Update: September, 2020
JobKeeper 2.0 – Further Detail on Testing & Eligibility Released
Here’s what you need to know
Business Eligibility & the Decline in Turnover Test
However, where JobKeeper 1.0 eligibility was measured on the projected GST turnover of the business, JobKeeper 2.0 eligibility will be based on the actual GST turnover of the business during the September and December 2020 quarters.
In addition, JobKeeper 2.0 has been split into 2 distinct phases.
The first phase runs from 28 September 2020 until 3 January 2021.
- In order to be considered eligible for JoKeeper 2.0 during the first phase, your business is required to pass the Decline in Turnover Test for the September 2020 quarter.
- This means that the business’s actual GST turnover during the September 2020 quarter, needs to have reduced by at least 30% in comparison to September 2019 quarter.
The second phase runs from 4 January 2021 until 28 March 2021.
- In order to be considered eligible for JoKeeper 2.0 during the second phase, your business is required to pass the Decline in Turnover Test for the December 2020 quarter.
- This means that the business’s actual GST turnover during the December 2020 quarter, needs to have reduced by at least 30% in comparison to December 2019 quarter.
For those businesses that cannot satisfy the above reduction in turnover tests, the ATO will be releasing some “alternative tests” which may make you eligible for JobKeeper 2.0. While the ATO has advised that the alternative tests will be similar to those alternative tests available under JobKeeper 1.0, they have yet to be formally released for JobKeeper 2.0.
A few important points regarding JobKeeper 2.0 Eligibility
- The ATO has stipulated that a business’s actual GST turnover needs to be calculated (for the purposes of the JobKeeper 2.0 eligibility test) in the same manner that the business prepares its Business Activity Statements (BAS’s). I.e. if the business reports the GST within its BAS’s on a Cash basis, then its actual turnover also needs to be calculated for the purposes of JobKeeper eligibility on a Cash basis. Similarly, if the business prepares its BAS’s on an Accruals basis, then its actual turnover also needs to be calculated on an Accruals basis.
- Your business will not be excluded from participating in JobKeeper 2.0 if it didn’t participate in JobKeeper 1.0.
- Furthermore, if your business is not eligible to receive JobKeeper 2.0 during the first phase (28 Sept 2020 – 3 Jan 2021), then this does not exclude it from being eligible to receive JobKeeper 2.0 during the second phase (Jan 4 – 28 March 2021).
Did you know?
A business’s actual GST turnover includes not only regular sales income, but also income received from:
- sales of depreciable assets (such as music equipment, office equipment, motor vehicles etc)
- some government grants
- most sales to overseas customers
In addition to satisfying the Decline in Turnover test above, an employer also needs to satisfy the following criteria in order to be eligible to receive JobKeeper 2.0 payments: –
- Must have carried on the business at 1 March 2020; and
- Must employ ‘eligible employees’ during the fortnight they claim JobKeeper 2.0 payments (this includes employees who have been stood down or re-hired); and
- Must ensure that all eligible employees have received wages during each fortnight at least equal to the amount of the JobKeeper payment being received
Eligible employees are currently those employees that: –
- were employed by an eligible employer on 1 July 2020; and
- met all of the following criteria on 1 July 2020: –
- were either employed on a full time, part-time, or long term casual (a casual employee employed on a regular and systematic basis during the 12 -month period that ended 1 July 2020) basis; and
- were 18 years or older at 1 July 2020 (if they were 16 or 17 years old they can also qualify if they were independent or not studying full time on 1 July 2020); and
- Were an Australian citizen, permanent resident, Protected Special Category Visa Holder, or a Special Category (Subclass 444) Visa Holder; and
- Have not been nominated by another Employer to participate in the JobKeeper Scheme
What if I changed Employers? Will I still be eligible to be nominated for JobKeeper 2.0 by my new employer?
An employee may be eligible to receive JobKeeper 2.0 payments from a new employer, provided that they were no longer employed by their original employer (that previously nominated them under the JobKeeper 1.0 Scheme) as at 1 July 2020.
Note however, that in a situation where an “eligible business participant” (including Sole Traders) was receiving JobKeeper payments as an employee during Jobkeeper 1.0, they will not be eligible to claim JobKeeper 2.0 payments as an Eligible Business Participant, even if they left that employer prior to 1 July 2020.
