The first tranche of JobKeeper ends on 27 September 2020. Those needing further support will need to reassess their eligibility and prove an actual decline in turnover.
To receive JobKeeper from 28 September 2020, eligible employers need to assess their decline in turnover with reference to actual GST turnover for the September 2020 quarter (for JobKeeper payments between 28 September to 3 January 2021), and again for the December 2020 quarter (for payments between 4 January 2021 to 28 March 2021).
From 28 September 2020, the JobKeeper payment rate will reduce and split into a higher and lower rate based on the number of hours the employee worked in a specific 28 day period prior to 1 March 2020 or 1 July 2020.
To access JobKeeper payments from 28 September 2020, there are three questions that need to be assessed:
- Is my business eligible?
- Am I and/or my employees eligible? and
- What JobKeeper rate applies?
We’ve summarised the key details in this update.
1. Eligible businesses
Eligible employers
An eligible employer is an employer that:
- On 1 March 2020, carried on a business in Australia or was a non‑profit body pursuing its objectives principally in Australia; and
- before the end of the JobKeeper fortnight, it met the original decline in turnover test*:
15% or more
- ACNC-registered charity (excluding universities, or schools within the meaning of the GST Act – these entities need to meet the basic turnover test)
50% or more
- Large businesses where aggregated turnover for the test period is:o likely to be $1 billion or more; oro aggregated turnover for the previous year to the test period was $1 billion or moreA small business that forms part of a group that is a large business must have a >50% decline in turnover to satisfy the test.
30 % or more
- All other qualifying entities
1 March 2020 is an absolute date. An employer that had ceased trading before 1 March, commenced after 1 March 2020, or was not pursuing its objectives in Australia at that date, is not eligible.
The decline in turnover test
For businesses already enrolled in JobKeeper, to receive payments from 28 September 2020, you need to meet an extended decline in turnover test based on actual GST turnover.
Businesses that are enrolling for the first time, need to meet the basic eligibility test and the decline in turnover test/s for the relevant period.
30 March to 27 September 2020
- Projected GST turnover for a relevant month or quarter is expected to fall by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*
28 September to 3 January 2021
- Actual GST turnover in the September 2020 quarter (July, August & September) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*
4 January 2021 to 28 March 2021
- Actual GST turnover in the December 2020 quarter (October, November & December) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*
* Alternative tests may apply
Most businesses will generally use their Business Activity Statement (BAS) reporting to assess eligibility. However, as the BAS deadlines are generally not until the month after the end of the quarter, eligibility for JobKeeper will need to be assessed in advance of the BAS reporting deadlines to meet the wage condition for eligible employees.
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.
Calculating GST turnover
Calculating GST turnover for tranches 2 and 3 of JobKeeper is different to the original JobKeeper requirements as entities will only be using current GST turnover figures (not projected GST turnover).
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.
Current GST turnover 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 such as certain State based grants.
What if you don’t have a comparison period or there was a one-off event?
The Commissioner of Taxation has the power to set out alternative tests that 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. The Commissioner provided a number of alternative tests that could be used for passing the original decline in turnover test and the ATO has indicated that similar tests are likely to be available for the additional decline in turnover tests for the September 2020 and December 2020 quarters, but these have not been released as yet.
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Eligible employees
From 3 August 2020, the eligibility tests for employees were changed to enable a greater number of employees to access JobKeeper.
Previously, an employee had to be employed by the relevant entity on 1 March 2020 to be eligible for JobKeeper payments. Someone employed as a casual on that date also must have been employed on a regular and systematic basis for the 12 month period leading up to 1 March 2020.
Now, employees who were previously ineligible for JobKeeper because they were not employed by the entity on 1 March 2020 may be able to receive JobKeeper payments if they were employed by the entity on 1 July 2020 and can fulfil all of the other eligibility requirements. If an employee already passed all the relevant conditions at 1 March 2020 then they don’t need to be retested using the 1 July 2020 test date.
- On 1 July 2020 (previously 1 March 2020):
- Was aged 16 years and over; and
- If the individual was aged 16 or 17, was either financially independent or was not undertaking full-time study;
- Was an employee other than a casual, or was a long-term casual*; and
- Was an Australian resident (under the meaning of the Social Security Act 1991), or a resident for tax purposes and held a Subclass 444 (Special category) visa**.
- And, at any point during the JobKeeper fortnight:
- Was an employee of the employer (including employees that have been stood down or rehired); and
- Was not an excluded employee:
- An employee receiving parental leave pay or dad and partner pay; or
- An employee receiving workers compensation payments in relation to total incapacity.
- And, has provided the JobKeeper Payment Employee Nomination to the employer:
- Agreeing to be nominated by the employer as an eligible employee under the JobKeeper scheme; and
- Confirming that they have not agreed to be nominated by another employer; and
- If they are a long-term casual, they do not have permanent employment with another employer.
*A ‘long term casual employee’ is a person who has been employed by the business on a regular and systematic basis during the period of 12 months that ended on the applicable testing date (previously 1 March 2020, but changing to 1 July 2020). These are likely to be employees with a recurring work schedule or a reasonable expectation of ongoing work.
3. JobKeeper payments
From 28 September 2020, the payment rate for JobKeeper will taper from the flat rate of $1,500 and split into a higher and lower rate.
| JobKeeper payment | 30 March to 27 September 2020 | 28 September to 3 January 2021 | 4 January 2021 to 28 March 2021 |
| Worked 80 hours or more in the reference period | o$1,500 per fortnight per employee | o$1,200 per fortnight per employee or business participant | o$1,000 per fortnight per employee or business participant |
| Worked less than 80 hours in the reference period | o$750 per fortnight per employee or business participant | o$650 per fortnight per employee or business participant |
What’s a reference period?
| Reference period | Hours | |
| Eligible employees | The 28 days finishing on the last day of the last pay period that ended before either:
o 1 March 2020, or o 1 July 2020. |
Actual hours worked including any hours for which they received paid leave (e.g., annual, long service, sick, carers and other forms of paid leave) or paid absence for public holidays. An employee’s ‘actual’ hours might be different to their contracted, ordinary hours or hours they are paid for. |
| Eligible business participants | February 2020 (29 days) | Active engagement in the business. |
| Religious practitioners | February 2020 (29 days) | Activities in pursuit of your vocation for your institution. |
Eligible employees
Eligible employees that have been employed on a full time basis since 1 March 2020 or 1 July 2020 will generally receive the higher JobKeeper rate (as full time employees work more than 80 hours in 28 days).
Businesses however will need to determine the rate applicable to eligible part-time and casual employees.
The reference period is the 28 day ending at the end of the most recent pay cycle for the employee ending before:
- 1 March 2020; or
- 1 July 2020.
For eligible employees who have been employed since 1 March 2020, employers need to choose the reference period that provides the best outcome for the employees. For many employers, this will be the pre COVID-19, 1 March 2020 reference date.
For eligible employees employed since 1 July 2020, use the pay periods prior to 1 July 2020.
If the pay cycle is longer than 28 days, a pro-rata calculation needs to be done to determine the average hours worked and on paid leave across an equivalent 28 day period. For example, if the relevant monthly pay cycle has 31 days, you take the total hours for the month and multiply this by 28/31.
In order for an employer to receive JobKeeper payments from 28 September 2020 onwards they must notify the ATO of the payment rates for all eligible employees. The employer must then notify its employees within 7 days of advising the ATO of the payment rate.
| Need more information or have further questions in relation to JobKeeper 2.0? Call us on 07 5451 1118 or send an email at reception@mjjacountants.com.au |
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