JobKeeper Changes

The Government announced today (7 August) that they will be changing two key points of the eligibility criteria for JobKeeper. These two changes are significant and we would expect they will allow more Victorian businesses and not-for-profits, in particular, to be able to access the ongoing JobKeeper support. The changes are designed to reflect the reality of the situation in Victoria – that the June quarter saw an easing of restrictions and businesses performing better, only for that to change in July and August. The changes also acknowledge people that started in employment in the March – June period, may now have that employment under threat by the Stage 4 restrictions.

JobKeeper 1.0 and JobKeeper 2.0 Change

The first change is in relation to eligible employees and is effective from 3 August 2020 and into JobKeeper 2.0. You can now be an eligible employee, subject to the other criteria which remains the same, if you were either:

a full-time, part-time or fixed-term employee at 1 July 2020 (in addition to employees at 1 March 2020); or
a long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 July 2020 (in addition to employees at 1 March 2020) and not a permanent employee of any other employer

JobKeeper 2.0 Change

The second change is in relation to the turnover test and is only relevant to JobKeeper 2.0. Rather than requiring a reduction in turnover in consecutive quarters, your business will now just have to demonstrate a reduction in the preceding quarter.

• For the first JobKeeper Payment extension period of 28 September 2020 to 3 January 2021, actual GST turnover will need to meet the relevant decline in turnover tests in the September quarter 2020 relative to the September 2019 quarter (alternative tests will still be available).
• For the second JobKeeper Payment extension period of 4 January 2021 to 28 March 2021, actual GST turnover will need to meet the relevant decline in turnover tests in the December 2020 quarter relative to the December 2019 quarter
  All other details, including the staged reduction in amounts, are not changed by today’s announcements.

The updated details for JobKeeper 2.0 are now all summarised below:

What will be changing from JobKeeper 1.0?

The Amounts

The extension of JobKeeper makes it clear that it is the Government’s intention to taper off the payments over the six months following the end of September. The payment rate will be decreased in two steps. Two tiers of payments have been introduced depending on how many hours an employee worked in the 28 day period ending in the last pay period prior to 1 March 2020 or prior to 1 July 2020. This may result in a reduction to what certain part-time employees can receive.

From 28 September 2020 to 3 January 2021, the JobKeeper Payment rates will be:

• $1,200 per fortnight for all eligible employees and business participants who satisfy the criteria of working 20 hours or more per week in the relevant period; and
• $750 per fortnight for other eligible employees and business participants.

From 4 January 2021 to 28 March 2021, the JobKeeper Payment rates will be:

• $1,000 per fortnight for all eligible employees and business participants who satisfy the criteria of working 20 hours or more per week in the relevant period; and
• $650 per fortnight for other eligible employees and business participants.

There will be discretion if employee hours were not usual in February 2020 or June 2020.

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 Test Period

New test periods have been introduced with the aim of restricting JobKeeper to those businesses who continue to experience a decline in turnover. This may render some businesses previously eligible for JobKeeper, ineligible going forward. The monthly test periods and the use of projected turnover (it will have to be actual turnover figures) to establish eligibility have also been eliminated.

The tests will now be as follows:

• For the first JobKeeper Payment extension period of 28 September 2020 to 3 January 2021, actual GST turnover will need to meet the relevant decline in turnover tests in the September quarter 2020 relative to the September 2019 quarter (alternative tests will still be available).
• For the second JobKeeper Payment extension period of 4 January 2021 to 28 March 2021, actual GST turnover will need to meet the relevant decline in turnover tests in the December 2020 quarter relative to the December 2019 quarter.

Businesses and not-for-profits will need to assess their eligibility for JobKeeper in advance of the relevant BAS deadline in order to meet the wage condition. The Taxation Office will 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.

We expect that the rules of the extended scheme will contain the same strong anti-avoidance measures that the original scheme has and so any action taken to obtain access to the scheme will be dealt with under those provisions.

What will not be changing from JobKeeper 1.0?

Eligible Employer Requirements

We do not have details to confirm this at the moment but expect that this will not change. Employers, including Not-for-profits (NFPs) will be eligible for the JobKeeper payment if all of the following apply:

• On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.
• You employed at least one eligible employee on 1 March 2020.
• Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).
• You satisfy the decline in turnover test (see below)
• The entity is not:
  • subject to the Major Bank Levy,
  • an Australian government agency,
  • a local governing body
  • wholly owned by an Australian government agency or local governing body
  • a sovereign entity
  • a company in liquidation
  • an individual who has entered bankruptcy

Definition of a Turnover

Turnover is calculated as it is for GST purposes. It includes all taxable and GST Free supplies but not input taxed supplies.

Aggregated turnover broadly includes your annual turnover, plus the annual turnover of all the entities that are connected or affiliated with you, subject to specific adjustments (for example, for transactions between you and those other entities). These connected entities or affiliates may be based in Australia or overseas.

For registered charities, turnover includes donations received or are likely to receive (including non-monetary value of gifts).

Decline in Turnover Test

To be an eligible employer, a business must show that it has faced a

• 30% fall in GST turnover (for an aggregated turnover of $1 billion or less)
• 50% fall in GST turnover (for an aggregated turnover of more than $1 billion), or
• 15% fall in GST turnover (for ACNC-registered charities other than universities and schools).

Where a business was not in operation a year earlier, or where the year earlier was not representative of their usual or average turnover, an alternate test may be used.

Eligible Employees

Once it is determined that an employer is eligible to receive the JobKeeper payments, you must determine and nominate eligible employees of the employer. Eligible employees for the extended JobKeeper will be:

• Full-time and part-time employees employed at 1 July 2020 and currently employed
• Casual employees employed on a regular and systematic basis for at least 12 months prior to 1 July2020
• Stood down or re-hired employees that are re-engaged by a business that was their employer on 1 July 2020
• Aged 16 or older at 1 July 2020 (some additional conditions apply to 16 and 17 year olds)
• Australian citizen, holder of a permanent visa, or a protected Special Category visa holder as at 1 March 2020 (this date has not changed)
• Resident for Australian tax purposes and a holder of a Subclass 444 visa as at 1 March 2020 (this date has not changed)
• Not in receipt of a JobKeeper Payment from another employer (If the employee has two or more permanent part time jobs, they will need to nominate a primary employer to receive the JobKeeper Payment)
• Not in receipt of any paid government parental leave or Dad and partner pay
• Not in receipt of a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work
• Where the business is a trust, partnership or company, the business is able to nominate one eligible business participant who is actively engaged in operating the business (partner, adult beneficiary, shareholder or director) to receive the JobKeeper payment

Timing of the payment

We expect there to be no change here. Employers will first pay eligible employees as usual. The ATO will then pay the JobKeeper Payment to eligible employers no later than 14 days after the end of the calendar month in which the fortnight ends.

Inevitably, there will be more details to come as the Scheme is legislated or the Treasurer formalises the Rules of the Scheme. However, in the meantime, we now have some clear direction on the future of JobKeeper. If you have any queries about how these changes will affect you or require assistance with ascertaining your continued or new eligibility to JobKeeper, please contact us to discuss this. More information is also available at https://treasury.gov.au/sites/default/files/2020-08/Fact_sheet-JobKeeper_Payment_extension.pdf