With many Australian businesses a long way from returning to ‘normal’ the Federal Government has extended the JobKeeper Payment scheme, commonly referred to as JobKeeper 2.0. As many of you will be aware, the JobKeeper payment, which was originally due to run until 27 September 2020, will now continue to be available to eligible businesses (including the self-employed) and not-for-profits until 28 March 2021.
Effectively, there will be two separate extension periods for the JobKeeper payment, these being:
- Extension period 1 – which covers the seven new JobKeeper fortnights that commence on 28 September 2020 and end on 3 January 2021; and
- Extension period 2 – which covers the six new JobKeeper fortnights that commence on 4 January 2021 and end on 28 March 2021.
In addition to the separate extension periods, a two-tiered payment system will apply based on hours of work or active engagement. With further changes announced to expand the eligibility criteria and adjustments to the new ‘Decline in Turnover’ tests applicable from 28 September 2020, JobKeeper 2.0 represents a targeted support package for those businesses still significantly impacted by COVID-19.
We will now examine the new ‘Decline in Turnover’ tests, the extended JobKeeper payment rates and expanded eligibility criteria in more detail.
The ‘Decline in Turnover’ Tests
From 28 September 2020, businesses and not-for-profits seeking to claim the JobKeeper Payment will be required to demonstrate they have suffered an ongoing decline in turnover using actual, rather than projected, GST turnover. Further, the manner in which sales are allocated to the relevant quarter, must be done consistently with how sales are reported for BAS purposes, if the business is registered for GST. Accordingly, businesses using an accrual basis for reporting GST, for example, must use an accrual basis for providing evidence of a decline in turnover.
Specifically, to be eligible for the JobKeeper payment Extension Period 1 (ie. from 28 September 2020 until 3 January 2021) businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the September 2020 quarter. Businesses will need to demonstrate their actual GST turnovers in the September 2020 quarter have decreased (in accordance with the applicable rates) relative to the September 2019 quarter, unless an alternative period has been determined by the Commissioner.
From 4 January 2021, businesses and not-for profits will further reassess their turnover to be eligible for the JobKeeper payment. To be eligible for the JobKeeper payment Extension Period 2 (ie. from 4 January 2021 to 28 March 2021) businesses only need to demonstrate an applicable decline in turnover in the December 2020 quarter relative to the December 2019 quarter, unless an alternative period has been determined by the Commissioner.
Alternative tests for determining an actual decline in turnover will be available in some circumstances and further guidance regarding alternative tests will be provided in due course. Please refer to our website for up to date information.
To be eligible for JobKeeper Payments under the extension, businesses and not-for-profits will still need to demonstrate they have experienced a decline in turnover of at least:
- 50 per cent for those with an aggregated turnover of more than $1 billion;
- 30 per cent for those with an aggregated turnover of $1 billion or less;
- 15 per cent for Australian Charities and Not for profits Commission-registered charities (excluding schools and universities).
If a business or not-for-profit does not meet the additional turnover tests for the extension period, this does not affect their eligibility prior to 28 September 2020.
The JobKeeper Payment will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period.
The Extended JobKeeper Payment Rates
From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:
- $1,200 per fortnight for all eligible employees who, in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, worked in the business or not-for-profit for 80 hours or more, and for eligible business participants who were actively engaged in the business for 80 hours or more in the month of February 2020; and
- $750 per fortnight for other eligible employees and business participants.
From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:
- $1,000 per fortnight for all eligible employees who, in the four weeks of pay periods before either 1 March 2020 or 1 July 2020, worked in the business or not-for-profit for 80 hours or more, and for business participants who were actively engaged in the business for 80 hours or more in the month of February 2020; and
- $650 per fortnight for other eligible employees and business participants.
Businesses and not-for-profits will be required to nominate, and also to notify (the Commissioner and the individual), which payment rate they are claiming for each of their eligible employees (or business participants).
Please note that the total worked hours for an employee includes their total hours of work, paid leave and public holidays. An employee only needs to satisfy the 80 hour requirement in respect of one reference period where both reference periods (i.e. pre-1 March 2020 and pre-1 July 2020) apply.
Further, a business participant must make a declaration to the entity (or in the case of a sole trader, to the Commissioner) that they had actively engaged in the business for at least 80 hours during the reference period.
The JobKeeper Payment will continue to be made by the ATO to employers in arrears. Employers will continue to be required to make payments to employees equal to, or greater than, the amount of the JobKeeper Payment (before tax), based on the payment rate that applies to each employee. This is referred to as the wage condition.
Expanded Eligible Employee Definition for JobKeeper
Additional recently implemented JobKeeper changes mean more employees will qualify for JobKeeper payments from 3 August 2020.
This is primarily because:
- the eligible employee test has been extended from 3 August 2020 to include eligible employees who were employed on 1 July 2020 (in addition to the original 1 March 2020 employment date) who are not currently nominated for the JobKeeper Payment by another entity; and
- from the fortnights commencing on 3 August 2020 and 17 August 2020 (i.e., JobKeeper fortnights 10 and 11) employers will have had until 31 August 2020 to meet the ‘wage condition’ for all new eligible employees included in the JobKeeper scheme under the 1 July eligibility test.
Importantly, as a result of these recent tweaks to the JobKeeper scheme, participating employers should have provided any new eligible employees with an employee nomination form.
The onus is on employers to ensure all of their employees now eligible for JobKeeper Payments as a result of the new 1 July test are given the opportunity to be included.
Information concerning JobKeeper 2.0 is released regularly, so please refer to our website for the most up to date information.
Should you wish to discuss the implications of these JobKeeper 2.0 extensions and adjustments, and your business’s eligibility please contact our office.