JobKeeper is continuing but what do the changes mean for businesses?
Treasury has announced the Government’s Jobkeeper 2.0 which has extended the life-span of Jobkeeper for six months beyond the original 27 September 2020 cut-off. Unlike the existing JobKeeper, the extended model reduces payments and includes a tiered structure, separating those employees who work 20 or more hours per week from casual and part-time employees who work less than 20 hours per week. The eligibility test has also changed to an actual GST turnover model. Eligible employers continue to be businesses that include companies, partnerships, trusts, sole traders, not for profits and charities.
The key points from 28 September 2020
a two-tier payment rate will apply based on the worker’s average weekly work hours in February 2020;
the current $1,500 per fortnight payment rate will be reduced on 28 September 2020 and reduced further on 4 January 2021;
the decline in turnover will be retested on a quarterly basis; and
the decline in turnover test will be based on actual GST turnover.
This is welcome news but does clearly indicate that businesses need to make the time to plan ahead in preparation for JobKeeper 2.0 and beyond.
Eligibility
The big difference in determining eligibility for JobKeeper 2.0 in comparison to JobKeeper is the replacement of the need to project GST turnover with the new requirement to compare actual GST turnover.
You will need to prove ongoing eligibility in order to continue to receive payments from 28 September 2020 to 3 January 2021. The proof will be by showing you have met the relevant decline in turnover test for both the June and September quarters of 2020, based on actual GST turnover comparable to 2019. From 4 January 2021 a similar approach will apply and to remain eligible through to 28 March 2020, businesses must have suffered a decline in turnover in each of the June, September and December 2020 quarters.
Many businesses will be able to assess their eligibility based on the details reported in their Business Activity Statements (BAS). Please be aware that lodgement deadlines will need to be carefully considered to meet the wages condition. We are awaiting information from the Commissioner of Taxation regarding any changes or extensions to timing in order for employers to pay employees and receive JobKeeper payments in arrears from the ATO. We will keep you updated as further details are publicised.
JobKeeper 2.0 also introduces a new tiered approach requiring employers to review the average hours worked by employees during February 2020. For employees who worked an average of 20 hours or more per week in February 2020, the flat rate of $1500 per fortnight will be replaced by a Tier 1 amount of $1200 a fortnight from 28 September 2020 to 3 January 2021. From 4 January 2021 to 28 March 2021, the flat rate will again reduce, to $1000 per fortnight. Employees who worked less than an average of 20 hours during February 2020 will receive $750 per fortnight from 28 September 2020 to 3 January 2021, reducing to $650 per fortnight from 4 January 2021 to 28 March 2021.
Important considerations
The object of reassessing eligibility for JobKeeper payments from 28 September 2020 is to ensure that only businesses that are genuinely in need of assistance will continue to receive payments. The JobKeeper payment will remain open to new recipients during the extension period provided they are eligible and meet the turnover requirements.
That said, if your business is fluctuating it is important to note that under the new decline in turnover rules, once JobKeeper is lost there appears to be no way to re-qualify should there be a further change to your business turnover. This may cause some distress to business owners. We therefore take this opportunity to remind you of the importance of working closely with your trusted financial adviser to ensure you do not wrongly estimate the performance of your business. The consequences of wrongly estimating may be substantial.
For those clients wanting to learn more, the Treasury Fact Sheet may be accessed here : Treasury Fact Sheet
Evolution is proud of the help our team has provided to our Clients throughout COVID-19. Assisting eligible businesses to access Government support has been at the core of our services throughout this time. We hope to continue this work as we move into the next phase of JobKeeper 2.0 and beyond. Please reach out to any of our team members if you require help navigating these changes.
At a Glance
