Update: JobKeeper – No Employees

Click here for the full .pdf with examples

 

JobKeeper

The Commonwealth Government has established the JobKeeper scheme to “provide financial support to entities to assist with the impact of the Coronavirus known as COVID-19”.

The Australian Taxi Industry Association (ATIA) understands that, subject to meeting the respective eligibility criteria, JobKeeper payments may be available to support and assist:

  • taxi drivers whose businesses comprise plying a taxi for hire that they bail (i.e. as a bailee driver), lease or own;
  • taxi operators whose businesses comprise bailing or leasing taxis to self-employed taxi drivers;
  • taxi licence owners whose businesses comprise leasing taxi licences to taxi operators.
  • taxi networks whose businesses comprise facilitating the hire of taxis via booking and dispatching services.

This advice focusses specifically on entities within the taxi industry that do not have employees, namely taxi drivers, taxi operators and taxi licence owners (or holders).  In such circumstances, the JobKeeper payment becomes payable to the owner of an eligible business, depending on its structure –

  • the individual sole trader;
  • one (but only one) of the adult beneficiaries of the trust;
  • one (but only one) of the adult partners of the partnership; or
  • one (but only one) of the shareholders or directors of the company.

Eligibility Criteria – General Requirements

To be eligible, a business entity must –

  1. be carrying on a business as at 1 March 2020;
  2. satisfy the turnover threshold test (e.g. have experienced, or likely to experience a decline in turnover of more than 30%);
  3. have an ABN on 12 March 2020;
  4. have either:
    (a) included an amount in its assessable income for the 2018-19 income year (in relation to it carrying on a business); or
    (b) lodged an activity statement or GST return reporting a taxable supply in an applicable tax period commencing on or after 1 July 2018 and 
before 12 March 2020;
  1. not be a non-profit entity;
  2. enrol, and remain enrolled, for JobKeeper with the ATO and in so doing –
    (a) self-access its eligibility in good faith;
    (b) nominate only one eligible business participant; and
  1. notify the eligible business participant in writing of his/her nomination (sole traders excepted).

To be an eligible business participant, an individual must –

  1. not be employed by the entity nor be an employee of another entity;
  2. be actively engaged in the business carried on by the entity;
  3. be 16 years or older at 1 March 2020[1];
  4. be an Australian resident at 1 March 2020 –
    (a) for social security purposes; or
    (b) a Subclass 444 (Special Category) visa holder;
  5. not be a nominated recipient for JobKeeper with any other entity;
  6. not be in receipt of parental leave pay, paid day or partner pay, or Workers Compensation payments (in certain circumstances); and
  7. have given a nomination notice in writing to the entity (sole traders excepted).

Eligibility of Taxi Drivers for JobKeeper

Taxi drivers may typically meet the eligibility requirements for enrolment in JobKeeper as an eligible business participant.  Their businesses are for-profit and highly exposed to the economic downturn associated with the COVID-19 pandemic, so making the 30% (or more) decline in turnover likely to be readily demonstrable.  As taxi drivers, they are required to be registered for GST, and so must have ABNs and should have been reporting income and taxable supplies routinely through their BAS.

Whether their business operates as a sole trader, partnership, trust or company presents is of no particular relevance for taxi drivers, their active engagement in the carrying on their business is usually readily demonstrable.  Similarly, the fact that a taxi driver was carrying on his/her business at 1 March 2020 is the pertinent factor for eligibility, not how much or how little a respective taxi driver has or has not driven.

When considering enrolment in JobKeeper, taxi drivers should pay particular attention that –

  1. their business already satisfies, or is reasonably expected to satisfy, the turnover threshold (i.e. more than 30% decline); and
  2. they meet the requisite residency and/or visa status criteria for eligibility.

Eligibility of Taxi Operators for JobKeeper

Taxi operators may typically meet the eligibility requirements for enrolment in JobKeeper as an eligible business participant.  Like taxi drivers, their businesses are for-profit and highly exposed to the economic downturn associated with the COVID-19 pandemic, so making the 30% (or more) decline in turnover likely to be readily demonstrable.  As bailors of taxis to bailee taxi drivers, their businesses provide taxable supplies in their own right, and along with their respective taxi drivers, they are co-adventurers in businesses that are required to be registered for GST.  Accordingly, taxi operators in Australia operate with an ABN and should be reporting income and taxable supplies routinely through their BAS.

Whether their business operates as a sole trader, partnership, trust or company presents is of no particular relevance for taxi operators, their active engagement in the carrying on their business is usually readily demonstrable.  Similarly, the fact that a taxi operator was carrying on his/her business at 1 March 2020 is the pertinent factor for eligibility, not how many or how few taxi vehicles a respective taxi operator owns or leases.

