JobKeeper Payments – The Calculation of Workers Compensation & Payroll Tax

The information and guidance on JobKeeper continues to come through in bits and pieces. But we have finally received some clarity on the JobKeeper payments and what to include in the calculation of Workers Compensation and Payroll Tax in NSW. For specific information on legislation for states and territories outside of NSW refer to the website in each state or territory.

Workers Compensation

In regards to workers compensation, NSW State Insurance Regulatory Authority (SIRA) have advised for policy and premium purposes, it has been determined that:

• JobKeeper payments made to workers who performed no work during the period to which the payment relates will be excluded from the amount of wages used to calculate premium.
• JobKeeper payments made to workers who continue to perform work (whether in their usual or a reduced or otherwise augmented capacity) will continue to be included in the amount of wages used to calculate premium.

What does this mean?

• If your business is receiving the JobKeeper allowance you only need to include in your actual wages declaration the portion paid to your worker for the hours they worked during the period in which JobKeeper was paid. The top-up portion of the allowance is not included.

Payroll Tax

As payroll tax is a state tax, each state and territory has its own payroll tax legislation with different rates and thresholds. One must be careful to ensure that you apply the correct legislation in the calculation of your payroll tax for the state or territory in which it applies.

In regards to JobKeeper, employers must pay their eligible employees a minimum of $1,500 per fortnight to receive the JobKeeper payments. The NSW Government will exempt from payroll tax any additional wages paid to employees to meet the requirements of the Job Keeper scheme as stated on the Revenue website.

What does this mean?

• Where an employee is stood down, the full $1,500 payment would be exempt from payroll tax.
• In the case of employees who have earned wages less than the amount of the JobKeeper payment, the  top up amount between the earned wage and the $1,500 payment will be exempt from payroll tax.

In both Workers Compensation and Payroll Tax, the announcements will require you to undertake additional year end reconciliation work.

If you require any assistance with the calculation of your Workers Compensation and Payroll Tax, please contact the team at HQB.

– Catherine Stojcevska

Posted 26.05.2020

This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.