JobKeeper has been essential to keep many business afloat and a massive bonus for other business that would have survived the coronavirus crisis without it.
Like all government initiatives there have been winners and losers. And our role is to make sure that our clients take full advantage of the benefits on offer whilst ensuring they comply with the rules.
On 21st July the Government announced the extension of the JobKeeper payment from 28th September to 28th March.
Further changes were announced on 7th August 2020 to adjust the reference date for employee eligibility and make it easier for businesses to qualify for the JobKeeper Payment extension from 28th September 2020.
On 1st September the Coronavirus Economic Response Package (JobKeeper Payments) Amendment Bill 2020 was passed.
So what does all this mean?
Firstly, it creates an opportunity for businesses that didn’t apply or otherwise didn’t receive JobKeeper from March to September to participate from 28th September. Secondly, it will require a re-qualification for existing participants to continue in the system from 28th September and again from 4th January.
From 28th September 2020, eligibility for the JobKeeper Payment will be based on actual turnover in the relevant periods and the payment will be stepped down and paid at two rates.
Business Eligibility –
From 28th September, businesses and not-for-profits seeking to claim JobKeeper Payment will be required to re-assess their eligibility with reference to their actual turnover in the September quarter 2020. Businesses will need to demonstrate that they have met the relevant decline in turnover test in this quarter to be eligible for JobKeeper from 28th September 2020 to 3rd January 2021.
Businesses will need to further reassess their eligibility in January 2021 for the period from 4th January to 28th March 2021. Businesses will need to demonstrate that they have met the relevant decline in turnover test in the December quarter 2020 to remain eligible for the March quarter 2021.
Please be aware that the 30% decline in turnover need not be caused by coronavirus.
The ATO has now issued preliminary guidance on the extension of JobKeeper.
Businesses already enrolled in JobKeeper will not need to re-enrol nor will they need to reassess employee eligibility or ask employees to agree to be nominated, but they will need to determine if they satisfy the actual fall in turnover test for the two extension periods — 28th September 2020 to 3rd January 2021, and 4th January 2021 to 28th March 2021.
The ATO noted it will provide more information soon as to how to undertake this calculation. The ATO also says it will make some alternative tests available for special circumstances soon. The 7 alternative eligibility tests available for the original JobKeeper enabled many businesses that failed the 30% decline in turnover test to qualify and we eagerly await the release of this information.
Employee Eligibility –
The reference date for assessing which employees are eligible for the JobKeeper Payment is now 1st July 2020 with effect from 3rd August 2020. The reference period for employees regarding their hours worked to determine their tier of payment will be the two fortnightly pay periods prior to 1st March 2020 or 1st July 2020. The period with the higher number of hours is to be used for employees who were eligible at 1st March 2020.
JobKeeper Payment Rate –
The JobKeeper Payment rate is to be reduced and paid at two rates:
From 28th September 2020 to 3rd 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 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 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 4th January 2021 to 28th 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.
A word of warning. JobKeeper began on March 30th and until August 26th, more than 15,000 businesses have been removed from the scheme after the Australian Tax Office found them to be ineligible. During the same period, the ATO received 8,000 tips from the public pointing to 6,250 businesses or sole traders who may have been rorting the system.
The ATO warned businesses in June that employers found to have knowingly rorted the system may face fines of up to $126,000, or 10 years in prison.
Please contact us if you need help.