In August 2020, the Federal Government announced an extension of the JobKeeper Scheme until March 2021.
There are two new eligibility periods, October to December 2020 and January to March 2021. However, the maximum payment rate will be cut from $1,500 per fortnight to $1,200 per fortnight. The payment rates will be reduced again from 4 January 2021.
The scheme is for organisations which have experienced a drop in turnover due to the COVID-19 pandemic. Non-government schools are required to have experienced a decline in GST turnover of 30% to be eligible.
There was some uncertainty in the initial rules for JobKeeper 1.0 about the method for determining GST turnover. However, we believe there is greater clarity in the rules in relation to JobKeeper 2.0 in the determination of GST turnover for Non-Government Schools.
We recommend you consider the following:
- Eligible – Schools have been intentionally included in the JobKeeper scheme and are specifically named in the rules, albeit with a higher turnover decline threshold compared to other charities. So there is a clear expectation that some schools will be eligible to benefit.
- Assessment – The JobKeeper Scheme represents significant additional funding for schools and therefore eligibility warrants close consideration. Every school should assess and document their eligibility and report to their governance body.
- Decline in turnover – The JobKeeper Scheme requires a 30% decline in turnover for schools and determining how this should be calculated and for which period requires knowledge of the JobKeeper legislation and rules, the GST Act, and other ATO guidance and rulings. For most organisations this will require specialist tax knowledge and most likely external advice.
- Early Access of July Federal Funding – Some schools may have applied for and received their July 2020 Federal Recurrent Funding in June 2020. We believe this increases the chances of being eligible for JobKeeper 2.0, so it is important you factor that into your assessment.
- Alternative Test – Organisations have the option of using the Basic or Alternative Test. One of the tests under the Alternative Test is for an organisation that has had an increase in turnover. There are a number of periods that need to consider here in this test, so we encourage schools to assess eligibility under this test also.
- Documentation – One of the eligibility conditions of the scheme is that proper documentation is maintained in relation to an organisation’s assessment. Schools should document their eligibility and all other relevant information in a form that is able to be approved by the governance body and subjected to scrutiny by the ATO.
- Risks – It will be important as part of the government approval process to consider the various risks associated with participating in the scheme and ensure these risks are adequately managed and/or mitigated.
We have an expert team assisting a number of schools and not-for-profit to navigate the complexities of the JobKeeper Scheme. We have assisted schools in a review of in-house calculations, assessing GST turnover, reviewing inclusions and exclusions , technical interpretations and also with the documentation to provide the board so that they can make an informed decision and the comfort that management have appropriately assessed eligibility.
If you are interested, we have developed an initial checklist of information requirements needed to undertake this review.
Organisation have until 31 October 2020 to meet the wage condition to be eligible for the JobKeeper fortnights starting 28 September 2020 and 12 October 2020.
Please feel free to contact us if you have any questions or would like us to undertake a review of your JobKeeper eligibility.