Everything your business needs to know about qualifying for the JobKeeper extension

16 September 2020

On 15 September 2020, the Government registered rules [1] that will dictate how the extended JobKeeper scheme will operate for another six months from 28 September 2020 to 28 March 2021.

While good news that JobKeeper has been extended, there has been a significant reduction in JobKeeper payments for employees that worked less than 20 hours a week in February 2020 or June 2020. This reduction will most likely affect long-term casual employees as well as part time employees who generally work less than 20 hours a week.

The main differences between the current rules and the extended rules are:

  • Employers must satisfy a new decline in turnover test that measures decline in actual turnover in the most recent completed quarter, even where entities satisfied the original decline in turnover test.
  • The amount of JobKeeper payments will be tapered in the December 2020 and March 2021 quarters for:
    • Employees depending on the number of hours worked and hours for which they received paid leave or paid absence for public holidays.
    • Business participants depending on the amount of business engagement.
    • Religious practitioners depending on the amount of relevant activities.

Qualifying for the JobKeeper extension

An entity that satisfies the existing rules does not automatically qualify for JobKeeper under the extended rules. To qualify for the extended JobKeeper scheme, an entity must satisfy the extended rules. However, any elections made under the existing rules remain in place. For example, elections by Australian Charities and Not-for-profits Commission (ACNC) registered charities to disregard certain supplies made to the Government.

Furthermore:

  • Entities that qualified under the existing JobKeeper scheme and also qualify for JobKeeper under the extended rules, do not need to make an election or re-enrol with the Australian Tax Office (ATO) to participate or give notice to employees about partaking in the extended JobKeeper scheme.
  • Entities that qualified under the existing JobKeeper scheme, who do not qualify for the December 2020 quarter but then re-qualify for the March 2021 quarter under the extended rules, also do not need to make an election or re-enrol with the ATO to participate. However, such entities must inform the ATO of the rate of JobKeeper that will apply, presumably in the Monthly Business Declaration.
  • Entities that did not qualify for the existing JobKeeper scheme but now qualify for the extended JobKeeper scheme must make such elections, enrol with the ATO and give notices to employees.

Conditions to qualify for JobKeeper

To qualify for JobKeeper payments in the extended periods, an entity must meet the eligibility requirements as well as the turnover test that measures the actual decline in turnover in the most recent completed quarter. This means decline in turnover will be tested twice under the extended scheme (where applicable).

JobKeeper extension period from 28 September 2020 to 3 January 2021

For entities to qualify for JobKeeper for this period such entities must have a significant decline in actual turnover (50%/30%/15% drop depending on type of entity), rather than projected turnover, in only the most recent quarter (i.e. July – September 2020) relative to a comparative period (e.g. the same quarter in 2019 unless an alternative test applies).

The different JobKeeper payment rates, which will be especially relevant for part time employees or long term casual employees are:

  • $1,200 per fortnight for employees that worked (including paid leave and absences) for 20 hours or more per week as measured in the four weeks before either 1 March 2020 or 1 July 2020 (whichever gives highest number).
  • $750 per fortnight for employees that worked (including paid leave and absences) for less than 20 hours per week as measured in the four weeks before either 1 March 2020 or 1 July 2020 (whichever gives highest number).

Note: For business participants and religious practitioners, the calendar month of February 2020 is used as the standard reference point.

The test date for employment of the employee is either 1 March 2020 or 1 July 2020 and entities that qualify for the extended JobKeeper scheme for the first time must:

  • Make an election to participate in JobKeeper and enrol with the ATO.
  • Provide a notice to employees about their participation in JobKeeper.

JobKeeper extension period from 4 January 2021 to 28 March 2021

For entities to qualify for JobKeeper for this period such entities must have a significant decline in actual turnover, rather than projected turnover, in only [2] the most recent quarter (i.e. October – December 2020) relative to a comparative period (e.g. the same quarter in 2019 unless an alternative test applies).

The different JobKeeper payment rates which are especially relevant for part time employees or long term casual employees are:

  • $1,000 per fortnight for employees that worked (including paid leave and absences) for 20 hours or more per week as measured in the four weeks before either 1 March 2020 or 1 July 2020 (whichever gives highest number).
  • $650 per fortnight for employees that worked (including paid leave and absences) for less than 20 hours per week as measured in the four weeks before either 1 March 2020 or 1 July 2020 (whichever gives highest number).

Note: For business participants and religious practitioners, the calendar month of February 2020 is used as the standard reference point.

The test date for employment of the employee is either 1 March 2020 or 1 July 2020.

The Commissioner has a discretion to set out alternative tests where an employee’s hours were not usual during February 2020 or June 2020. This is relevant for employees that were on leave or were not employed during the whole of February 2020 or June 2020 so could not meet the 20 or more hours a week test.

Because the deadline to lodge business activity statements is after the end of the September or December quarter, businesses will need to assess their eligibility for JobKeeper before they lodge their business activity statements and pay their employees before they receive JobKeeper from the ATO in order to meet the wage condition.

We expect to see significant audit activity from the ATO in the coming months to determine whether businesses that have claimed the JobKeeper payment were in fact eligible to qualify.

With the ATO’s wide-spread use of data matching, they have the ability to easily identify any discrepancies between data sources such as single touch payroll, income tax returns and superannuation fund information to identify certain JobKeeper “red flags” that may trigger further ATO scrutiny.

We recommend you contact your Findex Adviser to ascertain whether your business is eligible under the extended JobKeeper rules or get in touch with the Findex Tax Advisory team if you have any JobKeeper queries.

[1] Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 8) 2020

[2] Because all entities are enrolling for the extension of JobKeeper for the first time in this period, they will only have to show their actual turnover has significantly declined in the previous quarter (i.e. the September 2020 quarter)