Sole Traders & Other Business Owner Eligibility
Jobkeeper 2.0 eligibility will continue to be extended to “eligible business participants” (a Sole Trader, a partner of a Partnership, a beneficiary of a Trust, or a shareholder / director of a Company) provided that: –
- the individual was actively involved in carrying on their business as at 1 March 2020; and
- that business had an ABN on 12 March 2020; and
- the individual has not been nominated as an employee by their own business (or some other business) under the Jobkeeper 1.0 or 2.0 scheme; and
- the business had lodged a 2019 financial year income tax return or business activity statement prior to 12 March 2020; and
- the business satisfies the Decline in Turnover Test (discussed above)
New Payment Rates
Phase 1 Payment Rates (28/9/2020 – 3/1/2021)
- From 28 September 2020 until 3 January 2021, the current $1,500 per fortnight JobKeeper payment will be reduced to $1,200 per fortnight.
- There will be a further reduction to payments for certain employees (and eligible business participants) who are deemed to be working on average less than 20 hours a week (more on how this works below). These employees are set to receive $750 per fortnight.
Phase 2 Payment Rates (4/1/2021 – 28/3/2021)
- From 4th January 2021 until 28 March 2021, the payment rate will reduce further to $1,000 per fortnight (for people deemed to be working more than 20 hours a week), and $650 per fortnight for people deemed to be working less than 20 hours a week.
Which Payment Rate for Employees?
- An employee’s payment rate depends on how many hours they worked during their “reference periods”
- The reference periods for employees are the 28 day periods prior to the last pay cycle which finished immediately before 1 March 2020 or 1 July 2020
- So, for e.g., if an employee is paid on a fortnightly basis and their last pay cycle prior to 1 July was completed on Friday the 26th of June, then that employees reference period would be May 30th – June 26th (the 28 days preceding 26 June 2020).
- If within the reference period, they work 80 hours or more, they receive the higher payment rate
- If within the reference period, they work 79 hours or less, they receive the lower payment rate
A few important things to note –
- Employees have two reference periods – the 28 day period prior to last pay cycle immediately before 1 March 2020 and 1 July 2020
- If the employee works less than 80 hours in one of these reference periods, but more than 80 hours in the other reference period, then they will still be eligible to receive the higher payment rate
- The hours included in the calculation include paid leave hours (including annual leave, sick leave, carers leave, and public holidays)
- If the pay cycle of an employee is longer than 28 days, total hours worked is pro-rated down to the 28 day proportion
- Alternative reference periods may be available for employees in limited circumstances should the reference periods listed above not reflect their usual working arrangements accurately
Which Payment Rate for Sole Traders & Other Business Participants?
- Eligible business participants (a Sole Trader, a partner of a Partnership, a beneficiary of a Trust, or a shareholder / director of a Company) payment rates will be determined by how many hours they worked during their “reference period”
- The reference period for business participants is the month of February 2020
- If within the month of February 2020, they were actively engaged in business activity for 80 hours or more, then they will receive the higher payment rate
- However, if within the reference period, they were actively engaged in business for 79 hours or less, they will receive the lower payment rate
- Note, business activities which count as hours worked include actively operating the business or undertaking specific tasks in business development and planning, regulatory compliance or other similar activities.
A few important things to note –
- Sole Traders must make a declaration in the approved form to the ATO that their total hours of active engagement in the business are 80 hours or more
- Other eligible business participants need to make the same declaration to their business entity
- Failure to provide a declaration that active engagement was 80 hours or more will result in the eligible business participant receiving the lower rate.
Where to from here?
Update: July, 2020
As you may have heard, the Federal Government this week announced an extension to the JobKeeper Program.
The good news:
- The program has been extended from the initial end date of 27 September, until 28 March 2021
- If you are already receiving the JobKeeper payment, there are no additional eligibility requirements to keep receiving payments for the remainder of the first phase of the program (up until 27 September)
The not so good news:
- Post 27 September 2020, JobKeeper payment rates are set to reduce (more below)
What has the Government Announced?
- From the 28 September 2020, the current $1,500 per fortnight JobKeeper payment will be reduced to $1,200 per fortnight.
- There will be a further reduction for employees who were working less than 20 hours a week in February, 2020. These employees will receive $750 per fortnight.
- Then, from the 4th January 2021, the payment rate will reduce further to $1,000 per fortnight (for people working more than 20 hours a week), and $650 for people working less than 20 hours a week.
New retrospective eligibility tests
In order to be eligible for JobKeeper 2.0 (commencing 28 September), businesses will be expected to demonstrate the same reduction in turnover percentage that was required for JobKeeper 1.0.
To refresh you memory, the reduction in turnover tests are as follows: –
- 30 per cent for businesses with turnovers of $1 billion or less
- 50 per cent for businesses with turnover of more than $1 billion
- 15 per cent for ACNC-registered charities
However, this time, instead of showing the reduction in turnover on a projected basis, business’s will instead need to have actually experienced the reduction in turnover during the June and September 2020 quarters. Furthermore, to keep receiving payments post 4 January, the reduction in turnover tests will also need to have been passed in the June, September and December quarters.
