JOBKEEPER 2 - From 28 September 2020

The first tranche of JobKeeper ends on 27 September 2020. Those needing further support will need to reassess their eligibility and prove an actual decline in turnover. 

The Amended Rules for JobKeeper 2 do not replace the original JobKeeper rules, rather they are an amendment to the existing rules to incorporate the previously announced dual payment rate system, the adjustments to employee eligibility relation to the relevant dates of employment and the new modified decline in turnover test.

To receive JobKeeper from 28 September 2020, eligible employers need to assess their decline in turnover with reference to actual GST turnover for the September 2020 quarter (for JobKeeper payments between 28 September to 3 January 2021), and again for the December 2020 quarter (for payments between 4 January 2021 to 28 March 2021).

From 28 September 2020, the JobKeeper payment rate will reduce and split into a higher and lower rate based on the number of hours the employee worked in a specific 28-day period prior to 1 March 2020 or 1 July 2020.

Eligibility for one JobKeeper period does not entitle you to, or exclude you from, payments in another period. Each eligibility period is addressed separately. That is, there might be businesses that qualified for the first tranche of JobKeeper, do not qualify for the second tranche but qualify for the third.

To access JobKeeper payments from 28 September 2020, there are three questions that need to be assessed:

1. Is my business eligible? 
2. Am I and/or my employees eligible? and
3. What JobKeeper rate applies?

We’ve summarised the key details in this update.

1. Eligible businesses

Eligible employers

An eligible employer is an employer that:

• On 1 March 2020, carried on a business in Australia or was a non‑profit body pursuing its objectives principally in Australia; and
• before the end of the JobKeeper fortnight, it met the original decline in turnover test*:
• 15% or more for ACNC Registered charities
• 30% of more for all other qualifying entities
• 50% or more for large businesses where the aggregated turnover is over $1 billion
• And, was not:
• on 1 March 2020, subject to Major Bank Levy for any quarter ending before this date, a member of a consolidated group and another member of the group had been subject to the levy; or
• a government body of a particular kind, or a wholly owned entity of such a body; or
• at any time in the fortnight, a provisional liquidator or liquidator has been appointed to the business or a trustee in bankruptcy had been appointed to the individual’s property.

1 March 2020 is an absolute date. An employer that had ceased trading before 1 March, commenced after 1 March 2020, or was not pursuing its objectives in Australia at that date, is not eligible.

*Additional tests apply from 28 September 2020.

Business owners:

• sole traders with an ABN, and
• one partner in a partnership, adult beneficiary of a trust, director or shareholder who works in the business (i.e., only one person in a partnership, one beneficiary of a trust, or one director/shareholder are eligible for JobKeeper payments).

will be eligible for the JobKeeper payment if the following conditions are met:

• The entity carried on a business on 1 March 2020 and is not a not-for-profit entity; and
• Had an ABN on 12 March 2020; and
• Had some business income in the 2018-19 income year included in a tax return that was lodged by 12 March 2020; or made some supplies connected with Australia in a tax period that started on or after 1 July 2018 and ended before 12 March 2020 and notified the ATO of this (e.g. on an activity statement lodged with the ATO) by 12 March 2020. The Commissioner can potentially extend the deadline for holding an ABN, lodging the 2019 tax return or lodging a relevant activity statement.
• Passed the decline in turnover test; and
• The individual was not:
• employed by the business at any time in the relevant fortnight; or
• a permanent employee of another entity at the time the individual gives the nomination notice (i.e., they do not hold a full time or part time role with another employer); or
• a nominated JobKeeper employee of any other business; or
• entitled to parental leave pay or dad and partner pay or workers’ compensation payments for being totally incapacitated for work.

As at 1 March 2020, the individual satisfied all of the following:

• Aged 16 years or over; and
• If they are aged 16 or 17 years, they are either financially independent or are not undertaking full-time study;
• Actively engaged in the business; and
• An Australian resident under the Social Security Act or an Australian tax resident who holds a special category visa **

If the criteria have been met, the individual is eligible if they were actively engaged in the business in the fortnight of the JobKeeper payment, and they agreed to be nominated for JobKeeper payments and confirmed they pass the eligibility criteria.

