How mortgage brokers could be able to access JobKeeper payments

Brokers are being urged to act fast in order to access JobKeeper payments they may not believe they are eligible for.

The JobKeeper program was announced at the end of March and is designed to help keep more Australians in jobs by providing a wage subsidy of $1,500 per fortnight per eligible employee for fortnights between 30 March 2020 and 27 September 2020.

But brokers are potentially missing out by not realising that calculating turnover does not necessarily include trail payments.

Aaron Milburn, general manager mortgages and commercial lending at Pepper, said it was often hard to find information but that as an industry “we need to pull together”.

“The information is out there but sometimes it’s difficult to find,” he says. “Hence why we are sharing the information today that is publicly available. Sometimes it’s hard to find in busy or indeed stressful periods. As an industry we need to pull together and share whatever information or knowledge we hold for the benefit of all, regardless of aggregator or lender.”

Are brokers eligible for JobKeeper?

As long as brokers satisfy the tests set out in the JobKeeper provisions, brokers are eligible for payments.

With a business of an aggregated turnover of less than $1billion, employers will be eligible if their GST turnover has fallen or will likely fall by 30% or more between the relevant test periods.  When doing this calculation, the rules tell you to look at the value of services provided during the periods, which means that trail payments from loans settled in earlier periods should not be included in the calculation (more on this below).

JobKeeper also applies to employers who are companies, partnerships, trusts and sole traders - so one man band broker groups may still be eligible to apply.

“If by accessing these funds brokers can retain staff, and by doing that keep families out of stressful experiences as much as possible, it is a complete win,” Milburn says.

“Brokers will come back strong as always as we move through this period and will no doubt need their teams around them when that happens.”

How does a broker forecast their income?

Employers need to calculate their projected GST turnover for the test period (in 2020) and compare it to their GST turnover for the comparison period (in 2019).

The Australian Tax Office has set out JobKeeper guidance and explains that your GST turnover may be different to the amount you report on your BAS for GST for the period. According to the ATO, GST turnover is the value of supplies you have made or are likely to make in the relevant month or quarter.

For mortgage broker services which would normally be taken to be performed when a loan is settled. To do the calculation employers should include the upfront commission and reasonably expected trail commission for brokerage services in relation to loans settled in the tested periods.

This requires you to disregard trail commission received for services provided in earlier months.

Effectively, you are comparing the value of new activity during the test period in 2020 as compared to new activity during the comparison period in 2019.

If you have a material reduction in the value of your actual activity as compared to the same period last year then you may qualify for JobKeeper. 

As a concession, the ATO will also allow you to use your BAS to perform the calculation - this would mean you would include the upfront and trail received in the particular month irrespective of when the service was performed. 

What evidence is required?

The ATO has stated that ‘your projected GST turnover needs to be a reasonable assessment of what was likely at the point in time you calculated the test. If it later eventuates that your actual turnover for your test period is greater than your prediction of your projected turnover, you do not lose access to the JobKeeper scheme. The Commissioner will accept your assessment of these turnovers unless he has reason to believe that your calculation of your projected GST turnover was not reasonable.’

But it is important to keep records, in case the Commissioner has reason to believe your calculations of projected turnover was not reasonable.

There are also employee certifications and ongoing reporting requirements to consider.

For those who have, or are in the process of, selling their office space or premises, do they include the money gained in that transaction?

Depending on the nature of the transaction and the GST treatment, some of these transactions may be included. However, the law does allow certain transactions to be excluded. Certain sales made solely as a consequence of ceasing a business or substantially and permanently reducing the size of scale may also be disregarded.

What should brokers be doing next?

JobKeeper payments are currently scheduled to be paid fortnightly between 30 March and 27 September 2020. While the law allows government to reconsider this at any stage, it is not clear if anything will change.

The deadline to apply for JobKeeper payments for the fortnight started 30 March 2020 is 31 May. Milburn says that brokers need to be arming themselves with as much information as possible and reaching out to a trusted adviser to frame a potential application to see if they are eligible.

“Aggregators may also be able to provide assistance and share what others have done possibly,” he says. “It is important like in anything we do to be fully educated before making key decisions that have big impacts on business.”

These comments are general in nature and do not take account of your specific circumstances. The JobKeeper rules are complex and additional requirements than those summarised above need to be met in order to qualify. This includes employee certifications and on-going reporting requirements. We recommend you look further into these rules and seek professional support as required.