To qualify for JobKeeper Extension 1 (fortnights beginning on or after 28th September 2020 and ending on or before 3rd January 2021), entities must satisfy both:

  • The original decline in turnover test (extended to include the months of Sep to Dec and/or the quarter ended Dec 20); AND
  • An additional decline in turnover test for the quarter ended 30 September 2020.

For entities already receiving JobKeeper, the original test will have been passed so they only need to consider the additional test. For businesses that are enrolling for the first time, if they satisfy the additional test they will also satisfy the original test so this is the only test we need to concentrate on.

For JobKeeper Extension 2 (fortnights beginning on or after 4th January 2021 and ending on or before 28th March 2021) entities will again have to satisfy the additional decline in turnover test for the quarter ended 31 December 2020.

An important point to note here is that businesses do not have to already be on JobKeeper to access the JobKeeper extension. Also businesses that may fail the decline in turnover test for the September quarter may meet the test for the December quarter, and can then re-qualify for payments from 4th January 2021.

For businesses that are newly registering, they will also need to:

  • Notify the Commissioner and make required declarations;
  • Collect employee declarations;
  • Meet the wage condition.

The Additional Decline in Turnover Test

The new decline in turnover test is actually much simpler to apply than the previous test, as it removes quite a bit of flexibility.


The basic test requires the decline in turnover threshold to be met for a particular test period depending on the relevant fortnight. This removes any flexibility to choose a test period as either the current or earlier month, or the current quarter. For payments to continue:

Extension 1 (Fortnights between 28 Sep and 3 Jan)                Quarter ending 30 September 2020
Extension 2 (Fortnights between 4 Jan and 28 Mar) Quarter ending 31 December 2020


Unless an alternative comparison period applies, the comparison period will be

Extension 1         Quarter ending 30 September 2019
Extension 2 Quarter ending 31 December 2019

There may be situations where your turnover in the relevant comparison period in 2019 does not provide an appropriate relevant comparison. In these situations, you will need to consider an alternative test for the actual decline in turnover test.

Alternative Tests:

As with the original decline in turnover test, there are many situations where the comparison period being the same period last year will not be an appropriate comparison. All of the earlier alternative tests previously announced still apply and the ATO have updated their guidance to reflect the requirement to use a quarter (rather than a month) as the comparison period. While this does not cover every situation it does cover many cases that arise. The alternative tests are (with hyperlinks):


Instead of allowing actual or projected GST turnover to be used, the additional test requires “Current GST Turnover” to be used.

Current GST turnover is the amount of your sales except for the following:

  • the GST you included in sales to your customers (if any)
  • sales that are input taxed sales (for example, bank interest, sale of shares, residential rental income)
  • sales not connected with an enterprise that you carry on (for example, sale of private car)
  • sales that are not made for payment (unless a taxable supply to an associate)
  • payments for no supply (for example, JobKeeper payments)
  • gifts and donations (except for deductible gift recipients and ACNC-registered charities as discussed above)
  • sales not connected with Australia, for example:
    • sales of services made through a business you carry on outside Australia
    • sales of goods purchased and sold from a place outside Australia
    • sale of real property situated outside Australia.

One important consequence of this, is that the sale of capital assets WILL BE INCLUDED in the current GST turnover for a particular test period. Under projected GST turnover these could be excluded, however this is now not the case. This means if a business has had to sell off assets in order to maintain cash-flow they may have inadvertently jeopardized their eligibility to access the JobKeeper extension.

Another important change is that entities can no longer choose whether to apply the test on a cash basis, accruals basis, or timing of supplies. The rules are now quite clear that if an entity is registered for GST, they must determine the current GST turnover using the same method that they attribute for their BAS.

If an entity is not registered for GST, but uses the cash basis accounting method, then they must use this to determine the decline in turnover, and vice versa where accruals accounting method is used.

In all cases the same method must be applied to both the test period and comparison period.

This could give rise to further anomalies for example a business may be doing little to no work now, but still be collecting invoices for work performed months ago. If they are accounting for GST on a cash basis this could mean they fail the decline in turnover test.


This calculation is unchanged from previous JobKeeper eligibility rules.

Rates of Payment – 80 Hour Test:

Once a business has determined that they will meet the decline in turnover test, they need to work out which rate of JobKeeper payment applies to each employee and eligible business participant.

As people are no doubt aware, payment rates will now split into $1,200 for employees or business participants who worked more than 80 hours in their reference periods, and $750 for everyone else.

The rates of pay reduce to $1,000 and $650 from 4 January 2021.

The test is slightly different for employees and eligible business participants.


To be entitled to the higher rate of pay each employee must satisfy the 80-hour threshold. An employee will satisfy the 80-hour threshold if, in their 28-day reference period, the total of the following is 80 hours or more:

  • actual hours they worked
  • hours they were on paid leave
  • hours they were paid for absence on a public holiday.

The ATO provides guidance on some circumstances that arise and could cause confusion, for example a worker took paid leave at half pay.

Your 28-day reference period or periods are based on when your pay cycle ends and therefore won’t be the same for all employers or employees.