If more than one director wants to access JobKeeper payments, they need to meet the eligibility criteria of an employee (see Eligible employees). To be an employee a director would have received salary/wages, and this has been reported as salary/wages on activity statements, payment summaries, tax returns etc. If a director merely receives a distribution from the business, then they are unlikely to be an employee.

For businesses already enrolled in JobKeeper, to receive payments from 28 September 2020, you need to meet an extended decline in turnover test based on actual GST turnover. 

Businesses that are enrolling for the first time, need to meet the basic eligibility test and the decline in turnover test/s for the relevant period.

• 30 March to 27 September 2020
• Projected GST turnover for a relevant month or quarter is expected to fall by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*
• 28 September to 3 January 2021
• Actual GST turnover in the September 2020 quarter (July, August & September) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*
• 4 January to 28 March 2021
• Actual GST turnover in the December 2020 quarter (October, November & December) fell by at least 30% (15% for ACNC-registered charities, 50% for large businesses) compared to the same period in 2019.*

* Alternative tests may apply

Most businesses will generally use their Business Activity Statement (BAS) reporting to assess eligibility. However, as the BAS deadlines are generally not until the month after the end of the quarter, eligibility for JobKeeper will need to be assessed in advance of the BAS reporting deadlines to meet the wage condition for eligible employees.

The ATO has the power to extend the time an entity must pay employees in order to meet the wage condition. For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.

Calculating GST turnover for tranches 2 and 3 of JobKeeper is different to the original JobKeeper requirements as entities will only be using current GST turnover figures (not projected GST turnover).

When applying the new turnover reduction tests for the September 2020 quarter and December 2020 quarter, entities that are registered for GST must use the same method that is used for GST reporting purposes. That is, if the entity is registered for GST on a cash basis then a cash basis needs to be used to calculate current GST turnover for the purpose of these new tests. Entities that are not registered for GST can choose whether to calculate GST turnover using a cash or accruals basis but must use a consistent method.

Current GST turnover includes proceeds from the sale of capital assets unless the sale is input taxed. Current GST turnover includes taxable and GST-free supplies, but should exclude input taxed supplies such as residential rental income and financial supplies like dividends, interest etc. JobKeeper and ATO cash flow boost payments should be excluded from the calculation along with other payments that do not represent consideration for a supply made by the entity such as certain State based grants.

The Commissioner of Taxation has the power to set out alternative tests that 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.

The Commissioner provided a number of alternative tests that could be used for passing the original decline in turnover test and have stated that “where an entity has satisfied the decline in turnover test under section 8 of the Rules for JobKeeper fortnights before 28 September 2020, they do not need to apply the test again for JobKeeper fortnights starting on or after 28 September 2020. The entity will only need to apply this instrument for the purposes of satisfying the actual decline in turnover test in Section 8B of the Rules”.

There are several alternative tests, that can be applied for with the Commissioner of Taxation. These include:

• Business Commencement
• If your business commenced after the first day of the relevant comparison period and before 1 March 2020
• Business Acquisition or disposal that changed the entity’s current GST turnover
• Where an acquisition or disposal of part of your business at or after the start of the relevant comparison period and before the applicable turnover test period and the acquisition or disposal changed the entities current GST turnover
• Business restructure that changed the entity’s current GST turnover
• Where there was a restructure of your business or part thereof, or after the start of the relevant comparison period and before the applicable turnover test period and the restructure changed the entities current GST turnover
• Business had substantial increase in current GST turnover
• Where the entity had an increase of their current GST turnover of
• § 50% or more in the 12 months immediately before the applicable turnover test period or 1 March 2020
• § 25% or more in the 6 months immediately before the applicable test period or 1 March 2020
• § 12.50% or more in the 3 months immediately before the applicable test period or 1 March 2020
• Business affected by drought or natural disaster
• The entity conducted business or some of the business in a declared drought zone, or declared natural disaster zone during the relevant comparison period and it changed their current GST turnover
• Business has an irregular turnover
• Sole trader or small partnership with sickness, injury or leave
• Can applying using this method if the there are no employees;
• Sole trader or at least one of the partners did not work for all or part of the relevant comparison period due to sickness, injury or leave;
• The current GST turnover was affected by the sole trader or partner not working for all or part of that period

