JobKeeper Changes from September 2020
JobKeeper has changed and employers need to ensure they identify additional employees who could be eligible and meet new reporting criteria.
The Australian Taxation Commissioner has released further details about changes to new rules relating to ongoing eligibility for Jobkeeper 2.0.
The amendments to the JobKeeper scheme do not replace existing rules, but do incorporate the previously announced dual-tier payment system, adjustments to eligibility for employees, and the modified decline in turnover test.
Below we explore what is changing and how it may impact you and your employees. We've also summarised the September changes in a downloadable Factsheet below.
The ATO has the power to extend the time an entity has to pay employees in order to meet the wage condition. For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.
Current GST turnover is based on actual sales that have been made rather than an estimate / prediction of sales. Therefore, the business will have to show that it has had a decline in actual GST turnover for the September 2020 and/or the December 2020 quarter relative to those periods in 2019. The same rates of decline apply i.e. 30% for entities with less than $1billion aggregated turnover or 50% for aggregated turnover of more than $1billion.
The move to actual decline in GST turnover is a change from the previous projected turnover of any of the calendar months from March to December 2020, however you will technically need to satisfy both.
This is because businesses already enrolled in JobKeeper would have already satisfied the original projected GST decline turnover test and businesses entering the JobKeeper scheme for the first time will have to satisfy the original projected GST decline in turnover test if they can demonstrate a fall in their actual GST Turnover for a relevant quarter
The new actual decline in turnover test must be satisfied separately for Extension Period 1 (28 September 2020-3 January 2021) and Extension Period 2 (4 January 2021-28 March 2021).
Current GST turnover also includes proceeds from the sale of capital assets, unless the sale is input taxed. Current GST turnover includes taxable and GST-free supplies, but should exclude input taxed supplies such as residential rental income and financial supplies like dividends, interest etc.
JobKeeper and ATO cash flow boost payments should be excluded from the calculation along with other payments that don't represent consideration for a supply made by the entity.
When applying the new turnover reduction tests for the September 2020 quarter and December 2020 quarter, entities that are registered for GST must use the same method that is used for GST reporting purposes.
That is, if the entity is registered for GST on a cash basis then a cash basis needs to be used to calculate current GST turnover for the purpose of these new tests. Entities that are not registered for GST can choose whether to calculate GST turnover using a cash or accruals basis, but must use a consistent method.
If an individual did not work for at least 80 hours in the 'standard' reference periods for working out whether the higher or lower payment rate applies from 28 September 2020 onwards, it is necessary to determine whether this threshold could be satisfied in connection with some alternative reference periods.
Broadly, these are available if the employee's total hours of work and paid leave in the standard reference periods were not representative of the total number of those hours in earlier periods; the individual was not employed during all or part of the standard reference periods; the first pay cycle ended after the reference time; or where an employee has been transferred to a new employer as part of a business sale.
Eligible businesses that have nominated an eligible business participant will need to confirm the hours of active engagement in the business to determine whether they receive the higher or lower tier payment.
For more details about the dual rates, see our August JobKeeper update or contact our team on 02 9957 4033 to discuss how your employees will be impacted by these changes.
Some employees will automatically qualify for the higher JobKeeper payment rate. Broadly, this applies if the employer has incomplete records of total hours of work and paid leave, including where salary, wages, commissions, bonuses etc are not tied to an hourly rate or contracted rate.
The employee must also fall within specific categories, including where they were paid at least $1,500 in the reference period; they were required to work at least 80 hours under an industrial award, enterprise agreement or contract; or it is reasonable to assume that they worked at least 80 hours during the applicable period.
Business are required to comply with separate notification requirements for their eligible employees and business participants. The ATO will release its approved forms in due course.
The ATO has not yet released details of the alternative tests that will be used in determining whether certain entities can pass the new turnover reduction tests. The ATO has stated that these will be similar to the alternative tests that apply in connection with the original decline in turnover test, but further guidance will be published soon.
Changes to JobKeeper are complex and we highly recommend speaking to your accountant to ensure that your eligibility requirements are met, however we have summarised key points and examples in our new JobKeeper 2.0 Guide:
Business Factsheet: JobKeeper 2.0.
Please contact us via email or phone 02 9957 4033 for advice.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.