The ATO has updated its webpage on the JobKeeper eligibility to include further details for business owners who are not employees of their businesses. Some of this guidance is welcome news and displays some flexibility but there is a glaring omission that will impact many businesses and effectively excludes common business structures and will disadvantage their business owners.

A business is eligible for the JobKeeper payment if: –

• It carried on a business on 1 March 2020; and
• It satisfies the turnover reduction test; and
• Had an ABN on 12 March 2020; and
• It is not a not-for-profit organisation; and
• It has lodged its 2019 tax return or a Business Activity Statement for any period after 1 July 2018 by 12 March 2020.

The guidance confirms that only one payment will be received for business owners and that the payment will be made to the business rather than directly to the eligible business owner (noting that this will be the individual for a sole trader business). Pleasingly there is no requirements for eligible businesses to pay any wages or drawings of $1,500 per fortnight upfront to be eligible for the payment nor is there a requirement for the business owner to need to be registered on Single Touch Payroll and receive a wage. In effect the payment received by the business will be assessable income and the business can choose to spend this money as it wishes.

The only problem with these rules is that the payments must be made on behalf of an eligible business participant who must not be employed by the entity, must be actively engaged in the business, must not be receiving a JobKeeper payment as an employee of another employer or business owner of another business and who must be either a sole trader, partner in a partnership, adult beneficiary of a trust or shareholder or director in the company.

It is this last requirement that is an issue. Many common business structures involve two independent parties in business and they will be excluded from being eligible for the payment (if they are not employees) based on their business structure which has been set up for asset protection and tax minimisation purposes. Common examples are a partnership with family or discretionary trusts (rather than individuals) as the partners or unit trusts with family or discretionary trusts as the unitholders.

Intense lobbying is now being undertaken by many professional associations to ask for this guidance to be extended to allow for such structures to be eligible. The Treasurer has the authority to make changes to the rules at any time so there is hope. However at this stage we are only able to wait.

The same rules for eligible businesses in applying for registration for this payment. The business owner must complete a JobKeeper Employee Nomination Notice and the business must apply through their tax agent or on their Business Portal from 20 April (enrolments need to be made by the end of April).

If you have any queries regarding this payment or need assistance in registering, please do not hesitate to contact us.