Current as at 20 August 2020
On 21 July 2020, and then with further clarification on 7 August, the Government announced that the JobKeeper payment would be extended until 28 March 2021. The extended support will target supporting businesses that continue to be significantly impacted by COVID-19.
The existing JobKeeper rules and eligibility will remain unchanged until 27 September 2020, but from 28 September, payment rates will be reduced and eligibility reassessed.
From 28 September 2020 to 3 January 2021, the payment rate will be reduced from $1,500 down to $1,200 per fortnight for eligible employees and business participants who worked for 20 hours or more per week on average in the four weeks of pay periods before 1 March 2020. The rate will drop to $750 per fortnight for those working for less than 20 hours per week during that period.
From 4 January 2021 to 28 March 2021 the above payment rates will be reduced to $1,000 and $650 respectively.
Additional Turnover Tests
In order to qualify for JobKeeper Payment for the period from 28 September 2020 to 3 January 2021, businesses will need to demonstrate that their actual GST turnover has significantly fallen (by at least 30% for businesses with turnover of less than $1 billion) in the September 2020 quarter relative to the comparable quarter in 2019.
For the period from 4 January to 28 March 2021, businesses will need to demonstrate a significant fall in turnover for the December 2020 quarter, again comparable to the December 2019 quarter.
The Commissioner of Taxation will have discretion to set out alternative tests to establish eligibility where it’s not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.
Businesses that aren’t eligible under the new tests will cease to receive JobKeeper payment for its eligible employees from the first period when the new tests are failed. That is, if turnover falls by less than 30% in the September quarter compared to the same time last year, the business is no longer eligible from 28 September 2020. If the test is satisfied in the September quarter but failed in December quarter, the business is eligible to receive the reduced rates up to 3 January 2021, but is not eligible from 4 January 2021. Additionally, if the test is not satisfied in the September quarter (and therefore the JobKeeper payment is not received in the December quarter), but the turnover drops in the December quarter below the required level compared to last year, then businesses are able to then claim the JobKeeper payment from 4 January 2021 onwards.
Businesses will generally be able to assess eligibility based on details reported in the Business Activity Statement (BAS). 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 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 eligibility rules for employees have also changed. In the original eligibility rules the employee had to have been employed with your business as at 1 March 2020. The date of relevant employment with your business will now move to 1 July instead, with the same requirements for casual staff still relevant. This will increase the number of employees eligible under the JobKeeper scheme.
What do you need to do now?
The urgent items are as follows
- The new JobKeeper rules require you to provide the nomination notice to employees who qualify under the new rules within 7 days of the commencement of the legislative instrument, which is by 22 August 2020. As that is on the weekend you have until Monday 24 August to do this.
- The ATO provides employers until 31 August to meet the wage condition (including meeting any top up payments to employees) for all newly eligible employees under the 1 July eligibility test. Remember, under JobKeeper, it is one in, all in and all eligible employees, including the employees employed at 1 July, must be included in the JobKeeper scheme.
You will need to prepare your September 2020 BAS as early as possible after quarter end and compare it to the September 2019 quarter. If your turnover is not at least 30% lower you will not be entitled to JobKeeper payment after 27 September and should plan accordingly.
If you need to clarify any of the detail of the above below is the link to the Treasury website fact sheet which covers all announced changes on 21 July and 7 August.
If you have any queries in relation to the above don’t hesitate to contact your client manager.
This newsletter has been produced by Stanley & Williamson as a service to its clients and associates. The information contained in the newsletter is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this newsletter, it is imperative you seek specific advice relating to your particular circumstances.
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