When considering enrolment in JobKeeper, taxi operators should pay particular attention that –

  1. their business satisfies, or is reasonably expected to satisfy, the turnover threshold (i.e. more than 30% decline); and
  2. they meet the residency and/or visa status requirements for eligibility.

Eligibility of Taxi Licence Owners (or Holders) for JobKeeper

Taxi licence owners may typically meet the eligibility requirements for enrolment in JobKeeper as an eligible business participant.  Like taxi drivers and taxi operators, their businesses are for-profit and highly exposed to the economic downturn associated with the COVID-19 pandemic, so making the 30% (or more) decline in turnover likely to be readily demonstrable.  When their businesses comprise leasing taxi licences to taxi operators and/or taxi drivers, the leasing constitutes a taxable supply, and in collection with their respective taxi operators and taxi drivers, they are co-adventurers in businesses providing taxi services for profit.  Accordingly, the usual practice for taxi licence owners is to have an ABN, be registered for GST, and be reporting income and taxable supplies routinely through their BAS.

Whether their business operates as a sole trader, partnership, trust or company is of some potential relevance for taxi licence owners because their active engagement in the carrying on their business may not be as readily evident as in the case of taxi operators and taxi drivers.

Neither common law or legislation sets out a precise test for whether an entity is carrying on a business as distinct from carrying on a hobby or an enterprise pursuing passive income.  Importantly, taxi licence owners’ businesses must be able to be distinguished from passive income enterprises where they simply lease out their licence for a set amount and do not actively participate in the business activity.

Under the State-based legislation that establishes taxi licences, taxi licence owners are held by chain-of-responsibility and other provisions to be party to the carrying on of the service businesses that operate with/under their licence[2]. 

When considering enrolment in JobKeeper, taxi licence owners should pay particular attention that –

  1. their business satisfies, or is reasonably expected to satisfy, the turnover threshold (i.e. more than 30% decline); and
  2. their eligible business participant –
    (a) meets the residency and/or visa status requirements for eligibility; and
    (b) was actively engaged in the business.
  1.  

Active engagement in their business may be demonstrated by a taxi licence owner (or eligible business participant) in various of ways, for example –

  1. in the structure of arrangements –
    1. the lease of the taxi licence to a taxi operator includes other material tools of trade bundled with the licence (e.g. a vehicle and/or taxi specific equipment such as an approved security camera system, taximeter etc);
    2. the lease of the taxi licence to a taxi operator includes payment arrangements that share the risk of reward (profitability) with the taxi operator and/or taxi driver (e.g. lease incomes to taxi licence owners being subject to adjustment by a lessee based on the business performance of the respective taxi to which the licence is affixed);
    3. the collective peak value and/or number of the taxi licences owned for leasing purposes is substantive (e.g. 3 or more licences);
  2. by their conduct –
    1. incomes from leases have been consistently recorded on the taxi licence owner’s income tax returns as business income;
    2. a system for business record keeping is maintained, including tax invoices and receipts;
    3. the profitability of leases is monitored and reviewed on an ongoing basis;
    4. the taxi licence owner engages in activities and/or holds interests in entities that promote the profitability of taxi services and/or their taxi licence leasing businesses, such as –
      1. holding shares in a taxi network related to their taxi licence; and/or
      2. holding membership of substantive industry representative bodies that promote the interests of taxi licence owners and/or taxi services;
    5. in decisions taken by the taxi licence owner –
      1. choosing the taxi network with which their taxi licence affiliates (e.g. and so on an ongoing basis determining –
        1. the livery of the taxi associated with the licence;
        2. the network rules applying to respective drivers associated with the licence;
        3. the business model for the taxi associated with the licence as to whether it will be predominantly hail/rank or booked-hire or a mix);
      2. for proper discharge of their legislated Chain-of-Responsibility obligations and duties;
      3. promoting compliance by taxi businesses related to their licence (e.g. licence owners remain vicariously liable for the actions of taxis and taxi drivers operating with their licence, such as discrimination claims, and so must act to minimise such events);
      4. promoting service availability (e.g. licence owners are responsible for taxi services being available in the area to which their taxi licence applies and so must act to ensure there is an operating taxi vehicle continuously attached to their licence);

______________________________________

[1] while unlikely to be relevant for taxi industry stakeholders, for JobKeeper, 16 or 17 year olds must be able to declare they are financially independent or undertaking full-time study

[2] Unlike other property owners, taxi licence owners uniquely do not have a power or discretion to have their licence not carrying on a business – providing a 24/7 taxi service is a material condition for continuing to hold the licence.

Menu