JobKeeper Extension

The Government is extending the JobKeeper Payment by 6 months to 28 March 2021.

Rules from 28 September 2020

– The payment rate of $1,500 per fortnight for eligible employees and business participants will be reduced to $1,200 per fortnight.
– A lower payment rates of $750 per fortnight will apply for employees and business participants that worked fewer than 20 hours per week.
– Businesses and not-for-profits will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020.

Rules from 4 January 2021 to 28 March 2021

– The maximum payment rate will be further reduced to $1,000 per fortnight.
– The lower payment rate will be reduced to $650 per fortnight
– Businesses and not-for-profits will need to further reassess their eligibility with reference to their actual GST turnover in each of the June, September and December quarters 2020.

New Recipients

The payment will continue to remain open to new recipients, provided they meet the existing eligibility requirements and the additional turnover tests during the extension period. Other eligibility rules for businesses and not-for-profits and their employees remain unchanged.

Determining applicable payment rate

The maximum payment rate will apply to:
– eligible employees who, in the four weeks of pay periods before 1 March 2020, were working for 20 hours or more a week on average, and
– eligible business participants who were actively engaged in the business for 20 hours or more per week on average in the month of February 2020; and

The lower payment rate will apply to all other eligible employees and business participants.

The Commissioner will have discretion to set out alternative tests where an employee’s or business participant’s hours were not usual during the February 2020 reference period (e.g. they were on leave or were not employed for the whole month). Guidance will be provided where the employee was paid in non-weekly or non-fortnightly pay periods and in other circumstances the general rules do not cover.

Additional turnover tests in order to be eligible for the JobKeeper

Payment extension period of 28 September 2020 to 3 January 2021: Businesses and not-for-profits will need to demonstrate that their actual GST turnover has significantly fallen in the both the June quarter 2020 and the September quarter 2020 relative to comparable periods (generally the corresponding quarters in 2019).

Payment extension period of 4 January 2021 to 28 March 2021: Businesses and not-for-profits will again need to demonstrate that their actual GST turnover has significantly fallen in each of the June, September and December 2020 quarters relative to comparable periods (generally the corresponding quarters in 2019).

The relevant decline in turnover required for eligibility remains the same as existing rules. The Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019, in line with the existing discretion.

Businesses and not-for-profits will generally be able to assess eligibility based on details reported in the BAS. However, they may need to assess their eligibility in advance of the BAS deadline in order to meet the wage condition. The Commissioner will have discretion to extend the time an entity has to pay employees in order to meet the wage condition, so that entities have time to first confirm their eligibility for JobKeeper.

Treasury Worked Example

Carmen owns and runs the City Café. Carmen started claiming the JobKeeper Payment for her eligible staff and herself as a business participant when the JobKeeper Payment commenced on 30 March 2020. At the time, Carmen estimated that projected GST turnover in April 2020 would be 70% below actual GST turnover in April 2019

Retesting turnover under the JobKeeper extension

– Actual turnover for the June 2020 quarter was $170,000 compared to $600,000 for the June 2019 quarter, resulting in an actual decline of 72%. For the September 2020 quarter, actual turnover improved to $400,000, compared to $600,000 for the September 2019 quarter, resulting in a decline of 33%.
– As the actual turnover decline for both the June and September 2020 quarters was greater than 30%, City Café is eligible for JobKeeper Payment for the period of 28 September 2020 to 3 January 2021.
– Business continued to improve and actual turnover for the December 2020 quarter was 20% less than the December quarter 2019, so the City Cafe was no longer eligible to claim the JobKeeper for the second extension period from 4 January 2021.

Working out JobKeeper payment rate

– As Carmen was working full-time at the café throughout February 2020, she is entitled to claim $1,200 per fortnight from 28 September 2020 to 3 January 2021, as an eligible business participant.
– Her full-time employees are also eligible to be paid $1,200 per fortnight because they each worked 20 hours or more per week throughout February 2020.
– Carmen has an employee, Chris, who works part-time with different hours every other week. During the two pay fortnights prior to 1 March 2020, Chris was employed for 36 hours in each fortnight. On average, Chris worked less than 20 hours per week. Carmen is eligible to claim $750 per fortnight for Chris, from 28 September 2020 to 3 January 2021.
– Cathy is an eligible employee who worked on a long-term casual basis during February 2020. Pay records for the two fortnightly pay periods before 1 March 2020 show that Cathy was employed on average less than 20 hours per week, so Carmen claims $750 per fortnight for Cathy, from 28 September 2020 to 3 January 2021.
– Carmen also started employing Charles from September 2020. Because Charles was not employed on 1 March 2020, Carmen cannot claim the JobKeeper Payment for Charles.

The information contained in this bulletin is intended to  provide  general information only and is not intended to serve as tax advice. Specific advice should always be sought regarding a taxpayers’ particular circumstances. Please contact MC Tax Advisors if you would like assistance with the issues identified in this bulletin.