When should I pay JobKeeper wages? ATO clarifies deadlines amid payroll confusion

The ATO says businesses are able to make JobKeeper payments for work performed in another fortnight but must comply with bi-weekly payment deadlines.

Matthew Elmas 18 May, 2020

The Australian Taxation Office (ATO) has clarified that businesses are able to make JobKeeper payments for work performed in another fortnight but must comply with bi-weekly payment deadlines.

Business owners, accountants and bookkeepers have expressed confusion about JobKeeper payment deadlines over the last week, as hundreds of thousands of firms across the country come to grips with the wage subsidy program now that payments have started to flow.

Under the JobKeeper rules, businesses must pay eligible employees a minimum $1,500 for each fortnightly period they are claiming wage subsidies for, with strict deadlines requiring firms to pass on payments by certain dates.

Businesses which don’t meet these payment deadlines, falling on the last day of any given JobKeeper fortnight, will be ineligible to receive wage subsidy payments for that period.

However, the most recent JobKeeper deadline, which fell on Sunday, May 10, caused some confusion as many businesses do not typically process payroll over the weekend, driving concern some may have inadvertently broken the rules.

Others expressed concern they typically process bi-weekly payroll on dates that fall across multiple fortnights, for example, April 20 to May 4, and May 4 to May 18, where the JobKeeper fortnights are actually April 13 to April 26 and May 11 to May 24.

But the ATO has maintained businesses do not need to adjust their existing pay cycles to comply with the JobKeeper laws, saying in a statement they aren’t worried if employees receive payroll for work performed in another fortnight.

“For weekly and fortnightly pay cycles, the wage condition will generally be satisfied when eligible employees are paid on their regular payday(s) occurring within a JobKeeper fortnight,” an ATO spokesperson said in a statement.

“It doesn’t matter if the JobKeeper fortnight was still ongoing after the payments were made, or if the payments related to work performed in another fortnight.”

David McKellar, owner of Allied Business Accountants, says JobKeeper fortnights have been causing “great confusion” for business owners and even many accountants.

But he advises businesses not to adjust their payroll cycles to match JobKeeper fortnights.

“Doing so could cause more issues and confusion,” McKellar tells SmartCompany.

“The JobKeeper fortnight is not the same as the pay period that the employee worked, rather it is a date range in which payments are made,” he says.

“All existing weekly and fortnightly pay cycles will have payment dates falling in each JobKeeper fortnight, so there is no need to change the cycle.”

Taking the earlier example. A business running a pay cycle between April 20 and May 1 would be considered wages for the April 27 to May 10 period because the payments fall in that date range, McKellar says.

“The period they worked, 20 April to 1 May is irrelevant, it is only the payment date that is a factor,” he says.

That firm’s next payroll cycle ending on May 15 would then fall into the May 11 to May 24 JobKeeper fortnight.

“Getting the payment dates correct is crucial to your eligibility for the JobKeeper payments, so if you are unsure, please seek advice from an accountant who understands the program to ensure you are processing your wages correctly,” McKellar advises.

The ATO said firms which paid workers for the JobKeeper fortnight within the most recent April 27 to May 10 period (for example, on April 30) will have satisfied the wage condition.

A business which processes payroll weekly could have split the $1,500 payment for the fortnight into two payroll cycles of $750, so long as both payroll dates fell within the April 27 to May 10 timeframe.

For businesses processing payroll on a monthly basis, the ATO said employers can allocate payment in a “reasonable manner” across JobKeeper fortnights within each month.

“[If an] eligible employee is paid monthly — the employee is paid $3,000 (before tax) on May 25. The employer allocates $1,500 each to the JobKeeper fortnights ending on May 10, and May 24,” an ATO spokesperson said about businesses with monthly payroll cycles in relation to the April 27 to May 10 and May 11 to May 24 fortnights.

Key dates for JobKeeper

The JobKeeper scheme works in dedicated “fortnights”, although businesses aren’t required to change their individual payroll cycles to bi-weekly ones, so long as they comply with the dates listed below.

JobKeeper fortnight 1: March 30 – April 12; employees must be paid by May 8.
Fortnight 2: April 13 – April 26; employees must be paid by May 8.
Fortnight 3: April 27 – May 10; employees must be paid by May 10.
Fortnight 4: May 11 – May 24; employees must be paid by May 24.
Fortnight 5: May 25 – June 7; employees must be paid by June 7.
Fortnight 6: June 8 – June 21; employees must be paid by June 21.
Fortnight 7: June 22 – July 5; employees must be paid by July 5.
Fortnight 8: July 6 – July 19; employees must be paid by July 19.
Fortnight 9: July 20 – August 2; employees must be paid by August 2.
Fortnight 10: August 3 – August 16; employees must be paid by August 16.
Fortnight 11: August 17 – August 30; employees must be paid by August 30.
Fortnight 12: August 31 – September 13; employees must be paid by September 13.
Fortnight 13: September 14 – September 27; employees must be paid by September 27.