Let’s start with the reminder that all we have to go on is one Treasury Fact Sheet titled “Extension of the JobKeeper Payment” and a series of announcements by the Government. We won’t see the actual new regulations until late August so many questions you have right now will be answered with “We will have to wait to find out”. But what do we know?
The JobKeeper Payment will be extended by six months, out to March 2021. However, there are three substantial changes to the current JobKeeper rules.
The first change is a requirement for employers to demonstrate an actual decline in turnover, the second is that Jobkeeper will be paid at 2 different rates and the third relates to which employees are eligible.
Change 1: A new, and of course lower, rate of JobKeeper payment
As expected, the Government is reducing the JobKeeper payments from 28 September 2020, including having two rates. One rate is for full time employees and one rate is for part time employees.
Rather than an employer receiving $1,500 for each eligible employee, for the fortnights between 28 September 2020 to 3 January 2021, an employer will only receive $1,200 per eligible employee, or only $750 if the eligible employee works less than 20 hours per week.
For an employee to pass the “20 hour a week” test, the employer considers the 4 weeks before 1 March 2020, adds up their hours worked and divides that by 4 to given them their average hours per week.
This means that when we all are completing the monthly declaration for the fortnights after 28 September 2020, we won’t just identify who are our “eligible employees”. We will also have to identify whether each employee works less than 20 hours (they will get $750 a fortnight) or if they work 20 or more hours a week (they will get $1,200 a fortnight).
And these rate all change again in 2021 – and go down further. From 4 January 2021 to 28 March 2021 the $1,200 rate for those working for greater than 20 hours a week drops to $1,000 and the $750 rate drops to $650.
The Treasury fact sheet states that the Commissioner will make alternative tests for working out these hours where February 2020 is not an appropriate reference period. The fact sheet states that examples of this could include where the employee was on leave, volunteering during the bushfires, or not employed for all or part of February 2020.
Change 2: The new actual quarterly turnover test
Also starting on 28 September 2020, to claim JobKeeper payments, an employer will need to show a drop in turnover happened when comparing the actual turnover in the September and December quarters in 2019 and 2020.
To claim JobKeeper payments for the fortnights between 28 September 2020 and 3 January 2021, an employer will compare the GST turnover in the September 2020 quarter to the GST turnover in the September 2019 quarter. The turnover must have dropped by the appropriate amount (generally 30%).
As the turnover that we use is the actual GST turnover, these figures will be on Activity Statements… and this can cause a timing issue. You currently need to apply for JobKeeper for a month by completing a monthly declaration by the 14th of the month. But your BAS is not due till well after that date. It looks like you need to work out the G1 figure (total sales) for your September BAS by at least 14 October so you can complete the monthly JobKeeper declaration.
Also, what if you are not sure if you will be eligible coming up to the end of September? Do you pay your employees hoping your September 2020 results will see a drop of 30%? The Treasury has identified this problem and states in the fact sheet, “The Commissioner of Taxation 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 the JobKeeper Payment.”
For 4 January to 28 March 2021, businesses will need to compare the December 2020 quarter with the December 2019 quarter to see if there has been the appropriate drop in turnover.
Just like he has done for the current turnover tests, the Commissioner will allow alternative turnover tests where it is not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019. But we will have to wait and see what these will be.
Change 3: More eligible employees
There will also be more employees that will be eligible for JobKeeper payments. Under the current rules, eligible employers receive the JobKeeper payment for each eligible employee that was on their books on 1 March 2020 that is still engaged by that employer. But from 28 September, eligible employers will be able to receive the JobKeeper payment for each eligible employee that was on their books on 1 July 2020.
Obviously, which rate an employer gets for these employees ($1,200 or $750) can’t be assessed on their hours in February, so this will probably be assessed on their hours in June 2020.
What to do now…
All the other rules that currently apply regarding JobKeeper remain the same. But there are a few things to do now.
- Think through what the lower rate, and the two different rates, means for you and your employees. At least let them know that in October, and again in January, they will be getting less. You can also do the analysis of February 2020 hours to work out who worked on average less than 20 hours a week.
- You can warn those involved in your BAS preparation that they will need to have the September BAS ready well before 14 October so you can assess eligibility for JobKeeper and compete the monthly declaration.
- You can identify new employees that started working for an employer between 1 March and 1 July as they may be eligible from 28 September.
Download the ADP JobKeeper Extension Package infographic here.
About Ken Mansell
Ken takes the label “tax nerd” as a badge of honour. He has worked for KPMG and Deloitte, as the tax counsel for ASX and NYSE listed entities, worked on tax policy for the Federal Government, as an advisor to the Assistant Treasurer, and on the secretariat of the Henry Review of Taxation. Ken runs “Tax Rambling” where he tries to share his love of tax with the rest of the world.
