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Managing cash flow when claiming JobKeeper

Last updated: 22 May 2020

The JobKeeper Payment is designed to help businesses that have experienced a financial downturn during the COVID-19 crisis to continue paying their employees. Once the situation returns to normal, having staff still on the books means businesses will be able to get back up and running quickly, with staff they know and trust. However, with employee wages needing to be paid in advance of receiving the JobKeeper Payment from the Australian Taxation Office (ATO), many businesses are wondering how to fund this when they are unable to generate revenue.

How does the JobKeeper Payment subsidise wages?

The JobKeeper Payment is a reimbursement or partial reimbursement to employers for wages they have paid to their employees.

If employers wish to apply for the JobKeeper Payment, they must first have paid their employees for each JobKeeper fortnight they plan to claim for. The first two eligible fortnights are 30 March to 12 April and 13 April to 26 April. They must make two fortnightly payments of at least $1,500 per fortnight (before tax), or one payment of at least $3,000 for the month, before 8 May, to each listed employee.

If your business is assessed as eligible by the ATO to receive the JobKeeper Payment, you will be reimbursed by the ATO from 4 May.

As of 24 April, the time to enrol for the initial JobKeeper periods, was extended from 30 April 2020 until 31 May 2020.

If you enrol by 31 May you will still be able to claim for the fortnights in April and May, provided you meet all the eligibility requirements for each of those fortnights. This includes having paid your employees by the appropriate date for each fortnight.

You can enrol and claim for JobKeeper earlier if you choose. For example, you can enrol by the end of April to claim JobKeeper payments for the two fortnights in April.

You will need to submit a declaration of turnover and other details to the ATO to reconfirm eligibility each month while your business is enrolled for JobKeeper payments.

Read JobKeeper Payment: key questions answered for more information about eligibility, important application steps to follow to receive the first round of payments, and reporting requirements to keep receiving the payments.

What if you have no funds to pay wages?

Many small businesses that have reduced or completely stopped operations since the onset of the COVID-19 crisis are experiencing cash flow issues. Without their usual revenue, they may not have cash at hand to pay wages in advance, before being reimbursed by the ATO if considered eligible for JobKeeper Payments.

If employers wish to access these payments, they need to find a source of funding to pay employees, before 8 May to receive JobKeeper Payments for the two pay fortnights in April. The issue may be more acute for businesses with many casual or part-time staff who usually earn less than $750 per week before tax, as these employees must be paid the full JobKeeper entitlement of $1,500 per fortnight.

Here are some options business can explore to access funds they need to pay employees during COVID-19:

  1. Speak to your financial lender to obtain a loan or line of credit to cover your expenses. The JobKeeper Payment will always be made a month in arrears.

    Most Australian banks have agreed to prioritise applications from businesses needing funding to bridge the gap until the first JobKeeper Payments are made in May. Each bank has set up a dedicate hotline to manage the applications from businesses and will bring JobKeeper related applications to the front of the queue. The contacts for each bank are:

    ANZ - 1800 571 123
    NAB JobKeeper Helpline - 1800 562 533
    Westpac JobKeeper Helpline - 1300 731 073
    Commonwealth Bank - 13 26 07
    St George - 1300 730 196
    Bank SA - 1300 669 472
    Bank of Melbourne - 1300 784 873
     
  2. The Federal Government has created an SME Guarantee Scheme to help banks and non-bank lenders provide eligible small businesses with access to up to $250,000 in unsecured funding, with repayments not required for six months.
     
  3. Look to defer other costs such as loan repayments and fees and charges to your bank, or to consolidate loans to save interest, by accessing your bank’s hardship teams.
     
  4. Ensure you are well informed of conditions relating to the various stimulus packages and whether you qualify, so you can make adjustments once initial payments start to flow through to you.

More information

For more information on dealing with the impact of coronavirus, including a recap of the federal, state and local government stimulus/support initiatives for small business owners, visit: smallbusiness.wa.gov.au/coronavirus.

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