Jobkeeper has created uncertainty as to whether jobkeeper wage subsidy can be applied for as a Company Director.
Small busines owners wear 3 hats. That as a Director, that as an employee and that as a shareholder.
It can be confusing and with the advent of Jobkeeper, it’s essential to understand where you stand in the business.
Let’s take a typical family business. For some Directors, they take their wages as an employee. The bookkeeper processes your pay withholds the tax, pays your superannuation, and issues you a payslip
Notes above you would be consider an empoyee of the business. The reason you do this is you are regularly working in the business . Being an employee may be tht you wish to derive a consistent income and other benefits. Under the STP system your wages will also need to be recorded by the business to the ATO.
Not every Director needs to be on the payroll. You can, as Director just paid Directors Fees. Directors fees are commonly agreed at a board level. The Directors fees recognise the strategic role a Director does in running the business. It’s not profit but rather a fee for yoru services.
A Director can be an owner via shares. Or a Director can just be someone who has no beneficial interest or ownership in your business. Normally the Board agrees to pay you a fee of X per annum for your services. This is often an annual payment, subject to tax and superannuation.
Am I an employee or a Director for Jobkeeper?
Referring to the above. A Dirctor who is not paid being systematically paid through the payroll of the company, will not be seen not as a regular employee for Jobkeeper.
Can I get a wages as a Director and jobkeeper?
Per the ATO – An eligible business can nominate only one director to receive the payment, as well as any eligible employees. Only one person in a director capacity may receive the payment, and that individual may not receive the payment as an employee.
How does this work in a family business? Let’s say Bill & Ben, who are brothers, have not paid them sales wages but only directors fees once a year. Using the participation test, the business can only nominate one Director, whereas if they had both been employees, then they would both would be entitled to receive job keeper.
You may ask why was I paid Directors Fees?
Why was I not paid via the payroll.?Directors fees are paid based around performance or a nominal fee. In a family business, many Directors enjoy payments from the company via a dividend and profits. We refer to our article at https://ggassociates.com.au/directors-fees/ about profit and dividends.
From an integrity point of view the definition of an employee vs a Director ensures that the Government does not pay additional Jobkeeper for every Director on the ASIC data base wich could lead to rather large burden on the Governments purse.
Don’t forget if you as Director work in the business you must complete an employee nomination form for Jobkeeper .