The JobKeeper Payment Scheme was legislated in April 2020 and will support businesses significantly impacted by COVID-19.
The Federal Government announced the JobKeeper Payment Scheme, which is designed to assist employers (and Self-employed individuals) affected by the Coronavirus pandemic to continue to pay their workers.
Summary April 2020
The economic impacts of the Coronavirus pose significant challenges for many businesses — many of which are struggling to retain their employees.
Under the JobKeeper Payment, businesses and not-for-profits significantly impacted by the Coronavirus outbreak are able to access a wage subsidy from the Government to continue paying their employees. This assistance is helping businesses to keep people in their jobs and re-start when the crisis is over. For employees, this means they can keep their job and earn an income.
The JobKeeper Payment is a temporary scheme open to businesses impacted by the Coronavirus. The JobKeeper Payment will also be available to the self-employed.
The Government will provide $1,500 per fortnight per employee until 27 September 2020.
The JobKeeper Payment will support employers to maintain their connection to their employees. These connections will enable business to reactivate their operations quickly — without having to rehire staff — when the crisis is over.
Employers (including not-for-profits) are eligible for the subsidy if, at the time of applying:
- their business has an aggregatedturnover of $1 billion or less (for income tax purposes1) and they estimate their turnover hasfallen or will likely fall by 30 per cent or more; or
- their business has an annual turnover of more than $1 billion (for income tax purposes) and they estimate their turnover has fallen or will likely fall by 50 per cent or more; and
- their business is not subject to the Major Bank Levy.
Self-employed individuals are eligible to receive the JobKeeper Payment where they meet the relevant turnover test outlined above, and are not a permanent employee of another employer.
JobKeeper wage subsidies will be extended for those who can continue to prove eligibility.
The Government announced on 21 July 2020 that, due to the ongoing COVID-19 crisis, the JobKeeper Payment scheme will be extended by six months until 28 March 2021, from its original end date of 27 September 2020.
The existing JobKeeper Payment will remain in place until 27 September 2020. The rules for accessing the payment under existing eligibility requirements remain unchanged for periods up until 27 September 2020, except for the change to the date of employment to 1 July 2020 that determines employee eligibility.
To be eligible for JobKeeper 2.0, businesses and not-for-profits will still need to demonstrate that they have experienced a decline in turnover of:
- 50% for those with an aggregated turnover of more than $1 billion;
- 30% for those with an aggregated turnover of $1 billion or less; or
- 15% for Australian Charities and Not-for-profits Commission-registered charities (excluding schools and universities).
The following is a summary of the way the current JobKeeper system will be modified after 27 September 2020:
- You must satisfy the actual decline in turnover test to be eligible for JobKeeper payments.
- The actual decline in turnover test compares the current GST turnover (sales) of the turnover test period to the current GST turnover of the comparison test period.
- JobKeeper Extension 1 – 28 September 2020 to 3 January 2021 – The actual decline in turnover test is satisfied for extension 1 when your current GST turnover for the quarter ending 30 September 2020 (the months of July, August and September) has declined by the specified shortfall percentage (15%, 30% or 50%) in comparison to your current GST turnover for the quarter ending 30 September 2019.
- Situation 1: Your business has suffered a reduction in turnover of at least 30 percent in the September 2020 quarter compared to the previous year = eligible.
- Situation 2: Your business has not suffered a reduction in turnover of at least 30 percent in the September 2020 quarter compared to the previous year = ineligible.
- JobKeeper Extension 2 – 4 January 2021 to 28 March 2021 – From 4 January 2021, businesses and not-for-profits will need to further reassess their turnover to be eligible for the JobKeeper Payment.
- You will need to demonstrate that you have met the relevant decline in turnover test with reference to actual GST turnover in each of the June, September and December quarters 2020 to remain eligible for the JobKeeper Payment from 4 January 2021 to 28 March 2021.
