JOBKEEPER 2.0 – THE RULES
On 15 September 2020 the Treasurer released detailed rules in relation to the extension of the JobKeeper scheme – referred to as JobKeeper 2.0.
Further to our JobKeeper 2.0 update from last month, the employer and employee eligibility rules have not changed however there have been some modifications to the turnover test. The most significant rule change though relates to the JobKeeper payments as not only have the JobKeeper payments reduced there is now an additional employee test based on numbers of hours worked.
A summary of the new rules are detailed below.
- All businesses are required to re-enrol from 28 September 2020 and are required to meet a new turnover test in order to qualify for JobKeeper 2.0 (referred to as phase 1).
- Once phase 1 has ended on the 3 January 2021, businesses will again have to re-enrol and are required to satisfy another turnover test should they wish to continue to receive JobKeeper payments (referred to as phase 2).
- Phase 2 is due to end on the 28 March 2021 and at this stage there has been no announcement if the Government will extend the JobKeeper scheme further.
- To qualify for JobKeeper 2.0 you must have also met the decline in turnover test for JobKeeper 1.0.
- If you enrolled in JobKeeper 1.0 then you don’t need to retake the original test however if you did not enrol in JobKeeper 1.0 and wish to enrol in JobKeeper 2.0 you will need to show that you also met the decline in turnover test requirement for JobKeeper 1.0.
- Please note a business could qualify for phase 2 of JobKeeper 2.0 even if it did not qualify for phase 1 so long as the business also met the original turnover test from JobKeeper 1.0.
- The turnover test for phase 1 will require a business to compare their actual GST Turnover for the period 1 July 2020 to 30 September 2020 against their actual GST Turnover 12 months earlier i.e. 1 July 2019 to 30 September 2019 and where a business can show a 30% or more decline in GST Turnover then the business ought to qualify for phase 1 of JobKeeper 2.0.
- Similarly, the turnover test for phase 2 will require a business to compare their actual GST Turnover for the period 1 October 2020 to 31 December 2020 against their actual GST Turnover 12 months earlier i.e. 1 October 2019 to 31 December 2019 and where a business can show a 30% or more decline in GST Turnover then the business ought to qualify for phase 2 of JobKeeper 2.0.
- GST Turnover refers to the amount of income declared at label G1 on a business’s activity statement. If a business is required to report turnover on a cash basis for GST purposes then the turnover test must be calculated on a cash basis. The same methodology would apply if the business reports turnover on an accrual basis.
- You are unable to choose which turnover method results in the highest decline.
- If a business is not registered for GST then they can choose either cash or accrual reporting to calculate the decline in turnover test (Note – method adopted must be consistent).
- The ATO has advised they will be releasing alternative tests in relation to calculating the decline in turnover test.
- Further to our JobKeeper 2.0 update, employees who started after 1 July 2020 may be eligible for JobKeeper from the fortnight beginning 3 August 2020.
- This revised start date will apply for the remaining life of JobKeeper 1.0 and also the extended scheme JobKeeper 2.0.
- Examples of employees who may now be eligible for JobKeeper can include*:
- An employee who was employed after 1 March 2020 but before 1 July 2020
- Casual employees who had been employed for 12 months prior to 1 July 2020
- Employees who were able to satisfy either the age and residency tests between 1 March 2020 and 1 July 2020
- Employees who were previously nominated for JobKeeper who ceased to work for their original employer after 1 March 2020 and was employed by a new employer prior to 1 July 2020.
*NOTE – employees must also meet basis conditions as per JobKeeper 1.0
- Employers need to ensure they identify any new employees that may meet the new eligibility requirements to ensure they maintain the ‘one in, all in’ principle.
- From 28 September 2020, there will be 2 tiers of JobKeeper payments – a higher rate and a lower rate.
- For Phase 1 (28 September 2020 – 3 January 2021) the higher rate will be $1,200 per fortnight per eligible employee and the lower rate will be $750 per fortnight per eligible employee.
- For Phase 2 (4 January 2021 – 28 March 2021) the higher rate will be $1,000 per fortnight per eligible employee and the lower rate will be $650 per fortnight per eligible employee.
- To work out if an employee will be paid on the higher or lower rate will depend on the actual numbers of hours worked in the test period.
- Eligible Business Participants (EBP) will be paid based on number of hours actively engaged in the business.
- The test periods are February 2020 and June 2020 and employees need to have worked at least 80 hours over a 28 day period in either of these months to be paid the higher rate.
- Where an employee works less than 80 hours in both test periods then they will be paid the lower rate.
- If an employees pay cycle is more than 28 days then the calculation will need to be pro-rated to confirm the client worked at least 80 hours over a 28 day period.
- An EBP needs to determine they were actively engaged for 80 hours in the same test periods outlined above (Feb 20 + Jun 20) in order to receive the higher rate.
- A declaration will be required to be signed by the EBP.
- Where they cannot determine they worked at least 80 hours then they will be paid the lower rate.
- Explanatory statement issued to assist in assessing what it means to be ‘actively engaged’ in business.
- Where an employer does not pay an employee based on number of hours worked the ATO has released ‘deeming’ rules which will apply to certain employee situations.
- The ATO has also released alternative test periods if February 2020 and June 2020 cannot be relied upon for a specific reason.
- It is the employer’s obligation to always consider paying the higher rate for an employee. In other words if an employee fails to qualify for the higher rate using the standard test periods (Feb 20 + Jun 20) then the employer is required to consider the alternative test periods.
- Employer required to report to ATO which payment rate they are using for each employee and employee to be notified with 7 days of ATO being notified.
We note the ATO has acknowledged that there will be a timing issue from when the enrolment process opens for JobKeeper 2.0 to when a business is made aware they qualify for the extended scheme and on that basis the ATO has granted an extension to 31 October 2020 to ensure all eligible employees are paid the appropriate amount for the first 2 fortnights under JobKeeper 2.0 (28 September 2020 to 26 October 2020).
We advise that Waterford Accountants will be hosting a Webinar to discuss JobKeeper 2.0 in more detail and will confirm the date in due course.