Coronavirus Economic Response Package (Payments and Benefits) Rules 2020

The Rules reach four populations.

Employers carrying on a business in Australia at 1 March 2020, who suffered a decline in turnover, are the central population for JobKeeper. They include sole traders, partnerships, trusts, and companies, plus non-profit bodies and certain deductible gift recipients operating public funds covered by item 9.1.1 or 9.1.2 of the table in subsection 30-80(1) of the Income Tax Assessment Act 1997.

Employees are reached through the eligible employee test in section 9. Critically, the 1 March 2020 reference date was supplemented by the 1 July 2020 reference date for fortnights from August 2020 onward; previously ineligible new starters became eligible.

Business participants (sole traders, partners, adult beneficiaries of trusts, shareholders or directors of companies) are reached through Division 3, with the integrity hook in section 11(6) requiring an ABN on 12 March 2020 (or a later time allowed by the Commissioner).

Religious institutions and their religious practitioners are reached through Division 3A of Part 2.

Employers wishing to claim the JobMaker hiring credit are reached through Part 3, and must hold an ABN, be registered for PAYG withholding, and meet the integrity criteria in section 28.

Insolvency practitioners and administrators are practically reached because JobKeeper payments to entities in administration generated debt-to-Commonwealth issues that needed orders under section 447A of the Corporations Act 2001 (the Federal Court considered this in the Virgin Australia administration in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717).

For an employer claiming JobKeeper for a paid employee, the obligations are:

• Qualify under section 7 (carrying on a business in Australia at 1 March 2020 and meeting the decline in turnover test under sections 8 or 8A; for fortnights from 28 September 2020 also meeting the section 8B actual decline in turnover test).
• Identify eligible employees under section 9 and obtain a nomination notice from each.
• Meet the wage condition in section 10 in respect of each eligible employee for each jobkeeper fortnight (this is a hard pay-first rule in the fortnight).
• Notify the Commissioner in the approved form before the relevant deadline (the integrity time-limit hooks live in section 11 and parallel sections for employee entitlement).
• Provide monthly turnover reporting under section 16.
• For fortnights from 28 September 2020, notify which rate (higher or lower) applies under section 12AA.

For an entity claiming JobKeeper for a business participant, the additional obligations include having an ABN at 12 March 2020 (or a later time allowed by the Commissioner under section 11(6)), and identifying the eligible business participant under section 12.

For an employer claiming JobMaker, the obligations are:

• Qualify under section 28 (carrying on a business with an ABN, registered for PAYG withholding, and current with income tax and GST obligations).
• Avoid disqualification under section 29 (notably, JobKeeper recipients are excluded for the same period; sovereign entities and Australian government agencies are excluded; consolidated group entities other than the head company are excluded).
• Identify eligible additional employees under section 30, and demonstrate a headcount increase under section 31 and a payroll increase under section 32.
• Notify the Commissioner in the approved form for each jobmaker period.

The Commissioner of Taxation administers both schemes under the parent Act. Within the Rules, the principal discretions include:

• The discretion under section 11(6) to allow a later time than 12 March 2020 by which an entity must have had an ABN for business participant entitlement. The Full Federal Court in Commissioner of Taxation v Apted held that the parenthetical qualification "or a later time allowed by the Commissioner" is the source of an incidental discretion, rather than an administrative satisfaction-based criterion.
• The discretion under section 8 (and the alternative tests determined by the Commissioner under subsection 8(6)) to set alternative decline in turnover tests where the basic test is not appropriate.
• The discretion under section 9A and section 13 (and parallel provisions) about the amount of jobkeeper payment payable in particular cases.

The parent Act provides the integrity machinery (notably section 19 contrived schemes and section 20 overpayment recovery). Note 3 to section 8 expressly cross-refers to section 19 of the Act for "contrived schemes".

The Rules do not set offences or penalties of their own; those sit in the parent Act and in the general taxation administration regime. Recovery of overpayments runs through the parent Act. Where there has been a contrived scheme to obtain a jobkeeper or jobmaker payment, the parent Act's integrity provisions apply, alongside the general anti-avoidance provisions in Division 165 of the GST Act and Part IVA of the Income Tax Assessment Act 1936 where applicable.

Administrative review of decisions sits with the Administrative Appeals Tribunal (now its successor) and on appeal to the Federal Court under section 44 of the Administrative Appeals Tribunal Act 1975, as applied in Apted.

• JobKeeper started on 30 March 2020 and ended on 28 March 2021.
• JobMaker started on 7 October 2020 and ends on 6 October 2022.
• Reference dates for eligible employees: 1 March 2020 (initial) and 1 July 2020 (later).
• ABN reference date for business participants: 12 March 2020 (or a later time allowed by the Commissioner under section 11(6)).
• Two-tier rates from 28 September 2020 onwards, with the section 12AA rate notification.
• Actual decline in turnover test from 28 September 2020 onwards, with quarter-by-quarter testing under section 8B.
• Monthly turnover reporting under section 16.
• JobMaker payments at the end of each 3-month jobmaker period.

