01 Oct JobKeeper Extension
As previously announced the Government has approved the extension of the JobKeeper scheme by a further six months from 28 September 2020 until 28 March 2021.The rules governing eligibility to qualify for the extension periods have now been released.
How it works
Businesses that received JobKeeper during the initial period must re-qualify using a stricter decline in turnover test to qualify for the extension periods. It is expected that many businesses that have been receiving JobKeeper during the initial period will not qualify for the extension.
Businesses that do not qualify for the extension should review their employee wages to ensure that those employees previously receiving a JobKeeper “top up” payment are returned to their normal pay arrangements. We note that businesses receiving the JobKeeper initial phase payment must still lodge their September declaration to receive the final payment.
Businesses that qualify for the extension will need to adjust any employee “top-up” wages so that they are in line with the new rates (see below).
There are two separate extension periods:
- Extension 1: from 28 September 2020 to 3 January 2021
- Extension 2: from 4 January 2021 to 28 March 2021
For each extension period, a separate decline in turnover test applies and the rate of the JobKeeper payment is different.
Decline in turnover
The decline in turnover test is satisfied for JobKeeper Extension 1 when your business’s actual GST turnover for the quarter ending 30 September 2020 has declined by a minimum of 30% in comparison to the actual GST turnover for the quarter ending 30 September 2019.
The decline in turnover test is satisfied for JobKeeper Extension 2 when your actual GST turnover for the quarter ending 31 December 2020 has declined by a minimum of 30% in comparison to your actual GST turnover for the quarter ending 31 December 2019.
The new decline in turnover tests must be satisfied across the entire quarter. This is different to the initial phase of JobKeeper which only required a decline in turnover over a one month period. A further difference is that the turnover test for the extension periods uses the actual turnover, not the projected turnover as was used for the initial phase of JobKeeper.
To work out your GST turnover for the turnover test period, you must use the accounting basis you use for BAS reporting purposes. Businesses registered for GST on a Cash basis must use a Cash basis to determine their GST turnover for the JobKeeper extension tests.
Correspondingly businesses registered for GST on an Accruals basis must determine their decline in turnover on an Accruals basis.
For most businesses registered for GST, the GST turnover calculation will match the “Total Sales” reported at G1 on its BAS minus any GST included in the “Total Sales” figure.
If you are not registered for GST, you can work out your turnover using either the GST Cash or Accruals basis of accounting.
Alternative tests for determining actual decline in turnover are available in limited circumstances. These may apply to businesses where the corresponding quarter last year is not a suitable comparison period to determine the decline in turnover. Examples of businesses that may utilise the Alternative tests include, new or rapidly growing businesses, restructured businesses, businesses with irregular turnover etc. Further guidance on the
Alternative tests can be found here: https://www.legislation.gov.au/Details/F2020L01200/Explanatory%20Statement/Text
We note that the Alternative Tests are complex. If you think that your business may qualify for the JobKeeper extension under the Alternative tests please contact us before submitting your declaration.
New payment rates
The rate of the JobKeeper payment in each extension period will depend on the number of hours an eligible employee worked, or for an eligible business participant the number of hours they were actively engaged in the business. The rates will be split into two tiers based on these hours:
Tier 1 rate:
This rate applies to:
Tier 2 rate:
This rate applies to:
Employers and businesses will need to nominate the rate they are claiming for each eligible employee and/or eligible business participant when the October declarations are made.
October is the first month to which the JobKeeper Extension conditions apply.
The rate of the JobKeeper payment is also different for each extension period.
JobKeeper extension period rates
- Tier 1: $1,200 per fortnight (before tax)
- Tier 2: $750 per fortnight (before tax).
- Tier 1: $1,000 per fortnight (before tax)
- Tier 2: $650 per fortnight (before tax).
What you need to do
To be eligible to receive JobKeeper for the extension periods, you must do all of the following:
1. Determine if your business is eligible for the JobKeeper extension based on the decline in turnover tests. Please contact us if you require assistance with this step. If eligible for the JobKeeper extension the turnover information showing your eligibility must be submitted to the ATO online between 1 October 2020 and 31 October 2020.
2. Work out if the Tier 1 or Tier 2 rate applies to each of your eligible employees and/or eligible business participants. You must notify your eligible employees and/or eligible business participants which payment rate applies to them. The format for this notification has not yet been released. We suggest that the notification be made in writing and a record be kept of the notification.
3. Ensure your eligible employees are paid at least the minimum amounts based on the extension period and their Tier. For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 only, the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme. This means that you have time to determine your eligibility for the JobKeeper extension before being required to pay any “top-up” payments to your employees. In all future fortnights the payment must be made each fortnight.
4. Between 1 November 2020 and 14 November 2020 lodge the monthly JobKeeper declaration for October 2020. At this point you will also be required to lodge information on which Tier employees/business participants are being paid and provide further information on business turnover. As per the initial JobKeeper periods the monthly declarations will be ongoing.
If you are registered for GST and have outstanding BAS, you should lodge your BAS for the September 2019 and December 2019 quarters as soon as possible (or for equivalent months, if you report monthly). Un-lodged BAS may hold up your application for JobKeeper payments under the JobKeeper extension.
New JobKeeper participants
The JobKeeper scheme will remain open to new participants, provided they meet the eligibility requirements for the relevant period.
Please contact us if you have any questions regarding your JobKeeper eligibility.