Extension of the JobKeeper scheme welcomed as parts of Victoria endure stage four restrictions

11 August 2020

On 7 August 2020, the Government announced some further changes to their previous announcement regarding the extension of the JobKeeper scheme 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.

On the upside, businesses that employed new staff between 1 March 2020 and 1 July 2020 may now be eligible to apply for JobKeeper payments for these employees from 3 August 2020.

The main announced changes include:

1. 1 March employee test replaced with 1 July employee test from 3 August 2020

From 3 August 2020, employees will be eligible for JobKeeper if they were employed on 1 July 2020. Until 2 August 2020, only employees employed on 1 March 2020 could qualify for JobKeeper.

2. Only one quarter decline in turnover test

To qualify for JobKeeper in the period from 28 September 2020 to 3 January 2021, employers will need to have experienced a significant decline in turnover (e.g. 30%, 50% or 15% [1]) in only the September quarter. Likewise, to qualify for JobKeeper in the period from 4 January 2021 to 28 March 2021, they will need to have experienced a significant decline in turnover in the December quarter.

What does this mean for you?

JobKeeper up to 27 September 2020

From 3 August 2020, employees that were employed at 1 July 2020 would also qualify for JobKeeper up to 27 September 2020 (assuming all other JobKeeper requirements are also met). Prior to 3 August 2020, entities would only qualify for JobKeeper in respect of employees that were employed at 1 March 2020.

This change of employment test date means that from 3 August 2020, entities that qualify for JobKeeper and employed new staff in the period from 2 March 2020 to 1 July 2020, will be able to claim JobKeeper for those employees who were employed on 1 July 2020.

Unfortunately, no JobKeeper payment will be available for anyone who started a new job after 1 July 2020.

JobKeeper from 28 September 2020 to 3 January 2021

To be eligible for JobKeeper payments from 28 September 2020, an entity must meet the existing eligibility requirements as well as the additional turnover tests.

The employee that JobKeeper is being claimed for must be employed as at 1 July 2020 and the entity must have a significant decline in turnover in only the September 2020 quarter (i.e. July, August, September) relative to a comparative period (e.g. the same quarter in 2019 under the basic test)

The different JobKeeper payment rates will be:

  • $1,200 per fortnight for employees and business participants that worked for 20 hours or more per week as measured in the four weeks before either 1 March 2020 or 1 July 2020.
  • $750 per fortnight for employees and business participants that worked for less than 20 hours per week as measured in the four weeks before either 1 March 2020 or 1 July 2020.

Note: For employees who were also employed on 1 March 2020, the period with the higher number of hours worked can be used to calculate the 20-hour threshold.

JobKeeper from 4 January 2021 to 28 March 2021

During this period, an entity must have significant decline in turnover in only the December quarter (i.e. October, November, December) relative to a comparative period (e.g. the same quarter in 2019 under the basic test).

The different JobKeeper payment rates will be:

  • $1,000 per fortnight for employees and business participants that worked for 20 hours or more per week as measured in the four weeks before either 1 March 2020 or 1 July 2020.
  • $650 per fortnight for employees and business participants that worked for less than 20 hours per week as measured in the four weeks before either 1 March 2020 or 1 July 2020.

Note: For employees who were also employed on 1 March 2020, the period with the higher number of hours worked can be used to calculate the 20-hour threshold.

The Commissioner has a discretion to set out alternative tests where an employee or business participant’s hours were not usual during February 2020 or June 2020. This will be relevant for employees who 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 September or December quarter, businesses will need to assess their eligibility for JobKeeper before they lodge their business activity statements and pay the employees before they receive JobKeeper from the ATO (i.e. 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.

Talk to your adviser or get in touch with the Findex Tax Advisory team if you have any JobKeeper queries.

At the time of writing, these announcements have not yet been legislated and we will update you once legislation is released.

[1] https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/JobKeeper-tests/Applying-the-turnover-test/?anchor=Basictest#Step4determinewhichshortfallpercentageap