JobKeeper 2.0 – Update 10 December 2020

The government has announced changes to the JobKeeper payment that will extend the scheme until 28 March 2021.

These changes are summarised for you below along with some other important information.

Extensions

The extension to the scheme will be in two tranches:

• October to December 2020
• January to March 2021
  
  

What will change

• Turnover tests
• The amount of the payment
• Payments to part-time workers
•  Employees employed on or before 1 July 2020 will now be eligible
  

What won’t change

• Other employee eligibility criteria
• Notification requirements
• Business participant eligibility
• The rate of turnover decline
• Timing of payments to employees (by last day in fortnight)
• Timing of payments by ATO (monthly in arrears)
• Elections previously made will remain in place (e.g. charities electing to exclude government grants from turnover calculations)

Still to be clarified

• Alternative turnover tests where 2019 is not an appropriate comparison period for the decline in turnover tests
• Alternative tests where the legislated reference periods for determining an employee’s eligibility for the higher payment rate aren’t appropriate

Employee eligibility

• From 3 August, employees employed on 1 July 2020 or earlier will also be eligible for the payments (previously 1 March 2020).

Different payment rates

• A lower JobKeeper rate will apply to employees that worked less than 80hrs during a specified 28-day period called a “reference period”
• You will need to nominate which workers are eligible for which rate of the payment
• You must notify your employees of their payment rate within 7 days of making the nomination

Reference period – for employees

• Employers will need to test two reference periods to determine which JobKeeper rate applies to each of their eligible employees
• The standard reference periods are comprised of the 28-day period ending at the end of the most recent pay cycle for the employee ending before:
  • 1 March 2020; and
  • 1 July 2020
• Employers must test both the 1 March and 1 July periods regardless of when the employee became eligible for the JobKeeper payments
• If the employee works 80 hours or more in either of the two test reference periods, then they will be entitled to the higher payment rate

Irregular pay cycle

• If a pay cycle is longer than 28 days (e.g. monthly), the hours worked during the normal pay cycle need to be apportioned to the 28-day period on a pro-rata basis.
• i.e. 28 ÷ [total days in the pay cycle] x [hours worked in the month]

Alternative test reference periods

• The ATO has issued alternative tests for the following types of employees:
  1. Where the total number of hours is not representative of a typical 28 day period. For example:
     • because the employee they took unpaid leave (sick, parental, etc.);
     • because the business was affected by a natural disaster; or
     • because of rostering schedules such as fly-in-fly-out employees
  2. New employees
  3. Employees of businesses that changed hands
• Please contact your WLF Advisor for more information about these tests

 Deemed entitlement to higher rate

• The ATO has also issued tests that deem that an employee is entitled to the higher payment rate where the employer has lost records or cannot readily ascertain the number of hours worked; or because the employee’s remuneration is not linked to hours worked. E.g. piece rates or commissions.
• Under these circumstances the employees are eligible for the higher rate where
  1. During a reference period they were paid $1,500 or more (excluding JobKeeper “top up” amounts)
  2. The employee’s written industrial award, enterprise agreement, contract or similar requires the employee to work at least 80 hours during a reference period
  3. It can be determined, based on reasonable assumptions, that the employee worked at least 80 hours during the reference period.

Employees of businesses that have changed hands

• Employees of a business that has changed hands, cannot use hours worked during a reference period in respect of their previous employer (albeit in the same business) to work out if the 80 hour threshold has been met.

Reference period – for business owners

• To receive the higher payment rate, business participants will need to demonstrate they were actively engaged in the business for 80 hours or more during the month of February 2020.
• Additionally, the nominated business participant must provide a declaration to the entity (or to the ATO if the business participant is a sole trader) that their total hours of active engagement are 80 hours or more for the month of February 2020

Alternative test reference periods

• The ATO has issued alternative tests for business participants where the total number of hours they were actively engaged in the business during February 2020 is not representative of a typical 29 day period.
  • Because circumstances meant the business participant was absent or had reduced hours during February. E.g. due to sickness or on vacation
  • Because the business was affected by a natural disaster; or
  • Because the business participant commenced participation part way through February 2020.
• Please contact your WLF Advisor for more information about these tests

Decline in turnover

• To receive the JobKeeper payments during the December 2020 and March 2021 quarters, businesses (or charities) must demonstrate an actual decline in turnover in the immediately preceding quarter compared with the same period in the prior year.
• The rates of decline remain the same
• 30% for most businesses
• 15% for not-for-profits
• The decline must be based on actual turnover (not projected)
• JobKeeper payments are not included in the calculation of business turnover
• Charities that elected to exclude government grants in the calculation of their turnover must continue to do so
• Besides demonstrating a decline in the preceding quarter, businesses already participating in the scheme do not have to reapply to enter the scheme
• Businesses that do not satisfy the test to receive payments during the December quarter can retest their eligibility in January to receive payments during the March quarter
• The ATO has determined that a business’ turnover as reported on their BAS (or would be reported if it was registered for GST) is the actual turnover for the purposes of the test
• Businesses will need to finalise their accounts quickly to determine their eligibility for the extended scheme because employees still need to be paid before the end of each JobKeeper fortnight.
• However, the ATO has discretion to extend the deadline for which business has to pay employees. It is likely the ATO will provide a grace period to allow businesses enough time to confirm their eligibility and then make any necessary top up payments.

1^st Extension (October to December 2020)

• This round runs for fortnights beginning on 28 September and ending on 3 January
• Full rate: $1,200
• Partial rate: $750
• Decline in turnover test: September quarter
  • Businesses must demonstrate a drop in actual turnover for the September quarter (July, August & September 2020) to qualify for the next round of payments
  • The comparison period for demonstrating the decline will be the same period in the 2019 year
  • The ATO will issue alternative tests where the 2019 year is not an appropriate comparison, similar to the alternative tests available now
  • The rate of decline remains the same (30% for most businesses and 15% for not-for-profits)

2^nd Extension (January to March 2021)

• This round runs for fortnights beginning on 4 January and ending on 28 March
• Full rate: $1,000
• Partial rate: $650
• Decline in turnover test: December quarter
  • Businesses must demonstrate a drop in actual turnover for the December quarter (October, November & December 2020) to qualify for the second round of payments
  • The comparison period for demonstrating the decline will be the same period in the 2019 year
  • The ATO will issue alternative tests where the 2019 year is not an appropriate comparison, similar to the alternative tests available now
  • The rate of decline remains the same (30% for most businesses and 15% for not-for-profits)
    
    

JobKeeper 2.0 Extension – New Decline in Turnover Forms Lodgement Key Dates

More information is available here:
WLF Covid 19 news

Treasury factsheet: Extension of the JobKeeper Payment

ATO information 

Please contact your WLF Advisor if you have any additional questions