JobKeeper extended with cuts and tests ahead

Stuart Jones, Senior Tax Writer, Thomson Reuters

The Government has announced that JobKeeper payments will continue for 6 months beyond its legislated finish date of 27 September 2020, subject to revamped eligibility rules.

The Treasurer, Josh Frydenberg, said on 21 July that the Government will introduce 2 tiers of payment rates as part of “JobKeeper 2.0” to better reflect the pre-COVID-19 incomes of recipients

The extension of JobKeeper from 28 September 2020 until 28 March 2021 will also include a requirement for businesses and not-for-profits to demonstrate an actual decline in turnover under the existing turnover test.

The JobKeeper payment will also be stepped down and paid at 2 rates. Importantly, the existing arrangements for those receiving JobKeeper payments will continue until 27 September.

Note that under the existing rules, employers are not obliged to make superannuation guarantee contributions in relation to salary or wages that do not relate to the performance of work, and are only paid to an employee to satisfy the wage condition for getting a JobKeeper payment: reg 12A of the Superannuation Guarantee (Administration) Regulations 2018.

JobKeeper payment rates

PeriodFull rate per fortnightLess than 20hrs worked per fortnight rate
28 September 2020 to 3 January 2021$1,200$750
4 January 2021 to 28 March 2021$1,000$650

The JobKeeper payment rate is to be reduced and paid at 2 rates:

Phase 1: 28 September 2020 to 3 January 2021

  • Tier 1: $1,200 per fortnight – From 28 September 2020 to 3 January 2021, the payment rate will be reduced from $1,500 to $1,200 per fortnight for all eligible employees who, in the 4 weeks before 1 March 2020, were working in the business for 20 hours or more a week on average and for eligible business participants who were actively engaged in the business for more than 20 hours per week on average in the month of February 2020; and
  • Tier 2: $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 same period.

Phase 2 – 4 January 2021 to 28 March 2021

  • Tier 1: $1,000 per fortnight – From 4 January 2021 to 28 March 2021, the payment rate will be $1,000 per fortnight for all eligible employees who in the 4 weeks before 1 March 2020, were working for 20 hours or more a week on average and for eligible business participants who were actively engaged in the business for more than 20 hours per week on average in the month of February 2020; and
  • Tier 2: $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 same period.

Businesses and not-for-profits will be required to nominate which payment rate they are claiming for each of their eligible employees (or business participants).

The JobKeeper Payment will continue to be made by the ATO to employers in arrears. Employers will continue to be required to satisfy the “wage condition” by making payments to employees equal to, or greater than, the amount of the JobKeeper Payment (before tax), based on the payment rate that applies to each employee.

The Tax Commissioner will have discretion to set out alternative tests where an employee’s or business participant’s hours were not usual during the February 2020 reference period. For example, this will include where the employee was on leave, volunteering during the bushfires, or not employed for all or part of February 2020. Guidance will be provided by the ATO where the employee was paid in non-weekly or non-fortnightly pay periods and in other circumstances the general rules do not cover.

Business eligibility – additional turnover tests

From 28 September 2020, businesses and not-for-profits seeking to claim JobKeeper payments will have to meet a further decline in turnover test for each of the 2 periods of extension, as well as meeting the other existing eligibility requirements. That is, businesses will be required to reassess their eligibility for the JobKeeper extension with reference to their actual turnover in the June and September quarters 2020.

  • In order to be eligible for the first JobKeeper Payment extension period of 28 September 2020 to 3 January 2021, businesses and not-for-profits will need to demonstrate that their actual GST turnover has significantly fallen in the both the June quarter 2020 (April, May and June) and the September quarter 2020 (July, August, September) relative to comparable periods (generally the corresponding quarters in 2019).
  • For the second JobKeeper Payment extension period of 4 January to 28 March 2021, businesses and not-for-profits will again need to demonstrate that their actual GST turnover has significantly fallen in each of the June, September and December 2020 quarters relative to comparable periods (generally the corresponding quarters in 2019).

Further information is available in the Treasury fact sheet, Extension of the JobKeeper Payment.

The Commissioner will have discretion to set out alternative tests that would 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, in line with the Commissioner’s existing discretion. Information about the existing discretion is available on the ATO website.

Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the BAS. Alternative arrangements will be put in place for businesses and not-for-profits that are not required to lodge a BAS (eg if the entity is a member of a GST group).

As the deadline to lodge a BAS for the September quarter or month is in late October, and the December quarter (or month) BAS deadline is in late January for monthly lodgers or late February for quarterly lodgers, businesses and not-for-profits will need to assess their eligibility for JobKeeper in advance of the BAS deadline in order to meet the wage condition (which requires them to pay their eligible employees in advance of receiving the JobKeeper payment in arrears from the ATO). The Commissioner will also have discretion to extend the time an entity has to pay employees in order to meet the wage condition, so that entities have time to first confirm their eligibility for the JobKeeper Payment.

To be eligible for JobKeeper Payments under the extension, the decline in turnover test remains the same as the existing rules, ie:

  • ACNC-registered charities (excluding schools and universities) – 15%;
  • entities with turnover less than $1bn – 30%;
  • entities with turnover greater than $1bn – 50%.

The eligibility rules for employees remain unchanged. The self-employed will be eligible to receive the JobKeeper Payment where they meet the relevant turnover test, and are not a permanent employee of another employer.

The extension of the JobKeeper regime beyond 27 September is expected to require legislative amendments once Parliament resumes from 24 August 2020. The Government will also set out an Economic Statement on 23 July 2020 where it will reconcile and bring together the costs of its various COVID-19 economic response measures. The Prime Minister noted that this Economic Statement on 23 July is not a “mini budget”. The Federal Budget will be handed down on 6 October, Mr Morrison said.

Stuart Jones is a Senior Tax Writer with Thomson Reuters and a respected commentator on all matters superannuation. Stuart is the author of the Australian Superannuation Handbook and contributes extensively to other Thomson Reuters’ services, including the Australian Tax Handbook.

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