Use either:

  • the pre-March period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 March 2020, or
  • the pre-July period which is the 28 days which finish on the last day of the last pay cycle that ended before 1 July 2020.

In layman’s terms use the 28 day period leading up to and ending on the last pay cycle that ends in either February or June.

If an employee satisfies the test in one of the reference periods, they will be entitled to the higher rate.

Where the normal reference period is not representative of an employee’s normal work hours, and they fail the 80 hour test, an alternative reference period can be used. An example may be where they took unpaid leave during the reference period. The alternative test in this case is as follows:

The alternative reference period is the 28-day period ending at the end of the most recent pay cycle for the employee for you before 1 March 2020 or 1 July 2020 in which the employee’s total number of hours of work, paid leave and paid absence on public holidays was representative of a typical 28-day period.

Further circumstances where an alternative test can apply are:

  • The employee was employed partway through the reference period;
  • Businesses that change hands or changes within a wholly-owned group.

In such cases the alternative reference period is the first 28-day period ending on or after 1 March 2020 or 1 July 2020 that wholly occurs during:

  • consecutive pay cycles, or
  • a pay cycle of the employee.

If the employee was stood down in that first 28-day period, then use the first 28-day period starting on the first day of a pay cycle on or after the reference time in which they were not stood down).

The ATO have also put out some guidance for employees in respect of whom there are no records or incomplete records of hours including where remuneration is not tied to hourly or contracted rates. In such cases the higher rate of pay will be paid where:

  • in the reference period, the sum of the amounts covered by subsection 10(2) of the Rules totalled $1,500 or more in respect of an eligible employee (if all references to ‘fortnight’ in that subsection were instead to ‘reference period’);
  • Under a written industrial award, enterprise agreement, individual contract or other similar instrument governing the employment relationship, an eligible employee was required to work 80 hours or more (including paid leave and paid absence on public holidays) in the reference period; or
  • Although not readily ascertainable, it can be determined based on reasonable assumptions that an eligible employee’s hours in the reference period was 80 hours or more (including paid leave and paid absence on public holidays).


The test to determine payment rates for eligible business participants is different to that of employees. Eligible business participants will be required to demonstrate that they were actively engaged in their business for 80 hours or more over the 29-day reference period in February 2020.

The ATO have provided guidance on what is considered “actively engaged”

An individual will be actively engaged in the business carried on by the entity if they regularly:

  • perform, or manage the performance of, services the business provides
  • sell or manage the sale of goods of the business
  • perform other activities associated with managing the business
  • exercise control over activities related to business strategy and growth.

The hours that an eligible business participant spent actively engaged in your business can include, but are not limited to, time spent on the following activities:

  • providing services, or selling goods
  • supervising and managing the performance of employees
  • negotiating contracts with suppliers and customers including providing quotes
  • drawing up business plans and planning or budgeting reports
  • managing the record keeping and accounts, including the use of the documents for analysis
  • making financial, legal and tax decisions, including time spent on obtaining professional advice (for example ensuring the business complies with legal and regulatory obligations)
  • managing commercial risks of the business

An eligible business participant would not be actively engaged in the business whilst doing personal (non-business) activities, merely because they think about your business during this time.

An individual will also not be actively engaged in the business simply because they:

  • own an interest in the business or invest capital in it
  • provide advice or other assistance to the business from time to time.

The ATO’s guidance states that records to prove the 80 hours over the 29-day reference period will need to be kept, and these include business diaries, appointment books, log books, hours billed, invoices issued, time sheets or attendance records, or records prepared for other business or statutory purposes. It is unlikely that many small businesses will have these records. It should be noted that the treasury rules explain entities must be able to reasonably demonstrate the basis on which they make the determination.

If an entity has not been active during the reference period or had all duties and other activities carried out by employees, or where the business participant held a separate full time job, it is likely they would not satisfy the test.

Once determined, eligible business participants will be required to provide a written declaration confirming they have satisfied the 80 hours actively engaged requirement.

My opinion is that a common sense approach will apply, and unless there is evidence that 80 hours were probably not worked, I would think that a declaration should be sufficient.

Some important dates to be thinking about:

NOW: determine whether employees are eligible for tier 1 or tier 2 payments.

NOW: if using Single Touch Payroll to notify ATO of your eligible employees, provide each eligible employee’s tier as part of your normal payday reporting. Enrol for the JobKeeper payment if you’re doing so for the first time.

Between 1 – 14 October 2020: complete your October JobKeeper monthly business declarations to receive your reimbursement for the September fortnights.

Between 1 – 31 October 2020: prepare and submit your business’s actual decline in turnover to the ATO (in most cases September BAS).

Before 31 October 2020: ensure you meet the wage condition for all eligible employees included in the JobKeeper scheme for the JobKeeper fortnights starting 28 September 2020 and 12 October 2020.

From 1 November 2020: complete your monthly business declaration and confirm what payment tier you are claiming for each employee. You must also notify employees in writing which rate of pay applies to them WITHIN 7 DAYS of notifying the ATO.

Nick Moran

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