sec 12(4)(b) is what specifically knocks out sole traders with full or part-time employment).

  2. Jolene
    Reply

    Does anyone have any insight into the following situation : I have a client – an Australian resident business (trust) that provides services to an overseas client and this is their only source of income for the business. Although all the business income is reportable and taxable here in Australia by the business , the business hasn’t registered for GST in the past as there has been no requirement to given that all the supplies fall outside the scope of GST as the supply of it service to its overseas client are not in connection with Australia. Does this mean that the client/ trust can’t qualify for job keeper for the business participant if the only business income it receives is income from an overseas client it supplies services for given that the definition of GST turnover excludes income for supplies not in connection with Australia ? Or will there be an alternative test or adjustment to definition of decline in “turnover” for businesses like this that have supplies that are excluded from calculation of GST turnover to calculate and assess what income they can assess and include in the calculation of decline in turnover for jobkeeper assessment as the client has suffered severely from this pandemic and their business income has ceased temporarily completely since Mid March due to COVID-19 .

  3. Smile
    Reply

    What about sole traders / companies with no employees that started in dec 2019 and who are not registered for GST?
    They have had no chance to inform ATO as they don’t lodge BAS.
    Are they going to miss out?

  4. noel
    Reply

    does anyone know how i go about adding myself as an eligible business participant after I have already enrolled my staff member as an employee ??? once the enrollment process is done for the employee, you cannot now go back and add a business participant

  5. Paul
    Reply

    I am unclear on the situation where a company has 2 directors, no other employees, actively engaged in the daily operation business generating income from a number of contracts which have been suspended, and now with no income.
    Can the company enroll for Jobkeeper and receive 2 X $1500, or is it only one director can nominate and receive the allowance into their personal bank account.
    [The second outcome would seem to disadvantage one or both directors as each has been impacted by a loss of income greater than 30%.]

    I believe the “employed” provision is a basis for enabling the company to register and receive the Jobkeeper allowance for 2.

    Clarification would be greatly appreciated

  6. Doris S N
    Reply

    Do we have to pay $1500 per fortnite to each of our employees OR $1,308 as $192 (total = $1,500) is withholding tax?
    Can somebody advise. Thanks

    Doris

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