JobKeeper Extension (JobKeeper 2.0)

On 21 July 2020, the Australian Government announced plans to extend the JobKeeper Payment. Originally legislated to end on 27 September 2020, the payment has been extended to 28 March 2021.

Employee Eligibility

From 3rd August the employee eligibility has changed allowing employers until 31 August 2020 to meet the wage condition for all new eligible employees included in the JobKeeper scheme under the 1 July eligibility test (previously 1 March).  This means that any new eligible employees will have to be topped up and added to the scheme in ATO FN10 and FN11.

Reduction of full rate per fortnight

Currently, each JobKeeper recipient is receiving a flat $1,500 per fortnight payment, regardless of the amount of hours they complete. This is set to change in the upcoming extension.

Starting on 28 September 2020, the full JobKeeper rate will be reduced to $1,200 per fortnight, and then reduced again on 4 January 2021 to $1,000 per fortnight.

Only eligible employees that work over 20 hours and business participants will continue to receive the full JobKeeper Payment rate,

Introduction of lower payment rate for those working fewer hours

From 28 September 2020, JobKeeper is introducing a new lower payment tier. This tier is for employees and business participants working fewer hours than other eligible recipients.

From 28 September 2020 to 3 January 2021, eligible recipients working less than 20 hours will get $750 per fortnight, followed by $650 per fortnight from 4 January 2021 until 28 March 2021.

How to determine which tier your employees fall under

To find out which tier your employees and business participants fall under, you need to perform a simple calculation.

Put simply, if the eligible employees, in the four weeks of pay periods before 1 March 2020, were working in the business or not-for-profit organisation for 20 hours or more a week on average, they’re entitled to the full JobKeeper Payment rate.

Therefore, all other eligible employees and business participants – those who worked fewer than 20 hours per week in the four-week pay period before 20 March 2020 – will receive the lower JobKeeper Payment rate.

As a business owner or not-for-profit, you’ll be required to nominate which payment rate applies to each of your eligible employees and business participants.

Requalification dates

Both new and existing JobKeeper recipients will need to requalify to continue receiving JobKeeper from 28 September 2020 and then again in early January 2021.

For obvious reasons, any business, not-for-profit or self-employed individual no longer eligible for JobKeeper after 28 September 2020 will cease to receive the JobKeeper Payment.

To continue receiving JobKeeper from 28 September 2020 onwards, businesses, not-for-profits and the self-employed will need to demonstrate that they have experienced a significant decline in turnover due to the Coronavirus.

This is achieved by calculating your actual GST turnover as opposed to projected GST turnover.

Below are the following quarters in which recipients must report in order to requalify:

  • Before 28 September 2020: Demonstrate that your actual GST turnover has fallen in the September quarter 2020 (July, August and September)
  • Before 4 January 2021: Demonstrate that your actual GST turnover has fallen in each of the September and December 2020 quarters when compared to usual periods.

If it’s not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019, the Commissioner of Taxation may prepare an alternative test for such companies, not-for-profits and self-employed individuals.

Businesses and not-for-profits will be able to determine their eligibility based on details provided in the Business Activity Statement (BAS). Alternative arrangements will be made for businesses and not-for-profits that are not required to lodge a BAS.

Eligibility requirements

The required decline in turnover for businesses and not-for-profits must fall within the following ranges:

  • 50 percent of turnover reduction for those with a profit of more than $1 billion
  • 30 percent of turnover reduction for those with an aggregated turnover of $1 billion or less
  • 15 percent for Australian Charities and Not-For-Profit Commission-Registered charities (excluding schools and universities)

Even if a business, not-for-profit or self-employed person does not meet the requirements to be eligible for the JobKeeper extension, they will still continue to receive JobKeeper payments until the extension begins on 28 September 2020.

Furthermore, the JobKeeper program will continue to be open to new recipients, as long as they meet the existing eligibility requirements and – if they require further financial assistance – the additional turnover tests during the extension period.

Keeping up with your payroll obligations

Eligible businesses and not-for-profits must continue to maintain a record of their JobKeeper payments, submit their monthly declarations, and notify the ATO of staff turnovers.

This way, you guarantee that the information you give to the ATO is correct and accurate.

You should also update your payroll procedures when the full rate of pay is reduced and the new lower tier payment is introduced.

This is because some of your employees and business participants, who are currently receiving the flat $1,500 rate of pay per fortnight, may transition to the lower payment tier on 28 September 2020. Furthermore, even those on the full rate will experience a decline in their fortnightly pay.

For these reasons, make sure that your payroll system is ready for these upcoming changes. Of course, if you’re an existing E-Payoffice customer for our Outsourced Payroll service, we will do this for you.

For more information about the JobKeeper extension, refer to this detailed summary by the Treasury.

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