The first tranche of JobKeeper ends on 27 September 2020 and the government is extending the JobKeeper Payment by a further six months to 28 March 2021. Those businesses needing further support will need to reassess their eligibility and prove an actual decline in turnover.
From 28 September 2020, businesses and not-for-profits seeking to claim JobKeeper Payment will be required to re-assess their eligibility for the JobKeeper extension with reference to their actual turnover. The JobKeeper extension will be available to qualifying businesses and not-for-profits from 28 September 2020 until 28 March 2021.
Further changes were announced on 7 August 2020 to adjust the reference date for determining employee eligibility and make it easier for organisations to qualify for the JobKeeper Payment extension.
To receive JobKeeper from 28 September 2020, eligible employers need to assess their decline in turnover with reference to actual GST turnover for the September 2020 quarter (for JobKeeper payments between 28 September to 3 January 2021), and again for the December 2020 quarter (for payments between 4 January 2021 to 28 March 2021).
From 28 September 2020, the JobKeeper payment rate will reduce and split into a higher and lower rate based on the number of hours the employee worked in a specific 28 day period prior to 1 March 2020 or 1 July 2020.
To access JobKeeper payments from 28 September 2020, there are three questions that need to be assessed:
- Is my business eligible?
- Am I and/or my employees eligible? and
- What JobKeeper rate applies?
We’ve summarised the key details in this article.
Your business will not automatically qualify for the JobKeeper extension simply because you are already receiving the first tranche of Jobkeeper subsidy. You must re-test to determine your eligibility as an employer or as an Eligible Business Participant.
Businesses that are enrolling for the first time, need to meet the basic eligibility test and the decline in turnover test/s for the relevant period.
|30 March to 27 September 2020||28 September to 3 January 2021||4 January 2021 to 28 March 2021|
|Decline in turnover test||Projected GST turnover for a relevant month or quarter is expected to fall by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*||Actual GST turnover in the September 2020 quarter (July, August & September) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*|
|Actual GST turnover in the December 2020 quarter (October, November & December) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*|
* Alternative tests may apply
To qualify for Jobkeeper Extension 1, businesses and not-for-profits will need to reassess their eligibility with reference to actual GST turnover for the September 2020 quarter compared with the same period in 2019. If this assessement shows that your business met the requisite decline in turnover percentage then your business will be eligibly for JobKeeper payments between 28 September to 3 January 2021.
To qualify for Jobkeeper Extension 2 businesses will be required to assess their eligibility for the JobKeeper extension with reference to their actual turnover in the December quarter 2020 compared to December quarter 2019. Businesses and not-for-profits will need to demonstrate that they have met the relevant decline in turnover test for this quarter to be eligible for JobKeeper from 4 January 2021 to 28 March 2021.
Most businesses will generally use their Business Activity Statement (BAS) reporting to assess eligibility. However, as the BAS deadlines are generally not until the month after the end of the quarter, eligibility for JobKeeper will need to be assessed in advance of the BAS reporting deadlines to meet the wage condition for eligible employees.
To be eligible to receive JobKeeper payments, the employer must meet a wage condition. That is, employers must have paid the eligible employee at least the applicable JobKeeper payment for the relevant fortnight.
The ATO reimburses the employer for the JobKeeper payment monthly in arrears.
The ATO has the power to extend the time an entity has to pay employees in order to meet the wage condition. For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.
Calculating GST turnover for tranches 2 and 3 of JobKeeper is different to the original JobKeeper requirements as entities will only be using current GST turnover figures (not projected GST turnover).
When applying the new turnover reduction tests for the September 2020 quarter and December 2020 quarter, entities that are registered for GST must use the same method that is used for GST reporting purposes. That is, if the entity is registered for GST on a cash basis then a cash basis needs to be used to calculate current GST turnover for the purpose of these new tests. Entities that are not registered for GST can choose whether to calculate GST turnover using a cash or accruals basis, but must use a consistent method.
From 3 August 2020, the eligibility tests for employees were changed to enable a greater number of employees to access JobKeeper.
Previously, an employee had to be employed by the relevant entity on 1 March 2020 to be eligible for JobKeeper payments. Someone employed as a casual on that date also must have been employed on a regular and systematic basis for the 12 month period leading up to 1 March 2020.