- However, if you were not eligible in extension 1, you can and will be able to qualify for extension 2 by demonstrating, that you have met the relevant decline in turnover test (reduction of 30% or more in the December 2020 vs December 2019 quarter)
- The actual decline in turnover test is satisfied for extension 2 when your current GST turnover for the quarter ending 31 December 2020 (the months of October, November and December) has declined by the specified shortfall percentage (15%, 30% or 50%) in comparison to your current GST turnover for the quarter ending 31 December 2019.
- Situation 1: Your business has suffered a reduction in turnover of at least 30 percent in the September 2020 quarter & December 2020 quarter compared to the previous year = eligible
- Situation 2: Your business has not suffered a reduction in turnover of at least 30 percent in the December 2020 quarter compared to the previous year = ineligible
- Situation 3: There will also be many situations where a business suffers a decline in turnover of more than 30 percent in the September 2020 quarter and as such is entitled to phase 1, but is ineligible for phase 2 as turnover has not fallen by at least 30 percent for the December 2020 quarter, compared to the same period last year, and vice versa.
- There are 2 tiers of rates for Extension 1 & Extension 2
- Eligible employees who worked for 20 hours per week or 80 hours over four weeks, and eligible business participants who worked for 20 hours per week or 80 hours over four weeks. You will need to keep sufficient records of the hours worked eg Timesheets, Payroll Data including Payslips.
- If the employee isn’t entitled to the tier 1 rate, then they will be entitled to the tier 2 rate of payment. This rate applies to: any other eligible employees and eligible business participants.
- Extension 1 – 28 September 2020 to 3 January 2021
Amount per fortnight
$1,200 per fortnight (before tax) – 80 hours or more worked over four weeks
$750 per fortnight (before tax) – employee isn’t entitled to the tier 1 rate
- Extension 2 – 4 January 2021 to 28 March 2021
Amount per fortnight
$1,000 per fortnight (before tax) – 80 hours or more worked over four weeks
$650 per fortnight (before tax) – employee isn’t entitled to the tier 1 rate
Type of hours counted towards the 80 hours
- Actual hours worked means the actual hours of work performed by your eligible employee in their employment with you. This may be different than your employees’ contracted hours, ordinary hours or the hours they have been paid for.
- Any overtime performed by your employee in the course of their employment in their 28-day reference period will count towards the 80-hour threshold
- Personal or carer’s leave
- Annual leave
- Long service leave
- employer-paid parental leave
- other miscellaneous leave.
- When an eligible employee is paid for an absence from their employment with you on a public holiday during their 28-day reference period, you count the number of hours they were paid for that day.
- Unpaid leave is not counted towards the 80-hour threshold. However, if an employee takes unpaid leave, an alternative reference period may apply.
Notify the ATO and Staff
- Before you can claim a payment for a JobKeeper fortnight from 28 September 2020, you must notify the ATO whether the Tier 1 or Tier 2 rate applies to each of your eligible employees, eligible business participant, or eligible religious practitioners.
- You must keep relevant records used to determine eligibility for a JobKeeper payment.
What is different
Unlike when you calculated the original decline in turnover test, you do not use your projected GST turnover for the relevant quarter being tested. You use your current GST turnover.
- To work out which supplies you have made in the turnover test period, you must use the accounting basis you used for GST reporting purposes. Depending on your circumstances, you could use a cash basis or a non-cash basis.
- Employers also need to inform the ATO which tier they are claiming for each eligible employee or business participant, this can be completed through STP.
- The Decline in turnover will be retested on a quarterly basis.
- The Decline in turnover test will be based on “actual” GST turnover as disclosed on the Business Activity Statements.
- New recipients can apply for JobKeeper at any time, but existing eligibility rules apply (for example, the business was in existence on 1 March 2020 and there was at least one eligible employee on this date).
What hasn’t changed
ATO will continue to pay in arrears.
- The requirement for employers to pay employees before receiving JobKeeper payments will continue.
- You don’t need to re-enrol for the JobKeeper extension if you are already enrolled for JobKeeper for fortnights before 28 September.
- You don’t need to reassess employee eligibility or ask employees to agree to be nominated by you as their eligible employer if you are already claiming for them before 28 September.