Thinking | 21 July 2020

JobKeeper 2.0

By Anthony Bradica, Michael Parker, David Catanese, Adam Dimac, Darcy Bolton and Aron Mazur

To date, the Government has made over $30 billion in JobKeeper Payments. The JobKeeper Scheme, in its current form, will continue for the full six months originally planned until 27 September 2020.

However, from 27 September 2020, there will be some significant changes to the JobKeeper Scheme. Existing eligibility criteria, where not specifically modified, will remain in place.

These changes are summarised below:

  • The Jobkeeper Scheme will be extended for a further six months from 28 September 2020 to 28 March 2021, under a two-tiered payment system. The introduction of a two-tiered payment system is intended to address the concern that under the current $1500 flat-payment system, some individuals were receiving JobKeeper Payments far in excess of their ordinary earnings.
  • For the first quarter of JobKeeper 2.0, being 28 September to 3 January 2021, the JobKeeper Payment will be:
    • $1200 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for 20 hours or more a week on average, and for business participants who were actively engaged in the business for more than 20 hours per week.
    • $750 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working in the business for less than 20 hours a week on average, and for business participants who were actively engaged in the business for less than 20 hours per week in the same period.
  • For the second quarter of JobKeeper 2.0, being 4 January 2021 to 28 March 2021, the JobKeeper Payment will be:
    • $1000 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working for 20 hours or more a week on average, and for business participants who were actively engaged in the business for more than 20 hours per week.
    • $650 per fortnight for eligible employees that, in the four weeks before 1 March 2020, were working for less than 20 hours a week on average, and for business participants who were actively engaged in the business for less than 20 hours per week.
  • From 28 September 2020, eligibility for the JobKeeper Payment will be assessed based on actual turnover. This change is intended to target the JobKeeper Scheme to support those organisations which continue to be significantly impacted by the Coronavirus.
  • To be eligible for JobKeeper Payments for the first quarter of JobKeeper 2.0, being 28 September 2020 to 3 January 2021, entities will need to meet a modified decline in turnover test. Entities will need to show that they have met the decline in turnover test in the June and September 2020 quarters, with reference to their actual GST turnover and relative to comparable periods (generally the corresponding quarters in 2019). Existing decline in turnover percentage requirements, (ie 50%, 30% and 15%) will remain in place.
  • To be eligible for JobKeeper Payments for the second quarter of JobKeeper 2.0, being 4 January 2021 to 28 March 2021, entities will need to meet a modified decline in turnover test. Entities will need to show that they have met the decline in turnover test in the June, September and December 2020 quarters, with reference to their actual GST turnover and relative to comparable periods (generally the corresponding quarters in 2019). Existing decline in turnover percentage requirements, (ie 50%, 30% and 15%) will remain in place.
  • The Jobkeeper Payment will remain open for new recipients that may become eligible in the extended periods.

The announcement of JobKeeper 2.0 some months before its implementation, together with the fact that the current JobKeeper Scheme has been in place for over three months, should reduce some of the uncertainty originally faced by employers and their adviser regarding the Scheme.

The two-tiered payment system adds a further degree of complexity and, ultimately, employers and their advisers will bear the burden of getting it right. In determining which rate an employee will be eligible for, the eligible business will be required to nominate a rate for each eligible employee.

The Commissioner of Taxation (Commissioner) can provide tests where the employee’s hours were unusual and further guidance will be provided by the Australian Taxation Office (ATO). Presumably, the ATO will also be alert to dishonest and fraudulent claims that employees or business participants worked more than 20 hours per week prior to 1 March 2020.

The modified decline in turnover test, while more stringent, should be easier to assess as it will be based on actual GST turnover that is assessed for the relevant quarter(s), even if the employer reports on a monthly basis. That is, the modified test won’t require a projection. Additionally, the Commissioner will have discretion to set out alternative tests that would establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019, in line with the Commissioner’s existing discretion.

Entities that are required to lodge a Business Activity Statement (BAS) will generally be able to assess eligibility based on details reported in their BAS, while alternative arrangements will be put in place for businesses and not-for-profits that are not required to lodge a BAS.

As some entities may be required to assess their eligibility in advance before the deadline to lodge relevant BAS (ie for the September and December quarters (or month)), the Commissioner 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.

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