Now, employees who were previously ineligible for JobKeeper because they were not employed by the entity on 1 March 2020 may be able to receive JobKeeper payments if they were employed by the entity on 1 July 2020 and can fulfil all of the other eligibility requirements. If an employee already passed all the relevant conditions at 1 March 2020 then they don’t need to be retested using the 1 July 2020 test date.
Business Owners and sole traders
The reference period for business participants is the month of February 2020 (the whole 29 days).
A business participant is a sole trader or self-employed with an ABN, or one partner in a partnership, adult beneficiary of a trust, director or shareholder who works in the business (i.e., only one person in a partnership, one beneficiary of a trust, or one director / shareholder can be eligible for JobKeeper payments for a particular entity).
The test to determine eligibility is based on the hours of active engagement in the business carried on by the entity. This requires an assessment of the hours that the business participant was actively operating the business or undertaking specific tasks in business development and planning, regulatory compliance or similar activities in an applicable reference period.
Other than sole traders and self-employed, a business participant must provide a declaration to the business entity confirming their hours worked over the reference period.
For JobKeeper payments from 28 September 2020, the business must notify the Tax Commissioner about whether the higher or lower rate applies to the business participant and notify the participant within 7 days of providing this notice to the Commissioner.
Where February 2020 was not typical of the participant’s hours, an alternative test can be used:
- Not typical – use the next typical 29 day period
- Commenced work during February 2020 – use March 2020
- Not employed by the employer but still an eligible religious practitioner for JobKeeper purposes – use March 2020
Jobkeeper payment rates
From 28 September 2020, the payment rate for JobKeeper will taper from the flat rate of $1,500 and split into a higher and lower rate.
From 28 September 2020 to 3 January 2021, the payment rate will be $1,200 per fortnight for all eligible employees who, in the four weekly pay periods before the reference period, were working in the business or not-for-profit for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week, and $750 per fortnight for employees who were working in the business or not-for-profit for less than 20 hours a week on average and business participants who were actively engaged in the business less than 20 hours per
week in the reference period.
From 4 January 2021 to 28 March 2021, the payment rate will be $1,000 per fortnight for all eligible employees who in the four weekly pay periods before the reference period, were working for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week, and $650 per fortnight for employees who were working for less than 20 hours a week on average and business participants who were actively engaged in the business for less than 20 hours per week in the reference period.
|JobKeeper payment||30 March to 27 September 2020||28 September to 3 January 2021||4 January 2021 to 28 March 2021|
|Worked 80 hours or more in the reference period||· $1,500 per fortnight per employee||· $1,200 per fortnight per employee or business participant||· $1,000 per fortnight per employee or business participant|
|Worked less than 80 hours in the reference period||· $750 per fortnight per employee or business participant||· $650 per fortnight per employee or business participant|
What’s a reference period?
|Eligible employees||The 28 days finishing on the last day of the last pay period that ended before either:|
· 1 March 2020, or
· 1 July 2020.
|Actual hours worked including any hours for which they received paid leave (e.g., annual, long service, sick, carers and other forms of paid leave) or paid absence for public holidays. An employee’s ‘actual’ hours might be different to their contracted, ordinary hours or hours they are paid for.|
|Eligible business participants||February 2020 (29 days)||Active engagement in the business.|
|Religious practitioners||February 2020 (29 days)||Activities in pursuit of your vocation for your institution.|
Important points to note
It’s important to know the eligibility for one JobKeeper period does not entitle you to, or exclude you from, payments in another period. Each eligibility period is addressed separately. That is, there might be businesses that qualified for the first tranche of JobKeeper, don’t qualify for the second tranche but qualify for the third.
It may be that your business does not have a comparison period or there was a one-off event that prevents direct comparison of GST turnover between the stipulated periods. The Commissioner of Taxation has the power to set out alternative tests that establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.
With regards to ‘reference periods’ it may be that the reference period does not represent your employee’s typical employment or working arrangements. Alternative tests will be available where the reference period is not typical of the employee’s hours or you use a rostering system and there is no typical pattern in a 28 day period; or the employee started work during the reference period.
If you have any questions about Jobkeeper 2.0 rules or about any other matter, please contact our experienced Melton Accountants on 03 9746 6479.