How will the changes affect Sole Traders and other eligible business owners?
Provided you can demonstrate the required reduction in turnover, Jobkeeper eligibility will continue for Sole Traders, a partner of a Partnership, a beneficiary of a Trust, or a shareholder of director of a Company.
However, post 27 September, a “look-back” test will be required to determine the JobKeeper payment rate they are eligible to receive. If the business owner spent on average more than 20 hours per week “actively engaged in the business” during February 2020, then they will be eligible for the full JobKeeper payment. However, if they spent less than an average of 20 hours per week “actively engaged in the business” during February, they will only be eligible for the reduced JobKeeper payment.
As soon as further information is made available we will continue to let you know, however for now there are no changes you need to make.
CA have put together this handy graphic which outlines the changes quite well.
Update: APRIL, 2020
What is JobKeeper?
JobKeeper is the biggest of the government stimulus measures announced, estimated to cost around $130 billion.
It’s a wage subsidy for employers and helps cover the cost of their staff wages so as to avoid having to make them redundant. The measure aims to keep the relationship between employer and employee intact, so businesses are ready to return to “business as usual” once social restrictions are lifted.
How much is JobKeeper?
$1,500 per fortnight, per employee is paid to businesses to reimburse payments they’ve already made to their staff.
In order to take part in the subsidy package, employers will need to ensure that each of their eligible employees receive a wage of at least $1,500 per fortnight (before tax).
How long will JobKeeper last?
At this stage, the JobKeeper subsidy is set to continue for the next 6 months (30 March – 27 September). Applications to apply for the Scheme are now open.
How does an Employer know if they’re eligible?
Employers will be eligible to receive the subsidy if they:
- Can demonstrate to the ATO that their business has experienced a decline in turnover of 30% or more (or project they will experience a decline in turnover of 30% or more); and they
- Notify all employees in writing that the business has elected to participate in the JobKeeper scheme and that all eligible employees will be covered by the scheme; and they
- Pay all of their eligible employees at least $1,500 a fortnight before tax
We explore these eligibility criteria in more detail below.
How does an Employer Demonstrate their business has experienced a decline in turnover of 30% or more?
There are two tests which can be used to demonstrate this.
1) The Basic Test
The ‘basic test’ requires you to compare your turnover during a given period during the 6 month JobKeeper period, with the same period from the 2019 year. If your turnover in the 2020 period is 30% lower (or more) than the same period in 2019, then you pass the test.
e.g., if your turnover was $40,000 during April 2020, and your turnover was $60,000 during April 2019, then your turnover has dropped by 33% and you will have passed the test.
You are able to choose which period you want to compare, as long as it is one of the periods listed below.
Monthly Comparable Periods – March, April, May, June, July, August, September
Quarterly Comparable Periods – April to June or July to September
This means that even if you don’t pass the test during the month of March, you may still be eligible to receive the subsidy by passing the test in a later period.
2) The Alternative Test
For new businesses or businesses with fluctuating income – like many in the music industry – this testing criteria will not grant them access to the Jobkeeper Scheme, despite their business being significantly affected by the virus.
The ATO is aware of this and has referenced a second ‘alternative test’ which can be used to pass the decline in turnover test (if you failed the first basic test). This second test will mainly apply to:
- Businesses which have “lumpy” or “fluctuating” income whose previous year comparative periods do not fairly represent a usual (average) turnover period
- Businesses whose 2019 turnover was significantly affected by some other external factors
- Businesses which have only recently started trading and therefore have no comparative data available from the previous year
Unfortunately, there is not a heap of clarity surrounding exactly what the ‘alternative test’ entails. Under this test, the commissioner has been given discretion to request additional information to demonstrate that the business has been adversely affected by the pandemic. At this stage, we are still waiting on further detail from the commissioner for what information will be acceptable in order to satisfy the ‘alternative’ test.
Note: once an Employer has qualified once to start receiving the JobKeeper Subsidy, they do not need to qualify again each month or quarter following. They remain qualified until the end of the JobKeeper period (27 September 2020).
How does an Employer notify employees?
Once an employer has established that they pass the turnover test described above, they need to notify all employees in writing that the business has elected to participate in the JobKeeper scheme and that all eligible employees will be covered by the scheme.
It’s important to note that the scheme is designed to be “one in, all in”. Meaning, in order to be eligible for the subsidy, the employer must make the payments to all eligible employees (for more info on employee eligibility, see below).
