Companies that use a services entity to pay their staff will be eligible for the federal government’s $130 billion wage subsidies after Treasurer Josh Frydenberg eased the rules.

“The government will provide an alternate decline in turnover test for the eligibility of special purpose service entities that provide employee labour to group members and that have not met the basic test for decline in turnover,” Mr Frydenberg said.
KPMG’s head of economics and tax centre, Grant Wardell-Johnson, said he welcomed the government’s change.
“These entities are quite common and it will make a substantial difference to many corporates with service entity structures.”
“Often it’s for simplicity because its easy to have all the employees in a services entity to pay staff and do payroll tax.”
“Sometimes its historical due to a corporate take over.”
He said the broadened but still “narrow” eligibility meant partnerships, such as for accounting, law engineering firms, would not qualify.
To be eligible for the $1500 fornightly JobKeeper payments for workers, a business must record a monthly decline in revenue of at least 30 per cent.
Firms with a turnover of at least $1 billion require a turnover fall of more than 50 per cent.
However, corporate groups will still need to aggregate and average their turnover across a legal operating entity to work out if they qualify for the turnover test.
Corporate Tax Association executive director Michelle de Niese said diversified business groups were hoping for more “disagregation” of revenue across business units, because JobKeeper could be a “blunt instrument”.
“There will be employees of large corporates who will not get the benefit of JobKeeper because of the way their employer is structured.”
“Some businesses that are suffering substantial declines won’t be eligible.”
For example, staff who work for Woolworths’ pubs that have been closed are unlikely to qualify because the company’s liquor stores are doing well during the coronavirus economic downturn.
Wesfarmers’ Kmart Group, comprising Kmart and Target, would also need to aggregate its turnover across the retailers.
The government will count on large diversified companies being able to cross-subsidise their business units and to redeploy staff.
The government also confirmed the “one in, all in” principle for all workers, meaning employers can’t discriminate between which staff qualify for JobKeeper.
“Once an employer decides to participate in the JobKeeper scheme and their eligible employees have agreed to be nominated by the employer, the employer must ensure that all of these eligible employees are covered by their participation in the scheme,” the government said.
“The employer cannot select which eligible employees will participate in the scheme. As noted in the explanatory statement to the existing rules, this one in, all in principle is already a key feature of the scheme and will be made clearer in the rules.”
About 900,000 businesses have registered interest in the JobKeeper scheme.
More than 400,000 businesses have enrolled as of last week, covering around 2.4 million employees.
The scheme is designed to keep businesses connected with their staff during the economcic crisis.
Business Council of Australia chief executive Jennifer Westacott said Friday’s announced changes to JobKeeper were important to “make sure the policy works as intended to keep workers employed and connected to their employers regardless of the way their business is structured.
The government has listened to our members concerns and acted quickly to protect Australians and help position us for a strong recovery, she said.