An detailed description of the Alternative testing and what is required can be found at JobKeeper 2 Alternative Test

A number of modifications apply to not for profit entities when it comes to calculating GST turnover under the original decline in turnover test. It appears that the same modifications will generally also apply when determining whether a not for profit entity passes the new decline in turnover tests for the September 2020 and December 2020 quarters.

To be eligible to receive JobKeeper payments, the employer must meet a wage condition. That is, employers must have paid the eligible employee at least the applicable JobKeeper payment for the relevant fortnight.

The ATO reimburses the employer for the JobKeeper payment monthly in arrears.

As noted above, for the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 the ATO is allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.

From 3 August 2020, the eligibility tests for employees were changed to enable a greater number of employees to access JobKeeper.

Previously, an employee had to be employed by the relevant entity on 1 March 2020 to be eligible for JobKeeper payments. Someone employed as a casual on that date also must have been employed on a regular and systematic basis for the 12-month period leading up to 1 March 2020.

Now, employees who were previously ineligible for JobKeeper because they were not employed by the entity on 1 March 2020 may be able to receive JobKeeper payments if they were employed by the entity on 1 July 2020 and can fulfil all of the other eligibility requirements. If an employee already passed all the relevant conditions at 1 March 2020 then they don’t need to be retested using the 1 July 2020 test date.

• On 1 July 2020 (previously 1 March 2020):
• Was aged 16 years and over; and
• If the individual was aged 16 or 17, was either financially independent or was not undertaking full-time study;
• Was an employee other than a casual, or was a long-term casual*; and
• Was an Australian resident (under the meaning of the Social Security Act 1991), or a resident for tax purposes and held a Subclass 444 (Special category) visa**.
• And, at any point during the JobKeeper fortnight:
• Was an employee of the employer (including employees that have been stood down or rehired); and
• Was not an excluded employee:
• An employee receiving parental leave pay or dad and partner pay; or
• An employee receiving workers compensation payments in relation to total incapacity.
• And, has provided the JobKeeper Payment Employee Nomination to the employer:
• Agreeing to be nominated by the employer as an eligible employee under the JobKeeper scheme; and
• Confirming that they have not agreed to be nominated by another employer; and
• If they are a long-term casual, they do not have permanent employment with another employer.

*A ‘long term casual employee’ is a person who has been employed by the business on a regular and systematic basis during the period of 12 months that ended on the applicable testing date (previously 1 March 2020, but changing to 1 July 2020). These are likely to be employees with a recurring work schedule or a reasonable expectation of ongoing work.

From 28 September 2020, the payment rate for JobKeeper will taper from the flat rate of $1,500 and split into a higher and lower rate.

Eligible employees that have been employed on a full time basis since 1 March 2020 or 1 July 2020 will generally receive the higher JobKeeper rate (as full time employees work more than 80 hours in 28 days) .

Businesses however will need to determine the rate applicable to eligible part-time and casual employees.

The reference period is the 28 day ending at the end of the most recent pay cycle for the employee ending before:

• 1 March 2020; or 
• 1 July 2020.

For eligible employees who have been employed since 1 March 2020, employers need to choose the reference period that provides the best outcome for the employees. For many employers, this will be the pre COVID-19, 1 March 2020 reference date.

For eligible employees employed since 1 July 2020, use the pay periods prior to 1 July 2020.

If the pay cycle is longer than 28 days, a pro-rata calculation needs to be done to determine the average hours worked and on paid leave across an equivalent 28 day period. For example, if the relevant monthly pay cycle has 31 days, you take the total hours for the month and multiply this by 28/31.

In order for an employer to receive JobKeeper payments from 28 September 2020 onwards they must notify the ATO of the payment rates for all eligible employees. The employer must then notify its employees within 7 days of advising the ATO of the payment rate.