The extension to the JobKeeper scheme will start on 28 September 2020 and end on 28 March 2021. The legislation and detail on the workings of JobKeeper 2.0 were released during the week ended 20 September 2020 (and more details will be released shortly by the ATO).
Here is our summary on the key changes to JobKeeper 2.0 and how businesses will be able to qualify for the extension.
New Payment Rates
Rather than the flat $1,500 a fortnight under the original JobKeeper, there will be two payment tiers under JobKeeper 2.0.
Tier 1 Rate per Fortnight
(Worked 80 hrs or more in reference period)
|Tier 2 Rate per Fortnight
(Worked less than 80 hrs in reference period)
28 Sept 2020 to 3 Jan 2021
|4 Jan 2021 to 28 March 2021||$1,000||
Businesses will need to determine which payment tier applies for every person they are claiming the JobKeeper for and notify the ATO by the required date and format.
Businesses will need to ensure that they pay their employees the appropriate tier amount by the ATO nominated dates.
How to Determine Which Tier Payment Rate Applies?
The Tier 1 payment rate applies if the eligible employee, business participant or religious practitioner worked 80 hours or more in a reference period.
If less than 80 hours was worked in the reference period, the Tier 2 payment rate applies.
Businesses will need to determine the hours worked for every person they are claiming the JobKeeper for and keep records to support this.
The hours worked includes:
– Actual hours worked
– Paid leave (personal / annual / long service / parental leave)
– Paid public holidays
– Note that unpaid leave is not counted.
The “reference period” used to determine the hours worked varies for each recipient category.
There are two reference periods for employees. Businesses can calculate the hours under both reference periods and use the period that results in the higher tier payment rate.
– Reference Period #1 – 28 day period ending on the last day of the last pay cycle that ended before 1 March 2020; or
– Reference Period #2 – 28 day period ending on the last day of the last pay cycle that ended before 1 July 2020.
Example: Weekly Pay Cycle
If the last pay cycle that ended prior to 1 March 2020 was the week ended 28 Feb 2020, you would determine the hours worked during the 28 day period for the weeks ended 7 Feb, 14 Feb, 21 Feb and 28 Feb 2020.
Example: Fortnightly Pay Cycle
If the last pay cycle that ended prior to 1 July 2020 was for the fortnight ended 28 June 2020, you would need to determine the hours worked during the 28 day period for the fortnights ended 14 June and 28 June 2020.
Example: Monthly Pay Cycle
If the pay cycle is longer than the 28 day reference period, then a pro-rata is used to determine the appropriate hours. If the last pay cycle that ended prior to 1 July 2020 was for the month of June 2020 (30 days) and the employee was paid for 100 hours, the pro-rata hours for the 28 day reference period would be 93.3 hrs (100 hrs / 30 days x 28 days).
Eligible Business Participants
The calendar month of February 2020 is used as the reference period.
Eligible Business Participants (EBP) will need to assess the number of hours in February 2020 that they were:
– Actively operating the business; or
– Undertaking specific tasks in business development and planning, regulatory compliance and other similar activities.
– They will also need to show how those hours have been calculated and maintain records if ever audited by the ATO (ie. timesheets).
The EBP will need to make a declaration in the approved form (form yet to be released by the ATO) that their hours of activity were 80 hours or more in the applicable reference period to qualify for the higher Tier 1 payment rate.
– Sole traders will need to submit the declaration to the ATO.
– Non sole trader EBP will need to provide this to the entity receiving the JobKeeper on their behalf.
Eligible Religious Practitioners
Similarly to EBP, the calendar month of February 2020 is used as the reference period for Eligible Religious Practitioners (ERP),
Activities such as the below (but not limited to) would count towards the hours worked:
– Performance of religious rituals or practices (such as services, prayer, contemplation or mediation); and
– Furthering the objectives of the religious organisation (including missionary or charitable work).
The ERP will need to make a declaration in the approved form (form yet to be released by the ATO) that they worked 80 hours or more over the applicable reference period to qualify for the higher Tier 1 payment rate. This needs to be provided to the religious organisation.
Where the 80 hour threshold in the pre-March or pre-July reference periods cannot be satisfied, alternative reference periods may be allowed under specific circumstances.
If records do not exist to support hours worked, the ATO also has the power to determine if the higher Tier 1 payment rate applies for eligible employees under specific circumstances.
How to Qualify for JobKeeper 2.0 Beyond 27 Sept 2020?
To be eligible for JobKeeper payments from 28 September 2020, an actual decline in turnover test will need to be satisfied (conditions apply for this test).
Extension 1: from 28 Sept 2020 to 3 Jan 2021
The actual decline in turnover test will be satisfied when the current GST turnover for the quarter ended 30 Sept 2020 has declined by the specified shortfall percentage in comparison to the GST turnover for the quarter ended 30 Sept 2019.
Extension 2: from 4 Jan 2021 to 28 March 2021
The actual decline in turnover test will be satisfied when the current GST turnover for the quarter ended 31 Dec 2020 has declined by the specified shortfall percentage in comparison to the GST turnover for the quarter ended 31 Dec 2019.
If the Sept 2019 and Dec 2019 quarters are not an appropriate comparison period, an alternative test may apply. The ATO is yet to release further guidance on the alternative tests.
The required shortfall percentage depends on the type of business entity:
– 15% : ACNC registered charity
– 50% : Large businesses (aggregated annual turnover more than $1 billion)
– 30% : All other entities
Businesses already enrolled to participate in JobKeeper 1 do not have to re-enrol after 27 September 2020.
Where businesses fail to qualify for JobKeeper payments past 27 September 2020, all eligible recipients should be notified.
To determine your GST turnover, you need to consider:
– Your GST reporting method in the BAS;
– Inclusion of proceeds from the sale of capital assets, taxable and GST free supplies; and
– Excluding input taxed sales, ATO JobKeeper and cashflow boost receipts.
The actual decline in turnover test can be a complex calculation and advice should be sought if you have any questions.
New Participants to the JobKeeper 2.0 Scheme
The extension to the JobKeeper scheme also allows new businesses to qualify provided they can satisfy the original decline in turnover test and actual decline in turnover test from 28 September 2020 (together with other requirements).
This enables businesses that experience a sudden decline in turnover in the September 2020 and December 2020 quarters to obtain JobKeeper 2.0 support.
Please contact us to find out more. The team at EMspire Advisory are experienced accountants, bookkeepers and tax agents in Sydney. Please note that this information is not specific and is general in nature and cannot be relied upon as advice. More information is being released on the JobKeeper 2.0 on a regular basis by the ATO and Treasury which may supersede this blog. Please contact us for specific advice for you and your circumstances.