On 21 July 2020, the Federal Government announced that they will be extending the JobKeeper program until 28 March 2021, which is six months beyond the current legislated finish date of 27 September 2020.
This is great news for businesses that have been experiencing hardship as a result of COVID-19; however, there are some significant changes to be aware of.
The JobKeeper program will continue to be made available for eligible companies, sole traders, trusts and partnerships. The initiative will also be accessible for new recipients that meet the criteria.
When will these changes commence?
The new proposed JobKeeper 2.0 program will commence from 28 September 2020 and conclude on 28 March 2021.
There were no changes announced with respect to the existing JobKeeper 1.0 program.
What Are The Changes?
The JobKeeper 2.0 program will see a reduction in compensation as well as additional criteria for recipients to qualify.
New Payments
JobKeeper 2.0 will introduce two types of rates for employees:
1. Full rate: For employees who worked on average 20 hours or more per week during the month of February 2020*; and
2. Reduced rate: For employees who worked less than 20 hours per week on average during the month of February 2020*.
*We are awaiting further guidance from the Government on the alternative tests for calculating an employee’s average weekly hours, where the hours worked in February 2020 were not indicative of that employee’s usually weekly hours (for example when an employee was on leave, volunteering during the bushfires, or not employed for the entire month of February 2020).
For business participants, the 20-hour test will be based on the average weekly hours they spent “actively engaged in the business” during the month of February 2020.
Currently the JobKeeper payments are $1,500 per fortnight for eligible employees and businesses, regardless of the number of hours worked by the employee.
The proposed JobKeeper 2.0 will see rates decrease to:
1. 28 September 2020 – 3 January 2021: $1,200 per fortnight at the full rate and $750 per fortnight at the reduced rate.
2. 4 January 2021 – 28 March 2021: $1,000 per fortnight at the full rate and $650 per fortnight at the reduced rate.
New Criteria
For businesses to qualify for the proposed JobKeeper 2.0, employers must re-satisfy two separate ‘Decline in Turnover Tests’ for the new date ranges.
To qualify for the JobKeeper 2.0 program the rate of decline in GST turnover remains the same as the current requirements:
• 50% decline for entities with an aggregated turnover of more than $1 billion;
• 30% decline for entities with an aggregated turnover of $1 billion or less; and
• 15% decline for ACNC-registered charities.
One of the main changes under the proposed JobKeeper 2.0 program is that GST turnover must be based on actual turnover, rather than estimated turnover (see below eligibility criteria for a non ACNC-registered entity with an aggregated turnover of $1 billion or less).
To qualify for the 28 September 2020 – 3 January 2021 test:
1. Actual GST turnover for the June 2020 quarter must be at least 30% less than in the June 2019 quarter; AND
2. Actual GST turnover for the September 2020 quarter must be at least 30% less than in the September 2019 quarter.
To qualify for the 4 January 2021 – 28 March 2021 test:
1. Actual GST turnover for the June 2020 quarter must be at least 30% less than in the June 2019 quarter; AND
2. Actual GST turnover for the September 2020 quarter must be at least 30% less than in the September 2019 quarter; AND
3. Actual GST turnover for the December 2020 quarter must be at least 30% less than in the December 2019 quarter.
Our current understanding is that the quarterly reduction in turnover test will apply, even if businesses report their GST to the ATO on a monthly basis.
We also expect further guidance from the Commissioner of Taxation in respect to the alternative tests available where it would not be appropriate to compare the actual GST turnover in a period to the corresponding comparison period.
How do I apply?
As the proposed JobKeeper 2.0 program changes are yet to be legislated, the above requirements may be subject to change.
Dates have also not yet been released for enrolling in the JobKeeper 2.0 program; however, we expect the process will remain largely the same. Once enrolments are available, employers will need to log into the ATO Business Portal and complete the relevant JobKeeper 2.0 enrolment form.
Alternatively, we at WMS can enrol your business for the JobKeeper 2.0 program on your behalf via the ATO Tax Agent Portal.
Other COVID-19 stimulus package updates, changes and extensions
• ATO PAYGW Cash Flow Boost – the ATO are beginning to apply Tranche 2 credits upon lodgement of the June 2020 Business Activity Statement (BAS) for businesses.
• Apprentices and Trainees wage subsidy extended for a further six months to 31 March 2021.
• JobSeeker – Coronavirus supplement extended but reduced to $250 per fortnight from 25 September to 31 December 2020 (down from the current rate of $550 per fortnight).
• Instant asset write-off deductions extended until 31 December 2020.
• Early super release of $10,000 – second release period closure date extended from 24 September 2020 to 31 December 2020.
• SME (Small and Medium Entity) Guarantee Scheme.
Should you have any questions or require assistance in relation to the COVID-19 stimulus packages and upcoming changes, please don’t hesitate to contact our office on (07) 5556 3300 or info@wmssolutions.com.au
DISCLAIMER: This article is intended to provide a general summary only and should not be relied on as a substitute for professional advice.
© 2020 WMS Solutions Pty Ltd
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