The Rules sit on top of the parent Act and rest heavily on imported tax-law definitions. Section 4(2) imports definitions from the Income Tax Assessment Act 1997. The decline in turnover test imports the GST turnover concepts from the GST Act. The wage condition under section 10 imports section 12-35 of Schedule 1 to the Taxation Administration Act 1953 (PAYG withholding) and the salary sacrifice arrangement concept from the Superannuation Guarantee (Administration) Act 1992. Eligibility tests for 16 and 17 year olds reach into section 1067A of the Social Security Act 1991 (independence) and the same Act's full-time study definition. The ABN concept used in section 11(6) is sourced from the A New Tax System (Australian Business Number) Act 1999 via the ITAA 1997 definitional bridge. Approved child care services and approved providers track the A New Tax System (Family Assistance) (Administration) Act 1999. Constitutional underpinnings for JobMaker include paragraph 51(xxix) (external affairs, supporting the ILO Convention No. 122 and the ICESCR), paragraph 51(xxiiiA) (social services power for kinds of payments that are benefits), and the nationhood power. The Rules also interact with Part 5.3A of the Corporations Act 2001 in the insolvency context, as Strawbridge demonstrated in respect of administrators' personal liability under section 443A.

• Section 11(6) is a hard cliff for business participants. The ABN must have existed on 12 March 2020 unless the Commissioner allows a later time. The Apted decision opens the door for the Commissioner (and on review, the Tribunal) to exercise that discretion in cases of late reactivation, but the discretion is not unfettered and the entity carries the burden of showing why a later time should be allowed.
• The wage condition in section 10 has to be met before the Commissioner can pay. This is a forward-pay rule in the fortnight, not a reimbursement, even though the payment to the entity is ex post. A failure to pay wages on time defeats the entire claim for that employee for that fortnight.
• The 1 March 2020 versus 1 July 2020 reference dates for eligible employees were set up sequentially. Employers needed to nominate again for new starters who became eligible from August 2020 onwards; missing the nomination defeats the claim.
• The two-tier rate (higher and lower) from 28 September 2020 turns on hours actively worked in a relevant reference period; getting the rate wrong creates an overpayment exposure recoverable under the parent Act.
• The actual decline in turnover test (section 8B) from 28 September 2020 is a separate condition added on top of the section 8 test. An entity that satisfied the section 8 test on a projected basis but failed on actual turnover for the relevant quarter could lose entitlement for that fortnight.
• For JobMaker, the headcount increase (section 31) and payroll increase (section 32) tests are conjunctive and quarter-specific. Hiring an additional employee but reducing payroll elsewhere in the same jobmaker period can defeat the credit.
• Section 19 of the parent Act applies to contrived schemes; arrangements to qualify (or to retain a higher rate) that are artificial face a real exposure to recoupment.
• The Rules are administered under taxation administration framework, including objection and review rights; the Apted decision confirms that decisions under section 11 are reviewable by the Tribunal and on appeal under section 44 of the Administrative Appeals Tribunal Act 1975.

A sole trader cancelled their ABN at retirement, then resumed business in late 2019 without reactivating. They applied for JobKeeper as an eligible business participant in April 2020. Section 11(6) requires an ABN on 12 March 2020 or a later time allowed by the Commissioner. On the Apted analysis, the Commissioner has an incidental discretion to allow a later time; properly framed, the entity can ask the Commissioner for the discretion to be exercised, and on review the Tribunal can stand in the Commissioner's shoes (section 43 of the Administrative Appeals Tribunal Act 1975).

A small business satisfied the basic decline in turnover test in April 2020 on a projected GST turnover basis. From 28 September 2020 it had to also satisfy the section 8B actual decline in turnover test for the relevant quarter. The September-quarter test failed; entitlement for fortnights commencing on or after 28 September 2020 stops, even though the original section 8 test was met.

A registered religious institution paid stipends to ministers active in the institution on 1 July 2020. Provided it qualifies under section 7 and meets the section 9A or 12B requirements relevant to religious practitioners, it can be entitled to a jobkeeper payment for those practitioners for the relevant fortnights, with the same Commissioner-administered timing.

An entity entered voluntary administration in April 2020 and continued to pay staff out of administration funds. The administrators sought, and obtained, orders under section 447A of the Corporations Act 2001 limiting their personal liability under section 443A in respect of debts to the Commonwealth arising from JobKeeper payments. The Federal Court considered the issue in the Virgin Australia administration in Strawbridge (No 2).

A business that received JobKeeper payments for the same quarter as a JobMaker claim is disqualified from JobMaker under section 29; the two schemes do not stack within the same period.