With the JobKeeper scheme as we know it set to finish up on 27th of September and the end of the financial impact being experienced by businesses from the Covid-19 pandemic far from over, announcements have been made regarding the extension of JobKeeper for some businesses.
Labelled JobKeeper 2.0, new eligibility criteria as well as a tiered payment system will commence from the 28th of September 2020 for a period of 6 months. Below is a summary of what the revised scheme is proposed to look like with the finer details still being worked on.
It is hoped that formal legislation and guidance will be published in advance of the new scheme coming into effect to allow advisors and businesses alike to be on top of the requirements.
New decline in turnover test
Under the new rules employers must continue to reassess and re-qualify for the scheme by showing the applicable fall in turnover for the relevant period. Under the recent announcements this assessment can be done on a quarter by quarter basis as follows:
- For eligibility to receive payments for the period of 28 September 2020 to 3 January 2021, businesses will need to demonstrate that their actual GST turnover has declined by the applicable percentage in the September 2020 quarter, relative to the corresponding quarter in 2019;
- From 4 January 2020 to 20 March 2021, businesses will need to demonstrate that their actual GST turnover has declined by the applicable percentage the December 2020 quarter, relative to the corresponding quarter in 2019.
The decline in turnover percentage rates has not changed. Businesses with a turnover below $1 billion will need to demonstrate a reduction in turnover of at least 30%, those above $1 billion will need to demonstrate a reduction in turnover of at least 50% and charities must demonstrate a reduction in turnover of at least 15%.
Alternative tests are expected to be put in place for businesses where the actual GST turnover is not comparable with prior periods or where activity statements are not required to be lodged. These alternative tests had not been released at the time this article was published.
Another change to be aware of is that turnover will shift from being assessed based on projected GST turnover to actual GST turnover. Those who lodge BASs will need to ensure they are lodged on time and that appropriate records are maintained to support claims made.
New Employee Condition
Under the extended JobKeeper program employees will be eligible for JobKeeper if they were employed by the eligible employer on 1 July 2020. This has changed from the 1 March 2020 date under the original JobKeeper scheme.
The eligibility requirements for employees remain the same and are summarised below.
- The employee is currently employed by an eligible employer (including if they were stood down or rehired)
- The status of employment is either
- a full-time, part-time or fixed-term employee at 1 July 2020; or
- a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 and not a permanent employee of any other employer.
- They were aged 18 years or older at 1 July 2020 (if you were 16 or 17 you can also qualify if you are independent or not undertaking full time study).
- They were either:
- an Australian resident (within the meaning of the Social Security Act 1991); or
- an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa as at 1 March 2020.
- They were not in receipt of any of these payments during the JobKeeper fortnight:
- government parental leave or Dad and partner pay under the Paid Parental Leave Act 2010; or
- a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work.
Self-employed individuals will be eligible to received the JobKeeper payment where they meet the relevant turnover test and are not a permanent employee of another employer.
How much will the new JobKeeper payments be?
From 28 September 2020 the flat rate of $1,500 per employee will be scraped and replaced with a two-tiered system based on the employee’s employment hours. Further, the payments will be tapered over time, encouraging employers to meet a greater share of their own wages as the scheme comes to an end.
Employees who worked for 20 hours or more in the four week period before 1 March 2020 will be entitled to the full rate whilst employees who worked less than 20 hours on average in February 2020 will receive the partial rate.
|Period of JobKeeper Payments||Full Rate||Partial Rate|
|30 March to September 2020||$1500 per fortnight||$1500 per fortnight|
|28 September 2020 to 3 January 2021||$1,200||$750|
|4 January 2021 to 28 March 2021||$1,000||$650|
All entities will be required to nominate which rate they are claiming for each eligible employee and it is noted that further guidance will be provided regarding Commissioner’s discretion where an employee’s hours were unusual over the February 2020 reference period.
The rate eligible business participants will be entitled to will also be subject to the hours they were actively engaged in the business during February 2020. Eligible business participants will receive the full rate if they were actively engaged for 20 hours or more on average in their business during February 2020. The partial rate will be payable if the active hours were less than 20 hours on average during February 2020. Further guidance will be needed to assist business participants and their advisors to correctly determine which rate will apply.
At this stage no other aspects of the JobKeeper scheme are said to be changing. This means that employers will need to continue to make wage payments to employees equal to, or greater than, the amount of the JobKeeper payment (before tax) in order to meet the wage condition and the timing of payments by the ATO will be monthly in arrears.
If you haven’t registered for JobKeeper payments before now, you may still apply the turnover tests and attend to enrolment under the existing scheme or the new scheme should you meet the eligibility requirements.
The above is a brief snapshot of how the new JobKeeper scheme is proposed to work. We will keep you updated with details as we obtain them and will support you in assessing whether JobKeeper 2.0 is relevant for you and your business.
For access to the Treasury Fact Sheet on the extended JobKeeper program click here.
If you have any questions or would like further information, please contact us on 03 52216399 or at firstname.lastname@example.org.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.