JobKeeper subsidies for sole traders: How do I know if I’m eligible, and how much money will I get?

Since this article was first published the JobKeeper legislation has passed parliament and new information is available.

Read our latest explainer about JobKeeper eligibility here.

Read our latest explainer about how JobKeeper will work here.

Sole traders and self-employed people will be among the six million Australians who will gain access to the federal government’s $130 billion wage subsidy program. 

On Monday, Prime Minister Scott Morrison and Treasurer Josh Frydenberg revealed details of the new JobKeeper payments, which will start flowing to eligible employers and employees from the first week of May. 

Sole traders and self-employed people are included in this group of eligible employers, in a move that has been welcomed by small business and family enterprise ombudsman Kate Carnell, who said the payments will play a “crucial role” in supporting small businesses affected by the COVID-19 pandemic. 

“Crucially, it will allow small businesses to continue trading and paying their staff,” she said in a statement. 

“It will also ensure small businesses stay connected with their staff, who have been stood down, so they can re-engage their team when trading conditions return to normal.

“The government is taking unprecedented steps to shield small businesses from the devastating impacts of COVID-19 and this JobKeeper package gives the sector the hope that they need.”

So how will the payments work for sole traders? SmartCompany has pulled together some answers to your questions.

Are sole traders and self-employed people eligible for JobKeeper payments?

Yes. Sole traders that have seen the revenue from their business affected by COVID-19 are eligible to receive the JobKeeper payments. 

What if I am a sole trader with no employees, can I still get the JobKeeper payment?

Yes, both sole traders who employ people, and those who do not, can access these payments. 

Provided they meet the eligibility criteria (see below), sole traders will receive $1,500 per fortnight, before tax, per eligible employee, which can also include themselves if they are self-employed. 

The payments will be for a maximum of six months, starting from March 30. Sole traders will receive the first payments in the first week of May, with amounts backdated to March 30. 

What is the eligibility criteria?

Sole traders will be eligible for the JobKeeper payments if their business has a turnover of less than $1 billion and their turnover is expected to be reduced by more than 30% as a result of COVID-19, compared to “a comparable period a year ago, of at least a month”. 

Businesses that have annual turnover of $1 billion or more, and which expect their turnover to be reduced by 50% or more, will also be eligible for the payments. 

For sole traders that have employees, payments will be available for each eligible employee that was on their books as of March 1, 2020, and continues to be “engaged” by the sole trader. This includes part-time and stood-down employees. Casual employees will also be eligible if they have been with the same employer on a regular basis for at least 12 months. 

To be eligible, employees must also be an Australian citizen, or they must hold a visa that would allow them to access other government payments, such as the JobSeeker payment. 

What information do I need to provide to the ATO?

Sole traders will need to elect to participate in the JobKeeper payment scheme by applying through the Australian Taxation Office.

Business owners will need to provide an ABN, nominate an individual’s tax file number, and provide a declaration of recent business activity. Payments will then be made to the individual’s bank account.

Business owners will then need to continue to provide information to the ATO each month, including the number of eligible employees within the business. 

How will I receive the payments?

Sole traders will receive the payments directly from the ATO, monthly, in arrears. 

If the sole trader is receiving payments for eligible employees, they will then need to use the payments to pay their employees’ wages. 

If an employee usually receives more than $1,500 per fortnight before tax, they will continue to do so, and the JobKeeper payment would be used by the employer to subsidise these amounts. If the employee usually receives less than the JobKeeper payment, they must be paid $1,500 per fortnight, before tax, at a minimum. Employees that have been stood down will also need to be paid $1,500 per fortnight, before tax, as a minimum. 

Do the JobKeeper payments include superannuation?

No. According to Treasury, it will be up to individual employers whether they chose to pay superannuation on additional wages available through the JobKeeper payments. 

Can I still access other government payments, such as the JobSeeker payment and rent assistance, if I receive the JobKeeper payment?

The government has temporarily opened up the eligibility criteria for the JobSeeker payment so that more sole traders can access those payments. However, accessing the JobKeeper payment as a non-employing sole trader may change your eligibility for other government payments, as the income from the JobKeeper payment will need to be reported as such. 

What happens if I am a sole trader who previously had employees but I had to let them go because of COVID-19?

If you stood down workers before yesterday’s announcement, and they worked for your business as of March 1, you will still be able to access the JobKeeper payments for them, provided you and the employees meet the other eligibility criteria.  

What about if I operate my business through a partnership or a trust?

According to a statement from Treasurer Josh Frydenberg on Monday, Australian businesses that are structured as companies, partnerships, trusts and sole traders are all eligible for the scheme, as are not-for-profit entities and charities. 

How do I register to receive the Job Keeper payments?

You can register an expression of interest on the ATO website here. 

The ATO is advising businesses they do not need to call the tax office to register. 

What other assistance is available to sole traders that are being affected by COVID-19?

Sole traders may also be able to access other financial assistance through the federal government’s previously announced stimulus packages. This includes access to JobSeeker payments, and an extended instant asset write-off scheme. 

Sole traders that have seen a reduction in their income may also be able to access their superannuation, and sole traders are also included in the list of eligible businesses for the government’s coronavirus SME guarantee scheme for loans.

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