Once each eligible employee has been notified that they are eligible for the payment, the employees are then required to confirm with their employer (using the ATO approved form) that they are eligible to receive the subsidy and are not claiming the JobKeeper payment through any other employer.
How does an Employer pay the $1,500 to their employees?
There is one final requirement that needs to be met by the employer (on an ongoing basis) prior to receiving payments from the ATO. They need to pay all eligible employees at least $1,500 a fortnight before tax.
A few important things to note on this:
- If the employee is currently earning less than $1,500 a fortnight, the employer still needs to pay them at least $1,500 a fortnight (before tax). Note that no superannuation guarantee needs to be paid on this “top-up” amount that is required above their usual wage to reach the $1,500
- Stood-down employees (who are earning nothing) will need to be paid the full $1,500 (before tax) per fortnight. No Superannuation guarantee is payable to these employees while they remain stood-down and not working.
- Payments need to be made to employees before the end of each “Jobkeeper fortnight” – a “Jobkeeper fortnight” refers to each fortnight following the 30th of March for the next 6 months. e.g. the first jobkeeper fortnight ended on the 12th of April, the second ends on the 26th of April and so on.
- An exception also applies to businesses which already pay their employees on a monthly basis. For employers such as this, they will not be required to increase the frequency of their pay runs in order to pay employees within the JobKeeper fortnight.
When will businesses receive the subsidy from the ATO?
Businesses will receive the $1,500 subsidy per employee in arrears, on the 14th day of the month following the wages being paid. This is on the basis that the wage information is reported to the ATO within 7 days of the end of each month. However, the first subsidy payment will come a week earlier – arriving in the first week of May.
What’s involved in the Application Process?
The application process will open for registrations on the 20th of April and can be completed here –https://www.ato.gov.au/general/JobKeeper-Payment/
It is very important to note however, that failure to register for the Scheme by the 26th of April means that your business will miss out on the JobKeeper subsidy for the first two fortnights (30 March – 26 April). This leaves a very short window to get registered for the Scheme. If you are still unsure whether you may be eligible for the scheme for the first 2 fortnights, we recommend registering prior to the 26th anyway.
How does an Employee know if they’re eligible?
You are an eligible employee to receive the JobKeeper payment if:
- You were employed by the relevant employer at 1 March 2020; and
- You are currently employed by the employer (even if you have been stood-down, or were made redundant post 1 March, then re-hired); and
- Are full time, part-time, or a long term casual (a casual employee employed on a regular basis for 12 months or more as at 1 March); and
- Are at least 16 years of age; and
- Are an Australian citizen, hold a permanent visa, are a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
In addition, employees are only eligible to receive the JobKeeper payment from one source. If an employee has more than one employer, they must nominate only 1 employer through which they will receive the payment. Employees are also required to notify their employer (using the ATO approved form) that they are eligible to receive the subsidy and are not claiming the JobKeeper payment through any other employer.
Strict penalties apply to any employee seeking the rort the system by receiving the payment through multiple employers. Also note, that once an employee elects an employer to receive the JobKeeper payment from, they cannot switch to receive the payment from another employer.
What about the self-employed?
Sole traders and the self-employed are also eligible for the JobKeeper payments if the following conditions are met:
- They meet the 30% reduction in turnover test described above
- They had a valid ABN on or before 12 March 2020;
- They had some income in the 2018-19 income year or made some supplies between 1 July 2018 and 12 March 2020, and, they have provided a 2019 tax return or certain activity statements to the ATO by 12 March 2020;
- They were actively engaged in the business;
- They are not entitled to another JobKeeper Payment;
- They were aged at least 16 years of age as at 1 March 2020; and
- They were an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder at 1 March 2020.
What about the self-employed operating through a partnership, company or trust?
Only 1 partner in the partnership will be eligible to receive the subsidy, provided that the above tests are met.
Only 1 director or shareholder in the company will be eligible to receive the subsidy, provided that the above tests are met.
Only 1 adult beneficiary of the trust will be eligible to receive the subsidy, provided that the above tests are met.It is important to note that you will not be entitled to the JobKeeper payment as a self-employed individual, if you are also a permanent employee of an employer (including being a permanent employee of your own business) i.e. self-employed individuals will not qualify for the payment if they have a separate permanent source of employment income.
Where to from here?
If you think your business may have passed the turnover test described above (or project that it will pass the test), and you want to register for the JobKeeper Scheme, make sure you do so by the 26th of April here:
We’re happy to help!
Please feel free to reach out with any questions via firstname.lastname@example.org