Jobkeeper Extension Breakdown
Excellent news! The Government is continuing its support of businesses through the COVID pandemic, by extending the Jobkeeper program.
Morrison said that the Treasury review found the JobKeeper program has been effective in saving businesses from collapse and workers from unemployment.
“The report recommends that we should continue JobKeeper and we shall, but it needs to be done in a way that is responsive to the circumstances,” Morrison said.
Jobkeeper 2.0 extends the original JobKeeper scheme by a further six months to 28 March 2021, replacing the $1,500 a fortnight payment with a new two-tier payment rate from 28 September 2020.
Change One – CHANGE IN DECLINE IN VALUE TEST
Just to recap, Jobkeeper is applied for from the 1st - 14th of each month. This is so you have enough to time send out your invoices, run your reports and assess your eligibility.
This round, business will need to show that there has been a fall in their actual turnover rather than their forecasted decline in turnover.
So where you would have been able to show that your expected revenue for September was $X but due to COVID you’ve had to cancel engagements/work and have lost that projected income for the month. The new test is for the September quarter with reference to the relative comparative period in the prior year.
So what this means is, whatever your turnover was July, August, September 2019 (think total sales or revenue for the QTR) will be used in comparison with July, August, September 2020.
This JobKeeper eligibility will be re-tested in October and early January 2021.
The test periods will be:
The Commissioner of Taxation 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.
It is still unclear how the alternative tests will be applied. We will keep you updated!
This test would be applied in the event of a recently established business that has no direct comparable period. E.g. they started business in November 2019, so there is no September QTR to compare the GST turnover to, if they’ve had any key business changes. The variations are endless as there are many different combinations that could result in not having a comparable quarter.
Change Two – Employee eligibility
The reference date for assessing which employees are eligible for the JobKeeper Payment is now 1 July 2020.
Therefore any staff members that you’ve employed prior to 1st of July are now eligible to be part of your Jobkeeper payments.
The reference period for employees regarding their hours worked to determine their tier of payment will be the two fortnightly pay periods prior to 1 March 2020 or 1 July 2020. The period with the higher number of hours is to be used for employees who were eligible at 1 March 2020.
You will need to run some reports, if you use an accounting program such as XERO, there are inbuilt mechanisms which will easily help you churn out this data, however it is important that you do double check these figures.
So, If you are currently receiving Jobkeeper for your employees, but had a few that didn’t make the date cut off, now would be the time to re-assess their eligibility.
Change Three - $1,500 will now be $1,200 or $750
Instead of the flat $1,500 per employee under the original JobKeeper, JobKeeper 2.1 will have two-tiers depending on how many hours an individual worked in the 4 weeks before 1 March 2020 or July 2020
The payment amounts will be:
This means employers who have hired new employees or have existing employees who now satisfy the long-term casual employment requirement during the period 1 March 2020 to 1 July 2020 may face additional cashflow pressure in the short term.
If you are a sole trader, your tier is dependent on how many hours you were actively engaged in your business. But we all know that when you own your own business, that it is pretty much a 24/7 gig.
While it can be rather daunting having to navigate these changes, it can also be exciting for those who were not previously eligible to access Jobkeeper who now can.
If you are still confused, or are unsure of how these changes will affect you and your business, please reach out as we are more than happy to help you map it out.
Some sources:
https://treasury.gov.au/coronavirus/jobkeeper/extension
https://www.smartcompany.com.au/coronavirus/jobkeeper-jobseeker-changes-march-2021/