If you are currently receiving JobKeeper, you would be aware that the program was due to finish on 27 September 2020 after running for six months.  We now know that the program is being extended to 28 March 2021. However, there will be new eligibility requirements.  The rules governing JobKeeper 2.0 were recently released by the Treasurer and further guidance from the ATO has also been released, with more detail to come.

A recap on the changes

JobKeeper will be extended by six months in two (essentially) quarterly periods where an “actual decline in turnover test” is met.  The timing is as follows:

  • JobKeeper extension period 1 – 28 September 2020 to 3 January 2021
  • JobKeeper extension period 2 – 4 January 2021 to 28 March 2021

To qualify for the first JobKeeper extension period, the entity will need to show an actual decline in GST turnover of 30% or more when comparing the 30 September 2020 quarter with the 30 September 2019 quarter.

To continue to qualify for the second JobKeeper extension period, the entity will need to show an actual decline in GST turnover of 30% or more when comparing 31 December 2020 quarter with the 31 December 2019 quarter.

The other change announced was the introduction of a two-tiered payment system which will taper downwards in each of the extension periods.  The amount of JobKeeper an employee is entitled to in the extension period (either the higher amount or the lower amount) will be determined based on the hours worked for a 28 day period ending at the end of the most recent pay cycle that ended before either 1 March 2020 or 1 July 2020.

Where the hours worked in that period are greater than 80, the employee will be entitled to the higher amount of JobKeeper, otherwise the employee will receive the lower amount.  The payment amounts are as follows:

  • For JobKeeper extension period 1 – the higher rate is $1,200 and the lower rate is $750
  • For JobKeeper extension period 2 – the higher rate is $1,000 and the lower rate is $650

These payment changes also apply for eligible business participants.

What do you need to do?

Determine whether you will qualify post-27 September

If you are currently receiving JobKeeper you need to assess whether you will qualify for the first JobKeeper extension period from 28 September 2020.  To do this, you must determine your September quarter GST turnover ASAP to enable the comparison to be made with the September quarter in 2019.  Once compared, you will be able to determine if turnover is still 30% or more lower.  If it is not, the entity will not qualify for JobKeeper for the first extension period.

How is “GST turnover” determined?

For some businesses this may be simple, for others it may not be so straight forward.  For example, when the business was not in operation for the September 2019 quarter, or something has happened in the business which makes the September 2019 quarter not representative of usual trading.  We expect the alternative tests announced for JobKeeper 1.0 will be available and expect the ATO to confirm this soon.

The ATO has confirmed that to undertake the comparison, the amounts disclosed at G1 should be used.  This may cause some anomalies such as the fact that proceeds from the sale of capital assets is included at G1.

Determine which JobKeeper payment amount to pay

If turnover is 30% or more down, you then need to consider what rate you need to be paying your eligible employees.  To do this you need to determine how many hours the employee(s) worked, or were actively engaged in the business, for the 28 day period ending at the end of the most recent pay cycle that ended either before 1 March 2020 or 1 July 2020.

It is important that you determine this because if you are currently topping up an employees’ pay to $1,500 per fortnight and their payment rate drops to $750 per fortnight, you may not need to continue to top up their wage.  If you do top them up and you’re only entitled to the $750, you will not recoup the additional $750 paid through JobKeeper.

Importantly, the ATO has announced that they will extend the “wage condition” requirements to 31 October meaning businesses will have until then to determine what amounts to pay employees.  So, if you are unsure as to whether you will qualify for JobKeeper into October, you could revert to paying staff their actual wages throughout October and once you’ve confirmed entitlement to the extension period, you could provide any required top up payments by 31 October.

Other frequently asked questions

Can a business re-enter the JobKeeper scheme?

If a business doesn’t satisfy the actual decline in turnover test for the September 2020 quarter, they may re-enter the scheme if the actual December 2020 turnover, when compared to December 2019 turnover has declined by 30% or more.

Can a business who has not yet entered JobKeeper, go into the program now?

Yes, a business can enter JobKeeper. However, they need to meet the actual decline in turnover test for the September quarter to enter from the first extension period or, the December quarter, to enter for the second extension period.

It’s important to note that the requirements for entering JobKeeper introduced in March remain in place for the extension period. For example, the one-in-all in principle, the wage condition, and employee notifications.

Are any other notifications required?

If an entity is in the JobKeeper program and qualifies for the first extension period, they do not need to re-enroll. However, they do need to notify the Commissioner of Tax and their employees of the payment rate each employee will be paid (either the higher or the lower rate).

If an entity is entering the JobKeeper program for the first time in the extension period, they will need to have notified their employees

What if a business has used the Fair Work Act modifications?

We are not legal specialists and do not provide any comments with regards to the applicability of the Fair Work changes announced earlier this year. However, if your business used the Fair Work amendments i.e. the amended rules regarding “standing down” employees, you may be able to continue to use these rules where you are no longer in JobKeeper but can show a decline in turnover of more than 10%.  To do this however, businesses (other than small businesses) will require a decline in turnover certificate from a “financial service provider” which includes qualified accountants and tax agents to prove the 10% decline.

Please note, this is not relevant to JobKeeper, only to enable businesses to continue to use the Fair Work Act changes.  If you have any questions in relation to the application of the Fair Work Act, please seek legal advice.

If you have any questions in relation to JobKeeper and the impact on your business, please contact your Holman Hodge adviser.