The JobKeeper Payment has been in the news again with further tweaks being announced late last week. It’s important that businesses understand these proposed changes and the impact they may have on your business in the 2020/21 financial year.
In particular:
- The amendments to the eligibility tests for the JobKeeper extension; and
- The amendment to the eligible employee date – now 1 July 2020
There are a number of things you should be considering now.
What were the changes announced in July?
On 21 July, the Government announced that JobKeeper would be extended to 28 March 2021 but in two tranches. Businesses would have to meet additional eligibility criteria to qualify for JobKeeper from 28 September until 3 January and then again to qualify from January until March 2021 quarter.
The additional eligibility criteria required that businesses retest their downturn in turnover and show that for the June AND September quarter, the business has had an actual downturn in turnover of 30% or more to qualify for payments until the end of December. Businesses then have to test again for the December quarter to show an actual downturn of 30% or more to qualify for the payment through to March 2021.
The amount of the JobKeeper payment is also planned to be scaled back. Click here for the details.
What were the problems with this change?
The additional requirement of showing the actual downturn in turnover for June, September and (where relevant) December quarters, had business owners and advisers considering how appropriate this measure was.
Many businesses had a sharp downturn in March and April which saw them qualify for JobKeeper. However, many businesses staged (a bit of) a recovery in May and June – not necessarily back to “normal” turnover levels, but enough to mean that their actual turnover for the June quarter was not down by 30%. Now with Melbourne in Stage 4 lockdown which will go well into September, and the possibility for the virus to spread further and impact other states, questions were being raised as to how many businesses were going to be eligible for JobKeeper after 28 September due to these strict criteria.
Another consideration was that as businesses scaled up in May/June after the impact of various shut downs and lockdowns, they employed new staff members. The way the JobKeeper rules were worded (requiring employees to have been employed at 1 March 2020), JobKeeper was not available for these new employees. This was considered to be an issue.
What was announced on Friday 7 August?
Change in eligibility
To continue to qualify for JobKeeper payments after 28 September 2020 businesses will need to show a 30% drop in turnover for the September quarter only. There will be no need for businesses to consider whether their actual June turnover showed a 30% decline.
Change in eligible employee date
JobKeeper will now be available for people who were employed in the business as at 1 July 2020 and satisfy the other eligibility criteria.
If you are currently receiving JobKeeper, it is important to consider that you may now also be eligible to receive the payment for employees that have started working for you since 1 March 2020 and before 1 July 2020, or were otherwise ineligible initially (i.e. under 18 or weren’t casuals that had been employed for 12 months). This means you may receive the JobKeeper payment from 3 August until 27 September (and beyond if you qualify for the extension) for these additional employees.
This change applies from 3 August 2020 (JobKeeper Fortnight 10). The “wage condition” which requires that to be eligible for JobKeeper the employee must have been paid the $1,500 per fortnight still exists. JobKeeper Fortnight 10 ends on Sunday 16 August (this coming Sunday) which means, to meet the wages condition, any top up payments would be required to be made by Friday.
It is really important to note that there is no legislation governing this change available at the moment and as Parliament resumes on 24th August, we don’t expect to see anything before these changes come into effect.
We are hoping to see an extension granted by the ATO to allow longer for the $1,500 payment to be made, but as yet, nothing has been announced by the ATO.
You should do the following:
- Review your employees and consider whether you have any employees that are now eligible for JobKeeper with the employment date being 1 July 2020
- If you do, consider their basic eligibility and determine how much they have been paid for JobKeeper fortnight 10 (3 August – 16 August)
- If they have been paid less than $1,500, consider how/when you may make a top up payment
- Keep an eye out for further updates from us as more information becomes available, as we expect to see more on this in the coming days
Important: the rules around casual workers are complicated – if you have taken on new casual workers after 1 March 2020, it is unlikely they will satisfy the employee eligibility requirements but please contact us to discuss.
Please contact your Holman Hodge adviser if you have any questions in relation to the above.