On 21st July the government announced it was extending JobKeeper payments from 27th Sep 2020 to 28th Mar 2021. This is no doubt a welcome announcement to many businesses who saw the end of September as the date when some hard decisions had to be made about the viability of their business in its existing form.
The key changes from 27th September are as follows:
There are new eligibility rules to determine who can access the new payments. With the original JK, once a business qualified it was eligible for all remaining payments. With JobKeeper 2.0 a business will need to re-qualify in order to access further payments from Oct to Dec, and then again to access payments from Jan to Mar.
To re-qualify a business needs to determine that they continue to meet their decline in turnover threshold (15%, 30%, 50%).
To access payments from Oct to Dec a business must have had the required decline in turnover comparing BOTH the quarters ended Jun 20 and Sep 20 when compared to previous year.
To access payments from Jan 21 to Mar 21 a business must have had the required decline in turnover comparing ALL of the quarters ended Jun 20, Sep 20 and Dec 20 when compared to previous year.
While a new assessment of eligibility is sensible and necessary, it could distort some incentives for example a business might throttle it’s reopening in order to remain qualified.
As these are quarterly comparisons, the basic case for eligibility will be to compare numbers reported in quarterly BASs. Importantly the BAS lodgement dates for Sep falls in late October (or later with agent deferrals), and Dec BAS in late Feb so it is very important to have numbers up to date in order to determine eligibility before these due dates. Businesses should work with their bookkeepers and accountants to keep figures reconciled and ready.
Of course as we know from JK round 1 there were a number of ways to qualify including using, accruals, cash, or timing of supplies to attribute turnover. Also the many alternative tests that allowed business to qualify where prior year figures did not exist or where not a reasonable comparison will still apply.
One point that looks clear is that to be eligible, a business must meet the decline in turnover each quarter. It is not enough to have a 30% decline for the 6 months to September without both quarterly periods showing the required decline.
Rate of Payment
Another significant change to JobKeeper 2.0 is the new two tiered rate of payment based on hours worked.
Which tier an employee or business participant falls into is determined by the number of hours worked per week, on average, in the 4 weeks before 1 March (i.e. the month of Feb 2020). For an eligible business participant it will be the average number of hours actively engaged in the business.
Where that average weekly hours is 20 hours or more the rate of payment will be $1,200 per fortnight, otherwise below 20 hours will receive $750 per fortnight.
From Jan to Mar these rates will reduce further to $1,000 and $650 per fortnight respectively.
Again there are going to be many cut and dry cases, but also again the ATO have discretion to outline alternative tests where Feb hours are not a good representation of normal working hours. This information is not yet released and while I don’t expect it to perfect or cover all situations, it should give some peace of mind to employees and business participants that were on leave or off work for other reasons (e.g. bushfire affected).
The rules for employees have not changed, meaning any employees that were not employed on 1 March 2020 will remain ineligible for JK 2.0.
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At MMA we will continue to ensure we have a thorough understanding of the rules and we will implement a streamlined process for determining eligibility and registering / reporting to the ATO.