In response to the continued economic difficulties Australians are facing, the Australian government has announced big changes to the JobKeeper Scheme, with support targeted to businesses that continue to be significantly impacted by Coronavirus. Among other changes surrounding eligibility and the test to be met, the government also announced the JobKeeper payment will continue until 28 March 2021, and further, that the sum of the payments will operate as a tiered system.
KEY TAKE OUTS:
- From 3 August 2020, the relevant date of employment for employees on JobKeeper is 1 July 2020 (replacing 1 March 2020);
- From 28 September 2020, businesses claiming JobKeeper will be required to re-assess their eligibility with reference to their actual turnover;
- From 28 September 2020, the Jobkeeper payment will be reduced, and paid at two rates according to the hours worked by the employee;
- As the test now requires businesses to assess actual turnover, it is important for business owners to ensure their September 2019 and December 2019 Business Activity Statements have been lodged.
Additional turnover tests: re-assessing the business’ eligibility
From 28 September 2020, businesses and not-for-profits will be required to re-assess their eligibility to continue to partake in the JobKeeper program. Businesses will need to demonstrate that they have suffered the relevant decline in turnover, using their actual GST turnover and comparing it to the actual GST turnover of a comparable period (generally, the same quarter in 2019). Prior to 28 September 2020, the relevant tests were met by calculating a projected GST turnover.
|Initial JobKeeper Phase||From 30 March 2020 to 27 September 2020||Projected and actual GST turnover|
|Extension Period One||From 28 September 2020 to 3 January 2021||Actual GST turnover only, comparing September 2020 quarter to a comparable period (generally September 2019 quarter)|
|Extension Period Two||From 4 January 2021 to 28 March 2021||Actual GST turnover only, comparing December 2020 quarter to a comparable period (generally December 2019 quarter).|
The decline in turnover tests have not changed, and remain as follows:
- 50% decline in turnover for businesses turning over more than $1 billion;
- 30% decline in turnover for businesses turning over $1 billion or less; or
- 15% decline in turnover for Australian charities and not for profits.
In order to be eligible to receive JobKeeper during Extension Period One, businesses will need to demonstrate that their actual GST turnover has fallen by either 50%, 30% or 15%, in the September quarter of 2020 (July, August, September), when compared to the GST turnover of a comparable period – generally the September quarter of 2019. This can be easily calculated off the businesses 2019 Business Activity Statements that has been lodged, and if it hasn’t been lodged, we recommend doing so as soon as possible.
In order to be eligible to receive JobKeeper in Extension Period Two, businesses need to re-assess their eligibility to receive JobKeeper. Businesses will again need to demonstrate that their actual GST turnover has fallen by either 50%, 30% or 15%, in the December quarter of 2020 (October, November, December), when compared to the GST turnover of a comparable period – generally the December quarter of 2019. This can be easily calculated off the businesses 2019 Business Activity Statements that has been lodged, and if it hasn’t, we recommend doing so as soon as possible.
This change in the assessment criteria will cause some headaches for businesses, as they will be required to assess their eligibility for JobKeeper prior to the lodgement due date for the September and December 2020 Business Activity Statements (of late October and late January or late February respectively). Further, as JobKeeper is paid in arrears to the businesses receiving it, this early assessment is required by the business to forecast wages payable to its’ employees (as the amount payable to each employee by the business will be effected by whether the business is receiving JobKeeper or not).
What if my business doesn’t have a comparable period for 2019?
Where an appropriate comparison period for 2019 is not available, the Commissioner of Taxation has the ability to determine an alternative decline in turnover test. Examples of circumstances where an appropriate 2019 comparable period is not available are:
- The business was not operating in 2019;
- A part of the business was purchased or sold in 2019;
- A part of the business was restructured;
- A business had an increase in turnover by more than 50% in the last year;
- A business turnover is not cyclical (that is, the turnover does not occur recurrently or in cycles); and
- A business ran by a small trader or partnership did not turn over as much, or at all, in the 2019 period due to the business owner being sick, injured or on leave.
The alternative tests available are found in the body of legislation called the Alternative Decline in Turnover Test Rules 2020, which is located here.
For example, if the business was not operating in 2019, but commenced before 1 March 2020, then the business multiples the average monthly GST turnover by three, and uses that figure instead of the entity’s current GST turnover.
Amendment to employee eligibility: broadened definition of eligible employees
Also relevant to business owners is the amended definition of an eligible employee. Effective 3 August 2020, the definition of an eligible employee now includes those who were employed on or before 1 July 2020 (previously 1 March 2020). This definition also includes those employees who were stood down or re-hired.
Employees will still be required to meet the further eligibility tests (such as not receiving paid parental leave for the period in which they are claiming JobKeeper). Further information regarding the additional tests can be found here.
Amendment to the JobKeeper Payment
Effective 28 September 2020, the JobKeeper payment will be reduced and will operate as a two-tiered structure, based on the hours worked by the employee (detailed in the table below). In January 2021, the JobKeeper payment will be further reduced and will continue to operate as a two-tiered system:
|Period||Employees who work 20 hours or more per week||Employees who work 20 hours or less per week|
|From 28 September 2020 to 3 January 2021||$1,200.00||$750.00|
|From 4 January 2021 to 28 March 2021||$1,000.00||$650.00|
The hours worked will be based on the average amount of hours worked per week, during the month of February 2020 (or June 2020, under the extended JobKeeper scheme). In the circumstances where an employee’s hours were not usual during this assessment period (for example, if an employee was on leave, or was only employed for part of February 2020 or June 2020), the Commissioner of Taxation will have the discretion to set out alternative tests to meet.
The various amendments, eligibility tests, and requirements can become very overwhelming for business owners and sole traders. If you are unsure about any of the amendments due to commence in the near future, or the operation of the current JobKeeper scheme, it is important that you seek professional accountant and legal advice as soon as possible.
Coutts’ employment law team can guide you through the current operation of JobKeeper and the imminent changes, provide legal advice to you in relation to JobKeepers’ intersection with employment law, and also refer you to some great accounting teams if needed.
For further information please don’t hesitate to Contact coutts today.
This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.